Unearned Money

Yesterday I received a check in the mail that I’m feeling weird about. It’s not a huge amount, but it’s not trivially small, either.

The payment is a pro-rata share from the Vizcaino v. Microsoft class action suit.

As you may recall, this was the case in which some Microsoft temporary workers (sometimes designated permatemps) sued Microsoft for employee benefits. The claim was that, even though they signed explicit contracts to the contrary, they were common-law employees and entitled to the benefits of regular full-time employees, FTEs, including lucrative stock options and employee-purchase-plan discounted stocks. They argued that they were really treated just like employees (worked at Microsoft for years, did identical work under identical conditions as FTEs, participated in meetings and morale events, etc.) and that Microsoft only designated them differently to avoid paying them benefits and to avoid employer taxes.

But, this is absurd. These people, including me, had agreed to a different deal. In most cases, contractors made more money (in terms of pay and immediate benefits) than their FTE counterparts. I know several people, and I’m sure that there are many more, who specifically chose not to pursue full-time employment because they preferred their compensation packages over that of full-time employees. They weren’t being cheated. They agreed to different terms, and Microsoft lived up to its obligations completely.

It was only afterwards, when some saw their FTE counterparts getting rich from the stock growth of the 1990s that they decided that Microsoft should pay them more.

Court decisions were going against Microsoft and they settled the case in December of 2000 for about $100 million.

While some benefit from this, mostly lawyers, many suffer. For example, as a result of this case, Microsoft has changed its Human Resources policies with respect to contractors. Contractors cannot work longer than one year on an assignment. After an assignment, contractors must take a 100 day break away from Microsoft before engaging in any other assignments. Many other distinctions, like exclusion from morale events without overcoming burdensome hurdles, have made life worse for contractors and the overall morale of the teams they are on.

A few years ago, I was notified that I had been identified as a member of the class in the settlement and was asked to confirm the facts of my employment at Microsoft around 1999. I contacted Microsoft’s legal department expressing my disagreement with the lawsuit and to find out whether my choosing to not participate would help Microsoft keep some of the wrongly taken money. I had a nice exchange with a Microsoft lawyer who explained to me that Microsoft had already made its settlement payment and that it would not receive refunds for rejected awards. He thought that if I refused payment, that would only increase the amount received by those who accepted payment. Neither of us could see how that result would serve justice; in fact it would probably do the opposite by rewarding and encouraging those who approved of this sort of thing. Furthermore, Microsoft was not arranging any mechanism for the voluntary return of funds from the settlement (I suspect that they correctly judged that the bad press from such an arrangement would outweigh the benefit of the retrieved money). He did thank me for my support and acknowledged how frustrating the entire case had been.

So here I am with money I don’t think I earned. My first emotional instinct is to give it away; perhaps to the Cato Institute or the Institute For Justice or some other group that will promote the principles of free markets, private property, and contracts that were trashed by this case.

On the other hand, logically, I don’t think it makes sense. The money is now mine, legally and morally. If I could push a button to reverse the entire case (or the portion that benefited me) I would do it. But I can’t. So, I shouldn’t feel guilty about having the money. And, just as I shouldn’t consider sunk costs when deciding what to do with my assets in the future, I don’t think I should let my emotional feelings about the origin of this money affect how I should use it. I think I should treat it just as I would a bonus from my employer. I might give some of it away (because I’m now in a better financial position to do so), but only if I think that’s the best way to further my chosen values; not because I feel like reacting emotionally.

But, on a meta-level, I’m glad that I feel a bit uncomfortable about getting this money. It tells me that I have a strong sense of justice.

I wish the judges in this case had one.


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