Microsoft battles decision on “joint employer” status

Fred WhittleseyCompensation Expert Witness Blog, Conscious Compensation: The Impact Compensation Blog, Pay and Performance: The Compensation Blog


Back in March 2015 I blogged about Microsoft’s new policy of requiring its US suppliers to provide their employees with 15 days of paid time off. I took issue with this approach to changing compensation practices in the name of “corporate social responsibility” as I don’t agree that a company should be telling its suppliers how to compensate their employees.  Yes, a company should have supply chain standards (e.g., no child slave labor) but the paid time off policy is simplistic and not well thought-through.

Now there is a new twist:  Microsoft is supporting an effort to reverse a National Labor Relations Board ruling that could lead to Microsoft being considered a “joint employer” of those suppliers’ employees.  Why is this a problem?  Because then a unionized employer could solicit Microsoft employees to join the union.

This is a complex and legally technical issue but I think it highlights that companies need to give a  little more thought and due diligence before adopting policies or practices that may get them CSR points – a practice similar to greenwashing – but have unintended consequences.

The Seattle area has become ground zero for companies implementing “responsible” compensation practices – the $70,000 minimum wage at Gravity Payments; the group of companies that have signed the White House “Equal Pay Pledge” including Amazon and Expedia; paid parental leave at Moz and others. The rush to be cool, competitive, and responsible is creating a great transfer of value from company shareholders to employees, and in some cases the shareholders of suppliers to the suppliers’ employees. The latter may be a bit much.  The former may not be sustainable.