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The Permatemps Contretemps – Fast Company – Daylen Thane

by on October 15, 2007

I start this article review by defining the words in the title: Permatemps is a word used to describe contract workers that stay at a company for longer than a year, and Contretemps means an inopportune situation or event, it can also mean “against time”. In this article, the author talks about the situation of Permatemps at Microsoft, but mostly, he focuses on their unhappiness.

Ron Lieber starts the article by talking about how Microsoft got in trouble with the IRS in 1989 because they employed independent contractors for a long period of time and didn’t withhold their taxes. This situation led Microsoft to ask the temporary workers to sign-up with temp agencies, and those agencies to withhold the taxes.

Microsoft thought that it had the right to employ contract workers as long as the contractors knew that their employment didn’t include benefits, nor were they guaranteed to a full-time offer after their contract assignment expired. Contractors would stay with Microsoft for a long time hoping that their contract would become a full time status, but this didn’t happen in many cases. As a result, their temp status became a constant unhappiness as they saw their coworkers (that were FTEs) get benefits and participation in company’s activities where they couldn’t join.

Furthermore, a group of permatemps started a class-action lawsuit against Microsoft, claiming that they worked at the company for years and didn’t receive the benefits that full time employees get. Because of this, Microsoft started a new policy establishing that after a contract worker works for a year, she/he must take 100 days off before starting on another assignment. On this matter, Ron says that “although Microsoft has grown and prospered [this article was written in July of 2000] the lawsuit has generated lots of bad publicity and has lowered the morale dramatically among the company’s temps, who have at times made up as much as 25% of Microsoft’s Seattle area-workforce. The temps may well end up as the beneficiaries of a lawsuit that awards them millions of dollars, but a judgment in their favor will have consequences too. Even if the workers do win the case, free agents may find themselves constrained in their ability to work on their own terms, and permatemps may still not land the full-time jobs that they want. Meanwhile, the courts have taken over the role of chief policy maker on matters that could not be settled by the talent market and by human-resources strategists.”

To further support his position, Ron interviews an “unwillingly full-time employee, an unwillingly permatemp, two aspiring permatemp union organizers, a permatemp agency creator, and the head of the temp workers at Microsoft.” Here are their sides of the story:
Silvia Moestl: was a full time employee at Microsoft who felt she wasn’t getting paid as much as her permatemp colleagues even though her skill set matched and even surpassed theirs. For her, the stock options she received (permatemps didn’t get stock options) wasn’t enough to keep her around as a FTE; so in the fall of 1995 she left Microsoft to become a free agent.
For the next four years she took different contract projects at Microsoft, and greatly increased her skill set. This was her opinion about the permatemps controversy: “Just because someone wants a full-time job doesn’t mean that person is going to get one. The market has ways of regulating situations like this. There are job opportunities elsewhere, and if people are unhappy, they should take advantage of those opportunities.”
The permatemp lawsuit had a strong impact on Silvia’s life after Microsoft started a new policy where contract workers/free agents have to take a 100 days break after working on a project for a year. Moestl said that “some large companies are trying to avoid hiring any contractors at all. And there are others who don’t want to risk giving a contractor longer projects to work on, because they’re afraid that they might be sued if contractors think that they’re doing full-time work for them. All of it directly affects my bottom line and my ability to choose the way that I want to work.”

Barbara Judd: worked for two years as a temporary worker making a financial software product for Microsoft. During the interview, she said: “The company made it clear to us that there were not guarantees that the project would succeed. But my take on temp work has always been that it’s a good way to prove yourself to an employer. Plus, it was a chance to work on a piece of software from the ground up. It’s always more exciting to build than it is to fix. I saw that job as a chance for me to be a pioneer.”
After a year working on this project, Barbara attended a meeting of the Institute of Management Accountants in Seattle and heard Greg Maffei speak. In those times, Greg was the chief financial officer at Microsoft, and when an audience member asked for his opinion on permatemps, he said: “we are very tough in hiring [full-time workers] in terms of standards, but we aren’t as tough on temps. So you find the quality of temps is not as good as the quality of the full time people.” This was very hard for Barbara to hear, and she felt personally attacked.
Not only were the opinions of high-ranked executives hurtful, but she also had to follow a series of rules that came with her temp status. For example, she was “not allowed to play on the Microsoft ball fields, get a free membership to a local gym, or join any of the employee-affinity groups. Badges that the company issues to temps are orange, rather than blue. And, on the Microsoft email system, an “A” is printed before the name of temps who are assigned through local staffing agencies – a designation that temps say makes their email opinions easier to dismiss. There’s more: temps can’t buy discounted software at the company store. In fact, they can’t buy it at all, for any price, even if they wrote the instructions inside the box.”
After two years of working at Microsoft, Barbara was given 48 hours to gather her belongings and leave the company when her project got canceled. For Microsoft, her job was never permanent, so she didn’t deserve full-time employees’ status and benefits.

Marcus Courtney and Mike Blain: are the founders of Washington Alliance of Technology Workers (WashTech: By creating this organization they attempted to “organize and represent the interests of workers who don’t want to be employees of any one company, or who are contract workers unable to secure a full-time position.” Ron talks in the article about the struggles the organization had to face to get members to join in. Courtney said during the interview: “those who are most unhappy tend to be temps who want full-time jobs but can’t get them, and those same temps are least likely to make waves and jeopardize their chances of getting those full-time jobs. Meanwhile, true temps are generally not joiners by nature. They have a strong sense of individual spirit, and none of them has ever encountered and organization like ours. The word ‘union’ comes with a certain amount of baggage for white-collar workers in general, and for individualist workers, in particular. So we try to get people interested in the issues that we’re working on without using that term to describe what we do.”

Peg Cheirrett: was the owner of WASSER Inc., a Seattle-based temp agency. She felt that Microsoft was who made her firm successful and profitable. “According to Cheirrett, 51, the true free agents who worked through WASSER enjoyed their work at Microsoft but often felt conflicted. ‘I recall one conversation with someone who was particularly mistrustful to me,’ she said. ‘The whole reason that he had gone independent in the first place was because he felt that agencies were exploitative and that they didn’t give anything back to workers. Working through an agency in order to do work for Microsoft, to him, was a loss of control, a loss of prestige.’”
Cheirrett sold her company in 1997, and she started “researching cutting-edge human resources policies and studying the Hollywood model of deploying independent professionals.” She said: “I can’t believe that I haven’t looked into this until now. That model could serve as an example of what to do in the tech world.”

Sharon Decker: was the director of contingent staffing when the article was written. “To Decker, Microsoft’s solution of sending its temps to staffing agencies was neither a grand strategy nor a nefarious plot. It was just a way of going about the company’s business. ‘To my knowledge, there was no ‘big decision’ where people sat in a room and said, ‘this is how we are going to staff the company, and this is why we’re going to do it.’ We’ve just always wanted to maintain flexibility and to avoid big fluctuations in the number of full-time workers.’”
Decker tried her best to change the company’s culture with respect to temp workers. However, there were some things she could not change, for example, “policies that would exclude temps from bowling nights or forbid them from buying software at the company store, those were generally set by Microsoft’s lawyers specifically to enable the courts to see a clear line between full-time employees and contract workers.”
Furthermore, Sharon was convinced that the company deserves more credit than what it gets for trying to please everyone: “we haven’t done a good enough job of telling people what we’re looking for and what we’re trying to do. We want temps to be in temporary assignments, and if it turns out that those assignments require long-term work, then we want to make those jobs permanent. We want people to choose to work for us and to like us – no matter what sort of career they’re thinking about. We’d like to think that we can offer the best of both worlds.”

My thoughts & opinion about this article:

From reading this article I highly believe that the author was biased against Microsoft hiring temps workers. I think his argument would have been stronger and more believable if he would have interview at least one permatemp who was happy (or at least more optimistic) with his work situation. It seems to me that most of the temp employees are unhappy because they aren’t hired as full time employees, so Microsoft can’t be that bad of a company to work for if they want to be FTEs so badly. Again, I am biased because I do believe that Microsoft is great (couldn’t be better actually) to its employees, as I experience it first hand (when it comes to benefits and employees activities and opportunities). I am not entirely sure my opinion is very valid because I am not objective; however, there are some points I’d like to make:
During the intro, the author talks about the permatemps winning millions of dollars in the lawsuit, but still losing since they still may not land the full-time jobs that they want. I think if they win millions of dollars, they probably have plenty of time and money to educate themselves further and develop the skill set needed to obtain that full-time job. It is very hard to feel sad for them after they won millions of dollars in a lawsuit that most likely ended up screwing hundreds of temp workers; since due to the lawsuit Microsoft was forced to change its rules regarding contractors.
When I read what Barbara said about how contract workers benefits are pretty much non-existent compared to FTEs, my first thought was: “but all those rules came after Microsoft got sued, and their lawyers had to establish these rules to differentiate FTEs from temps.”
I feel bad for the contract employees who really want a full-time position with Microsoft. It must be really hard to be treated as if you are not part of the company you are helping succeed; but they know about all these rules and differences before they join as temp workers, and they should be tough enough to handle them before they agree to join as a contractor. If they can’t handle them, their best course of action is to probably work on the skill set needed for them to join the company as full-time employees.

Additional Reading:

“Microsoft battles Permatemp Issue” by Jennifer Laabs on Workforce News Angle:
“Microsoft: separate and unequal treatment of its employees” by Lynne Bernabei on Journal of Employment Discrimination Law
“Microsoft gets tough with permatemps” by Paul Sweeny on Treasury and Risk Management:
“The new rules at work” by Doug Isenberg on Internet World:
“Permatemps want more, more, more” by Margaret Price on Treasury and Risk Management:
“Microsoft `Permatemp’ Claims Hit a New Delay” by Brier Dudley on Tribune Business News.
“Law Firm of Bendich, Stobaugh, and Strong Announces Microsoft Permatemp Settlement” PR Newswire. New York, Dec 12, 2000.

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