Last week the Ninth Circuit Court of Appeals in San Francisco ruled in favor of the workers, saying employees who work at Microsoft through temp agencies are entitled to company stock options. The decision is worth an estimated $15 to $20 million for at least 10,000 former temps. If the ruling survives a Microsoft appeal, it will be a major precedent-setting dent in a mainstay of the new economy: temp contracting, the system that allows companies to avoid paying health insurance, benefits, and pensions by classifying longtime workers as part-timers or temps.
What's interesting about this major kick to corporate America is that it was executed without any formal union participation. In fact, with the exception of 1997's Teamster victory for part-timers at UPS, nearly all the major challenges to the temp economy have been the result of government action or litigation. The Department of Labor, for instance, recently awarded temp employees at Time Warner back pay for benefits. And the IRS found that temp agencies couldn't legally award pensions since they were not employers.
So, last week's dramatic decision raises an interesting question. At a time when unionization of the workforce is at a record low--a mere 15 percent, according to the Bureau of Labor Statistics, as opposed to 33 percent in the early 1960s--are labor issues of the new economy better suited to litigation than to organizing?
Here in Seattle, the firm that brought the Microsoft suit has been winning settlements for temp workers for the last decade, while the first organization to attempt to organize high-tech temps at Microsoft, WashTech, got off the ground about a year ago. In 1989, Bendich, Strong, and Stobaugh won pensions for "intermittent workers" at Seattle Center, some of whom had worked there for 17 years. More recently, they wrangled a nice settlement out of King County for having a separate set of part-time employees in inspection and water-quality testing. And they're currently working to get part-time community college instructors their due.
It was primarily the law firm's heads-up efforts--not those of WashTech or organized labor in general--that stopped a temp-industry-sponsored bill in Congress last June. Creating a new legal definition, the bill identified one's employer as "whoever cuts the paycheck." This definition would have prevented permatemps from making benefit claims at the place they actually work, and it had the potential of chiseling into a host of other workplace rights accrued over the last century.
Attorney David Stobaugh says, "The AFL-CIO could see it wasn't a good bill, but they didn't have a lot of practical experience in how it would be used." Stobaugh's firm laid out $200,000 for a lobbyist and sank the bill. WashTech leaders visited D.C. to lobby against the bill, but as Stobaugh says, "they were there once; I was there for six weeks."
The question that looms: When it comes to nuances of the new economy, are unions out of the loop and irrelevant?
Not surprisingly, Gretchen Donart, a spokeswoman for Seattle Union Now, an organizing arm of the AFL-CIO, thinks unions are very relevant. "Part of the pressure on Microsoft, and the reason this case was won, is because there's a union out there biting at their heels. WashTech did a tremendous job."
WashTech, however, acknowledges that they weren't ringleaders in the Microsoft case. In fact, the case was in litigation for five years before WashTech was even founded. They do think, however, that WashTech had an impact. WashTech spokesperson Mike Blain says their use of the term "permatemp" has sharpened the issue, roped in media attention, and added octane to the cause.
More importantly, he points out that WashTech had a direct influence on the proceedings: "When Microsoft tried to add new contract language earlier this year requiring that temps forgo any future benefit the lawsuit might award them, we publicized it and a judge found out about it. Because of us, Microsoft had to come in and explain that in the Vizicaino case."
Blain says there are a host of temping booby traps that litigation alone won't change. He points out, for example, that companies like Microsoft can unilaterally decide that a worker has to switch temp agencies, funneling workers to firms that cost Microsoft less but have the worst benefit packages. Temp firms can also make workers sign non-compete contracts, meaning workers can't shop around for better deals. Blain says only the power that comes with union numbers can combat these problems.
Getting unions on track, however, is going to take some work. Blain laments, "Labor isn't real aware of the issues being argued in the Microsoft case. For the most part it hasn't done a very good job at all to reach out to contingent workers, contractors, or part-timers, even though they've got lots of workplace issues and concerns."