Ex-Microsoft workers do not have to return severance pay

Update: SeattlePI has confirmed that Microsoft will allow laid off employees to keep the extra paid severance

Microsoft sent letters on February 18th to some of the 1,400 workers it laid off on January 22, instructing them that due to an accounting error, they will need to pay back some of the money they received in the next 14 days. The company has confirmed the letter's authenticity to Seattle PI, but did not specify the number of people affected. It also mentioned that former employees who received smaller severances than they were owed would receive the difference.

Gregg Keizer of Computer World reports that D.Jill Pugh, a Seattle-based employment attorney who reviewed several of the Microsoft severance agreements said today that Microsoft's decision to ask some of the 1,400 people it laid off last month to return part of their severance packages is bad PR and if the error wasn't obvious to employees when they signed their agreements, they might not be required to pay back the money. Pugh has said that she has never seen such a case in her 15 years of experience dealing with employment law other than dealing with the overpayment issues for people while they're still employed, but never on a severance package.

Pugh added that the law is not clear about whether Microsoft can force the laid-off workers to return part of the severance and may depend on whether or not it was obvious to the former employees that there was an error. Most of the salaried employees who were laid off often don't know exactly what they make in a week minus taxes. Severance is usually termed as a number of weeks, such as 12 weeks or 8 weeks. If they thought they were going to get $5,000 in severance but actually got $20000, then the error is obvious.

Pugh recommends that ex-Microsoft employees can contact a lawyer if they're asked to return part of their severance packages and can argue it is Microsoft's error if the amount is under $2,000.

Now Microsoft is backtracking on the decision that requires laid off workers to pay back money. On Monday, Microsoft human resources chief Lisa Brummel said to CNET news

"I thought it didn't make sense for us to continue on the path we were on. 25 workers were overpaid and about 20 underpaid. I have spoken or left messages to most of the affected. Those overpaid received, on average, about $4,000 or $5,000 in extra pay. It makes sense for companies to recover money if it makes an accounting error which is an extraordinary situation. It actually happened to me (overpay) and I wrote the company a check. It may have happened to others"

Report a problem with article
Previous Story

Riccitello: Recession is a "blessing"

Next Story

Exclusive: Some more Snow Leopard screenshots and info

20 Comments

Commenting is disabled on this article.

What kind of precedent does this set for the future? What about all the people that only got what they were intended to receive in the first place? I don't think I would have handled it the same way given that any bad press this stirred would be forgotten in a few days.

I once got more than i should. One work day worth of cash was added to my severance pay. Company did not ask me to refund the money.

I tend to think that when someone makes a mistake he must live with it. If MS gave 2 or 3 times the money they wanted to give as severance pay then i can understand MS wants it back. But if MS gave just a little too much them it's MS mistake so live with it ex-employees probably already took care of this money anyway.

I bet they wouldn't have let them keep the $$$ if the letter asking them to pay back wouldn't have leaked on the internets.

Probbly, but not because of the reason you think.

It's very unlikely that the person that mailed the level is in a position of power to determine Microsoft could eat that kind of loss $ wise. Posting the story online probably raised a red flag for someone high enough in the company to say "wait...we're not going to do that."

I think it was pretty bad of MS to ask for the money back but I guess I understand it. It's a real ****ty thing to be laid off, get severance pay and then have to pay some back.

Lets hope microsoft isn't in that bad of shape, capital expenses / losses like this aren't why the employees lost their jobs in the first place in sound businesses (which Microsoft seems to be, even if it's hitting some hard times). Long term recurring expenses/losses in profitability are why people lose jobs.

They can afford to let them keep it. It's not like they are on the verge of bankruptcy. I'm sure it was just poor oversight that the original letters even got sent out.

I knew this was going to happen and stated so in the previous thread. Companies do stupid stuff like this all the time and then retract it later. Like what Facebook changed in their TOS and then later took it back....

Well, good for Microsoft for caring this much in trying times to do the right thing. Granted, it stinks that they had to lay some people off but times are tough and companies are here to make money. It's called survival.

It's a costly error but to their image and not their wallet. It's a shame but these things happen.

As usual, dissing Microsoft to look cool.
People make mistakes and **** happens.
Accounting errors are prone to happen. Happened to me once.

@ZQA -

Can you please back up your statement with substance, fact or reason, please? Just posting comments like that really is bordering on trolling/flamebait, which is against our rules.

CalumJR, there is no substance? Nor reason, it is my opinion and nothing more, I still have an opinion, yes? [< snipped > - CalumJR]