Microsoft Loses Appeal Over Temps

Hundreds of Microsoft workers improperly classified as independent contractors have a right to participate in all the company’s benefit programs, a federal appeals court said Thursday.

The 11-judge panel of the 9th U.S. Circuit Court of Appeals reaffirmed a similar decision made last October by three of its members.

The workers had been hired by Microsoft’s international division between 1987 and 1990. They were classified as independent contractors or free-lancers, were not paid overtime and were told they were ineligible for benefits.

But the Internal Revenue Service ruled in 1990 that the company had to treat the workers as employees for tax purposes. Microsoft accepted the ruling, which required it to pay withholding taxes, Social Security taxes and, in some cases, retroactive overtime pay.

But it still balked at allowing the workers to participate in the stock option and 401(k) deferred-salary plans, arguing they were not on Microsoft’s regular U.S. payroll. The workers sued.