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ASA: Contingent Worker Assignment Limits

Staffing firm clients’ concerns about benefits liability largely stem from litigation during the 1990s involving Microsoft Corp. (Vizcaino v. Microsoft).

In the late 1980s, Microsoft used independent contractors to do the same kind of work done by its direct employees. After the Internal Revenue Service ordered the workers to be reclassified as employees, Microsoft hired many of them directly or engaged them through staffing firms.

The workers later sued Microsoft, claiming to be common-law employees of Microsoft and entitled to the company’s benefits-retroactively. After years of litigation, the court concluded that they were common-law employees of Microsoft and entitled to the company’s stock purchase benefits. Microsoft settled the case in 2000 for $97 million.

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