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USA: Microsoft Loses Appeal in Workers Dispute

by James ViciniReuters
January 10th, 2000

WASHINGTON -- The U.S. Supreme Court on Monday rejected Microsoft Corp.'s appeal of a ruling that thousands of temporary and contract workers were eligible to buy discounted stock in the software giant.

The justices let stand a U.S. appeals court ruling that greatly expanded the number of past and present workers who can participate in a class-action lawsuit against Microsoft over its lucrative employee stock purchase plan.

Microsoft asked the Supreme Court to review the ruling that could cost the company millions of dollars, but the high court turned down the request without any comment or dissent.

The lawsuit's eventual outcome could have widespread implications for many other companies that use temporary workers or independent contractors, an increasingly common business practice, especially in the technology industry.

A federal district judge initially limited the class to just a few hundred workers employed at Microsoft from 1987 to 1990.

But the appeals court ruled the class should cover any temporary or contract worker who worked 20 hours per week or more for at least five months in any year since the end of 1986, a class that could total well over 10,000 workers.

The appeals court required Microsoft to prove which workers should not be included in the class as part of the hearings before a federal district court judge in Seattle to determine damages.

Microsoft in its appeal urged the Supreme Court to restore ''order to the law of employee benefits.'' It said numerous lawsuits have been filed in the last year on behalf of temporary agency employees or independent contractors claiming benefits from the company where they performed their services.

It said the appeals court decision ''undermined the ability of district courts to manage class actions effectively'' and contravened the grant of discretion under a federal rule to district courts to manage a class-action lawsuit.

The class-action suit, filed in 1992, claimed that Microsoft treated temporary and contract workers as permanent employees except for compensation.

The lawsuit sought millions of dollars in gains from the employee stock purchase plans, which offer workers the opportunity to buy Microsoft stock at a 15 percent discount. The plans were not extended to temporary and contract workers.

The Supreme Court in 1998 rejected an earlier Microsoft appeal in the case.

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