Microsoft workers settle lawsuit

WITH THE PROPOSED $97 million settlement of the long-running class-action lawsuit, Vizcaino vs. Microsoft, managers should take the time to shore up the classification and treatment of temporary employees, says Raymond Hixson, senior associate at the law firm of Fenwick & West, in Palo Alto, Calif. "Misclassifying an employee as a contractor can violate laws covering worker compensation, taxes, unemployment insurance, and overtime. This can be an expensive mistake."

1. Understand the permatemp case

An important ruling came from the Microsoft permatemps litigation, Hixson says. "Just because your contractors sign an agreement saying that they're contractors and not employees, the agreement does not control. The legal test does."

The critical factor in the legal test, Hixson says, is, "How much control does the company exercise over how the contractor or temporary [employee] performs the work? Do they control the manner in which performance is accomplished?" Control is indicative of employee status.

2. Test employee status

Internal Revenue Service regulations help define "control" and the difference between permanent and temporary employees through a 20-point test (see sidebar " Permanent or Temporary? The 1099 Rule.") Courts have relied on it to test employee classification.

3. Treat temps differently

Even if employers are careful to define temporary employees as nonpermanent, casual, or seasonal workers in employee handbooks, employment contracts, and other corporate documents, managers' actions can affect employee classification, Hixson says.

In dealing with temporary workers, Hixson suggests that managers do not provide long-term temps with tools, define how their work is to be done (versus what is to be accomplished), nor provide them office space or training. Companies should also avoid giving temporary employees and contractors business cards or set hours of employment.

4. Review temporaries' rights

Just because an employee is temporary doesn't mean he or she is without rights. "IT managers have to be aware that temporary workers may have many of the same rights as other employees: the right to family and medical leave, the right to disability leave," Hixson says. Temporary employees are also protected by law from sexual harassment. Hixson advises IT managers to talk with HR representatives if issues arise.

This story, "Microsoft workers settle lawsuit" was originally published by InfoWorld.

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