Criticism of Microsoft - Labor Practices

Labor Practices

While Microsoft's permanent workers enjoy some of the best corporate treatment, a large part of Microsoft's labor pool exists outside this privileged class. This includes the use of permatemp employees (employees employed for years as "temporary," and therefore without medical benefits), use of forced retention tactics, where departing employees would be sued to prevent departure, as well as more traditional cost-saving measures, ranging from cutting medical benefits, to not providing towels in company locker rooms.

Historically, Microsoft has also been accused of overworking employees, in many cases, leading to burnout within just a few years of joining the company. The company is often referred to as a "Velvet Sweatshop", a term which originated in a Seattle Times article in 1989, and later became used to describe the company by some of Microsoft's own employees. The focus of the idea is that Microsoft provides nearly everything for its employees in a convenient place, but in turn overworks them to a point where it would be bad for their (possibly long-term) health. For example, the kitchenettes have free beverages and many buildings include exercise rooms and showers. However, the accusation is that they try to keep employees at the company for unreasonably long hours and working too much. This is detailed in several books about Microsoft, including "Hard Drive: Bill Gates and the Making of the Microsoft Empire."

A US state lawsuit was brought against Microsoft in 1992 representing 8,558 current and former employees that had been classified as "temporary" and "freelance", and became known as Vizcaino v. Microsoft. In 1993, the suit became a US Federal Class Action in the United States District Court Western District Of Washington At Seattle as No. C93-178C. The Final Settlement came in 2005. The case was decided on the (IRS-defined) basis that such "permatemps" had their jobs defined by Microsoft, worked alongside regular employees doing the same work, and worked for long terms. After a series of court setbacks including three reversals on appeal, Microsoft settled the suit for US $93 million.

A side effect of the "permatemp" lawsuit is that now contract employees are prevented from participating in team morale events and other activities that could be construed as making them "employees". They are also limited to one year contracts and must leave after that time for 100 days before returning under contract.

Microsoft is the largest American corporate user of H-1B guest worker visas and has joined other large technology companies like Google in recently lobbying for looser H-1B visa restrictions.