Microsoft Corp. has agreed to a $14.4 million settlement to resolve allegations of discrimination and retaliation against employees who took legally protected leave, including parental and disability leave. The California Civil Rights Department announced the proposed settlement on Wednesday, marking the end of a multi-year investigation into the tech giant's employment practices.
The investigation, initiated in 2020, found that Microsoft employees who took leave for pregnancy, disability, or to care for a new baby or sick family member, faced adverse consequences upon their return to work. These included lower bonuses, unfavorable performance reviews, and reduced eligibility for merit pay increases and promotions. The department noted that these practices disproportionately affected women and people with disabilities.
"Microsoft workers who use or will use protected leave are disproportionately women and people with disabilities," the California Civil Rights Department stated. "Microsoft's challenged policies and practices also have a discriminatory adverse impact based on sex and disability that Microsoft cannot justify based on business necessity."
The consent decree, which awaits approval by a state court in Santa Clara County, where Microsoft has an office, outlines the steps the company must take to prevent future discrimination. These measures include updated training for managers and oversight by an external consultant to ensure compliance with the new policies.
Kevin Kish, director of the California Civil Rights Department, commended Microsoft for its willingness to address the issue. "We applaud Microsoft for coming to the table and agreeing to make the changes necessary to protect workers in California," Kish said in a statement.
Despite agreeing to the settlement, Microsoft maintains that the allegations are inaccurate. A company spokesperson said, "Microsoft is committed to an environment that empowers our employees to take leave when needed and provides the flexibility and support necessary for them to thrive professionally and personally. While we believe the agency's allegations are inaccurate, we will continue to listen, learn, and support our employees."
The bulk of the settlement funds-$14.2 million-will be distributed to affected employees. Those eligible include employees who worked at Microsoft from May 13, 2017, to the date the court approves the settlement and who took at least one leave protected under state or federal law. Each eligible employee will receive a base payment of $1,500, with additional amounts based on factors such as salary and length of employment.
Microsoft's global workforce numbers around 221,000 employees, with nearly 7,000 based in California. The state civil rights agency has not provided an estimate of how many workers could receive payments under the settlement.
The allegations have put a spotlight on Microsoft's broader efforts to address issues of harassment and discrimination within the company. Under CEO Satya Nadella, Microsoft has sought to diversify its leadership and become more responsive to such issues. The percentage of women at the partner, executive, director, and manager levels has increased in recent years, from 27.6% in 2019 to 31.2% in 2023, according to the company's latest diversity report.
This settlement is part of a broader context of employee dissatisfaction and claims of unfair treatment at Microsoft. In 2022, following a shareholder vote, the company agreed to revise its sexual harassment and gender discrimination policies after an external report highlighted deficiencies in handling complaints.
As part of the settlement agreement, Microsoft will implement additional training for managers and human resources staff. They will be instructed not to consider time taken for protected leave when making decisions about employee performance and impact. APTMetrics, an external consultancy, will monitor Microsoft's compliance with these new policies.
