Microsoft

----- Forwarded by Maureen McVicker/NA/Enron on 01/04/2001 09:46 AM -----

Ann M Schmidt
01/04/2001 09:32 AM

To: Maureen McVicker/NA/Enron@Enron
cc:
Subject: Microsoft

Bias Suit Against Microsoft Aims at `Flat' Workplace Hierarchies
By Yochi J. Dreazen and Jess Bravin
Staff Reporters of The Wall Street Journal

01/04/2001
The Wall Street Journal
A10
(Copyright © 2001, Dow Jones & Company, Inc.)

The lawyers pursuing a racial discrimination lawsuit against Microsoft Corp.
are gearing up to put merit pay and other cherished tenets of the New Economy
workplace on trial before both a jury and the court of public opinion.
The suit, which was filed yesterday in federal court in Washington, D.C.,
seeks class-action status on behalf of hundreds of current and former black
employees of the Redmond, Wash., software giant. The plaintiffs, a group of
seven current and former Microsoft employees, accuse the company of racial
discrimination with regard to promotions and compensation, and also allege
that Microsoft wrongfully terminated some of its black employees. The suit
asks for at least $5 billion of compensatory and punitive damages.
"They have a plantation-type mentality when it comes to the treatment of
African-American employees at the company," said Willie Gary, the
high-profile plaintiffs' attorney bringing the suit, who also is involved in
a similar case against Coca-Cola Co. "It borders on corporate slavery."
Microsoft Chief Executive Steve Ballmer said he couldn't comment on the
specifics of the suit, but said, "We have a fairly strong track record of not
tolerating discrimination in any of our employment practices."
The 66-page complaint takes issue with otherwise ordinary interactions among
Microsoft employees, in contrast with some recent discrimination suits
against other big corporations that featured accusations of abusive language
toward black employees and of racist office displays, including nooses and
swastikas.
The suit alleges that some of the most widely replicated aspects of a New
Economy workplace -- "flat" corporate hierarchies where workers can bypass
managers and merit pay that isn't tied to an employee's seniority -- allowed
Microsoft to systematically discriminate against its African-American
employees.
The suit amends an existing action filed on behalf of Rahn Jackson, an
eight-year veteran of Microsoft's Washington, D.C., office who had led a team
of employees selling software to the U.S. military. Mr. Jackson claims that
despite receiving solid scores on performance reviews, he repeatedly was
passed over for promotions that went to white employees. Mr. Jackson has
since left Microsoft, and now handles corporate sales for one of the
company's biggest competitors, Sun Microsystems Inc., of Palo Alto, Calif.
The case could foreshadow a wave of similar claims against other
high-technology companies, especially if the sector sheds thousands of
workers amid the slowing economy.
John C. Fox, who heads the employment-law practice at Palo Alto's Fenwick &
West, said his law firm has spent weeks readying layoff plans for Silicon
Valley companies, which are preparing for a major round of cuts slated for
Monday. He declined to name the companies.
But whenever there are layoffs, lawsuits inevitably follow, Mr. Fox said.
"There will be a lot of discrimination claims. You can bet your bottom dollar
on that," he said. He predicted, though, that because there are relatively
few minorities working in Silicon Valley, most discrimination claims will
come from white male workers more than 40 years old -- who are protected by
the Age Discrimination in Employment Act.
The Jackson suit against Microsoft focuses on the fact that at many
companies, including Microsoft, managers are asked to grade their employees,
with the scores used in awarding promotions, stock options and pay raises.
Many younger employees cherish such systems, which allow skilled but
relatively inexperienced workers to get paid more and rise faster than they
would have under a traditional seniority system. The subjective nature of
such evaluations, however, could permit managers to discriminate against
employees because of their race (or age or sex), as the plaintiffs in the
Microsoft case allege.
Indeed, Mr. Jackson said in an interview that he and other black employees
were being paid less than a third as much as comparably situated white
employees and received fewer stock options. Microsoft denies black employees
were routinely paid less than their white counterparts, though it refused to
specifically address the suit, saying personnel matters are confidential.
The suit also highlights the potential for controversy that exists when
companies enact "flat" hierarchies designed to allow junior employees to
freely interact with senior managers as a way to increase productivity and
tear down barriers between workers. Mr. Jackson's suit, for instance, accuses
Microsoft of fostering a hostile work environment by allowing a junior white
employee to publicly challenge and defy him, and to bypass him in the
office's formal chain of command.
Microsoft's Mr. Ballmer, however, insisted his company has "worked very hard
to promote minority and women employees," despite having to contend with a
general shortage of engineering talent in the software industry. Microsoft
has invested more than $100 million in initiatives to stimulate interest in
science and technology among women and minorities, he noted.
---
Rebecca Buckman contributed to this article.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.

Business/Financial Desk; Section C
TECHNOLOGY
New Bias Lawsuit Is Filed Against Microsoft
By The New York Times

01/04/2001
The New York Times
Page 4, Column 3
c. 2001 New York Times Company

WASHINGTON, Jan. 3 -- Seven former and current employees of the Microsoft
Corporation filed a lawsuit today contending that the company had engaged in
racial discrimination in its employment practices, and seeking certification
as a class action on behalf of all former and current black Microsoft
employees.
The suit, filed in federal district court here, builds on a discrimination
suit brought in June by Rahn D. Jackson, a former account executive for
Microsoft. Mr. Jackson's complaint was refiled today to include the six other
plaiontiffs.
Mr. Jackson said today at a news conference here that he had raised his
concerns with Microsoft before filing his suit, but that he received little
response.
''We really didn't want to have to be here today,'' he said.
The plaintiffs are four former employees from Microsoft's office in the
District of Columbia and two former and one current employee at its
headquarters in Redmond, Wash.
The case is scheduled to be heard by Judge Thomas Penfield Jackson, who
presided over the government's antitrust case against Microsoft and ordered
the company to be split into two parts. Microsoft, which is appealing, has
argued that Judge Jackson committed substantive errors in the antitrust case.
Deborah Willingham, vice president for human resources at Microsoft, said the
company was ''100 percent committed to diversity.'' She declined to comment
on the specific complaint because she had not reviewed it.
Willie E. Gary, a lawyer for the plaintiffs, said at the news conference that
Microsoft discriminated against black employees in evaluations, compensation,
promotions and termination.
''There are glass ceilings and glass walls in place for African- Americans at
Microsoft,'' he said.
Mr. Gary, who won a bias lawsuit against the Walt Disney Company last year,
also represents four plaintiffs in a pending discrimination suit against the
Coca-Cola Company.
Mr. Gary presented employment figures that he said supported the complaint.
In 1999, 2.6 percent of the company's employees were black, Mr. Gary said,
and of the company's managers, just 1.6 percent were black. Mr. Gary said
that he gathered the figures by speaking to Microsoft employees and from
internal company documents.
Ms. Willingham said that ''Microsoft has a zero-tolerance policy toward
discrimination in the workplace.'' She added that, ''We take any allegations
of discrimination very seriously, and immediately investigate any concern
that is raised.''
A company spokeswoman said that 2.7 percent of Microsoft's domestic work
force of 27,249 was black and that in the last three years, there had been an
81 percent increase in the number of black employees. The percentage of all
minority employees at the company has risen from 16.8 percent in 1997 to
about 22 percent of the domestic work force today, she said.
This is not the only lawsuit contending racial bias at Microsoft. In October,
Monique Donaldson, a former program manager for Microsoft, filed a lawsuit
against the company claiming racial and gender bias; that lawsuit is pending
in federal district court in Seattle.
And Peter Browne, who had been Microsoft's highest-ranking black executive
before leaving the company in September, filed a discrimination lawsuit
shortly after his departure.

Photo: Rahn Jackson is one of the plaintiffs in a suit against Microsoft.
(Associated Press)

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.