THE GOVERNMENT'S antitrust case against Microsoft isn't the only lawsuit forcing the Redmond software giant into a corner. Last May, you'll remember, the U.S. Court of Appeals ruled that permatemps were entitled to Microsoft stock options ("Temporary Victory," May 27). While Microsoft is making a long-shot appeal to the Supreme Court, behind the scenes the company seems to be acknowledging defeat on the temp issue. According to an internal memo, Microsoft is currently drawing up a strategy to convert its estimated 6,000 virtual positions into full-fledged Microsoft jobs. The strategy, known simply as "The Plan," was outed by Bendich, Stobaugh & Strong -- the law firm that won the stock options case.

Microsoft has good reason to rethink its temp policy. First of all, the company is facing a second Bendich, Stobaugh & Strong suit, which contends that temps are entitled to the same health-care benefits as regular employees. However, according to "The Plan," there's an even graver threat looming: WashTech, the scrappy pro-union group that was founded by two former permatemps in 1998 to organize fellow temps.

"Why make massive conversions?" the Microsoft memo asks rhetorically. Bullet-point number one answers the question: "WashTech negative messaging -- creating an us vs. them. Ripe for unionization." For an industry that has been infamously impenetrable to unionization, the acknowledgment by the world's largest software company that temps -- a cornerstone of the high-tech business -- provide a window for organized labor is a bona-fide bombshell.

"Microsoft has got a problem," says Bendich's Policy Director, David West. "A P.R. problem. A union problem."

Traditionally, union organizers have had zero success with high-tech companies. Interestingly enough, at an industry standard-bearer like Microsoft, where colossal stock options are capable of obliterating union leanings, the fact that there's a foothold for organized labor is making Microsoft jump quicker than you can say monopoly. "Converting long-term temps and then retaining them is a good strategy," the memo says, in an about-face that contradicts years of reliance on long-term "contingent" workers. The plan, according to internal documents culled by WashTech, is to convert 500 positions per quarter.

WashTech itself is something of a union-sponsored experiment -- operating on a yearly $175,000 grant from Washington, D.C.-based Communications Workers of America. The three-person staff has drummed up about 240 dues-paying members at $11 per month. There are about 6,000 permatemps at Microsoft, who make on average between $13 and $22 per hour. WashTech is the first to admit that Microsoft temps aren't Indonesian Nike workers. Their beefs with Microsoft, however, are legitimate. WashTech complains that temp agencies offer sub-par benefit packages when compared to employee benefit packages, that Microsoft dictates which temp agency the workers must go through, and that thanks to a recent controversy about secret performance-review files, temps don't have the right to see their employee records.

WashTech organizer Mike Blain says the big push for temp conversion at Microsoft started during the summer. "Basically what they have told us is that they are not going to have any people at the company as 'temps' who have been here for a year or more after June 2000," one Microsoft manager told WashTech, confirming the strategy that was outlined in the "workforce planning" documents reviewed by WashTech.

"We think the move to convert a large number of contractors to full-time workers is a response to the work WashTech is doing," Blain says. "We've shown how Microsoft's current labor practices are creating an environment that is conducive to unionizing."

Microsoft spokesman Dan Leach says he's not familiar with the memo, but adds, "The issue of unionization is between employee and employer; and in this case, the employer is the contingent staff company," not Microsoft.

The irony of Microsoft's conversion plan is that it may render WashTech's nascent union movement unnecessary. "If Microsoft all of a sudden converts all of its long-term temps into full-time workers, we're not going to complain," says Blain. "If they're doing the right thing, that's a victory for workers in the industry."

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