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"