Redmond Loses a Round in Permatemp Suit

Employers of high-tech contract workers are being urged to re-examine their benefits policies after Microsoft Corp. lost another legal round over its treatment of so-called perma-temps.

The U.S. Supreme Court last week rejected Microsoft's appeal of a lower court's ruling that as many as 10,000 temporary workers should have been allowed to buy the company's stock under an employee discount plan. The ruling stated that Microsoft had to open that stock plan to permatemps who had worked at least five months in any 12-month period. Microsoft argued that the eligible group should be much smaller.

It was the second time the high court rejected a Microsoft appeal in the class action suit, which was filed in 1992. Two years ago, the court denied an appeal on the issue of whether temporary workers at the company qualified for any benefits.

The Microsoft case is being closely watched by technology industry groups and legal observers because it could force companies to offer some benefits to temporary and contract workers who are hired for long-term assignments.

The Supreme Court's decision should push other companies - and not just high-tech vendors - "to make sure they're not exposing themselves to the same kind of lawsuits," said Ken Dort, a partner at technology law firm Gordon & Glickson LLC in Chicago.

The Information Technology Association of America (ITAA) in Arlington, Va., which filed a friend-of-the-court brief supporting Microsoft, blasted the Supreme Court's decision. "This is a 19th-century court making outdated decisions about a 21st-century workforce," said Harris Miller, ITAA president.

The suit must go back to U.S. District Court in Seattle for final decisions on issues such as how much discounted stock workers should be able to buy.

A Microsoft spokesman said the vendor is "disappointed the [Supreme Court] has decided now is not the time to review the issues raised in the latest appeals court opinion."

But he said Microsoft doesn't expect the decision to have a big impact on the case.

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