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Saturday, October 1, 2005 - Page updated at 12:00 AM

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Judge OKs $97 million payout for Microsoft "permatemps"

Seattle Times technology reporter

After years of delays, false hopes and procedural haggling, the contract workers who sued Microsoft in 1992 for denying them benefits are finally getting paid this month.

Thousands of long-term temporary workers hired during Microsoft's early growth spurt sued because they were denied benefits given to regular employees. They won a record $97 million settlement in 2001 after a court found they were improperly restricted from the company stock-purchase plan, and Microsoft was forced to change its temporary-worker policies and limit the length of contracts.

But the payout to the so-called "permatemps" was delayed again and again. Microsoft was a stickler about the settlement terms and several of the original plaintiffs sued because they thought their lawyers' $27 million share was too much. Then the courts had to review the situations of individual plaintiffs who felt they were being shorted.

Most recently, the IRS was sorting out how much tax to deduct from the payouts.

It finally cleared up yesterday when a federal judge overseeing the case approved the payout plan. Checks are expected to be mailed Oct. 17, according to Judith Bendich, one of the plaintiff's lawyers.

"This has taken an inordinate amount of time," she said.

After legal fees, processing costs and early payouts to a small group of plaintiffs — along with interest the money earned since 2001 — there's $72 million left to distribute to the 8,558 remaining class members. That works out to an average payment of $8,429, before payroll taxes are deducted.

One expects $16,000

Phil Aiken, a Kirkland entrepreneur who worked as a Microsoft temporary worker for three years, expects to get about $16,000. Aiken said the delay "once again demonstrates how the courts and the legal system really take advantage of plaintiffs, the plaintiff class."

Aiken said the claims processors should have used technology such as a database to expedite the process, and taxes should have been figured out much earlier.

The check will be bittersweet for Renton technical editor Kate McLaughlin, 57, who spent about eight years as a Microsoft contract worker.

"I have mixed feelings about that," she said. "I could have still been working there as a permatemp making $25 an hour rather than being unemployed. I think a lot of people feel that way, who were also temps there — the people who sued made out for themselves, but they ruined things for thousands of other people."

"Just relieved"

Catherine Brand, 58, was a technical writer at Microsoft from 1993 to 2000, but now she's studying to become an elder-care manager. She thinks Microsoft treated contractors better in the past, but she's glad to finally get the check, which she'll probably add to her retirement account.

"I think it couldn't come at a better time for me," she said.

Bendich said it's likely that some recipients won't be found or won't cash their checks. Any money left afterward will be donated to a charity, which has not yet been chosen. Those loose ends could continue for six or seven months after the checks are mailed.

"We're just relieved," she said. "We've just been waiting for this for a long time."

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Copyright © 2005 The Seattle Times Company

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