Microsoft has agreed to a $14.4 million settlement regarding allegations that it retaliated against California employees who utilized legally protected time off.
This settlement arises from complaints filed with California’s Civil Rights Department, asserting that the company’s managerial practices were unfairly assessing employees who took time off for parental, caregiving, or disability reasons from 2017 to the present.
The proposed settlement, pending approval by a state judge, dictates that nearly all of the $14.4 million will be allocated to the affected Microsoft employees in California who choose to participate.
In addition to financial compensation, the settlement includes a directive for Microsoft to provide targeted training to both direct managers and second-level managers of staff in California, as well as human resources employees involved with bonuses and merit increases.
How Did Microsoft’s Practices Affect Employees?
The core issue cited in the complaint revolves around Microsoft’s alleged practice of considering protected leave usage in evaluations of an employee’s “impact.” This metric plays a crucial role in determining annual bonuses, promotions, stock awards, and merit increases.
The state agency emphasized that such practices not only disadvantage those who took protected leave but also disproportionately affect women and individuals with disabilities, leading to discriminatory impacts that cannot be justified by business necessity.
Microsoft, headquartered in Redmond, Washington, employs about 6,700 people in California, which represents a small segment of its total global workforce of 221,000. Under CEO Satya Nadella’s leadership, Microsoft has been actively working to diversify its upper management and enhance responsiveness to issues of harassment and discrimination.
The company reports an increase in the percentage of women at various executive levels within the organization: women comprised 31.2% of the workforce in core roles in 2023, a rise from 27.6% in 2019.
What Changes Will Microsoft Implement?
Following a 2022 shareholder vote that demanded better handling of sexual harassment and gender discrimination, Microsoft announced plans to overhaul its related policies. This decision was influenced by findings from an external review, which pointed to deficiencies in how the company addressed such complaints.
Despite the settlement, Microsoft disputes the allegations brought forth by the California Civil Rights Department. A company spokesperson communicated to CNBC via email: “While we believe the agency’s allegations are inaccurate, we will continue to listen, learn, and support our employees.” They affirmed Microsoft’s commitment to fostering a workplace that allows employees the flexibility to take necessary leave and thrive both professionally and personally.
The settlement also mandates the engagement of a consultant, APTMetrics, to monitor and ensure Microsoft’s compliance with the new training requirements and policy changes. These measures are intended to ensure that protected leave is not factored into performance impact assessments moving forward.
Featured Image courtesy of MIKE BLAKE/REUTERS