----- Forwarded by Maureen McVicker/NA/Enron on 01/04/2001 09:46 AM -----

	Ann M Schmidt
	01/04/2001 09:32 AM
		 
		 To: Maureen McVicker/NA/Enron@Enron
		 cc: 
		 Subject: Microsoft


Bias Suit Against Microsoft Aims at `Flat' Workplace Hierarchies
By Yochi J. Dreazen and Jess Bravin
Staff Reporters of The Wall Street Journal

01/04/2001
The Wall Street Journal
A10
(Copyright (c) 2001, Dow Jones & Company, Inc.)

The lawyers pursuing a racial discrimination lawsuit against Microsoft Corp. 
are gearing up to put merit pay and other cherished tenets of the New Economy 
workplace on trial before both a jury and the court of public opinion. 
The suit, which was filed yesterday in federal court in Washington, D.C., 
seeks class-action status on behalf of hundreds of current and former black 
employees of the Redmond, Wash., software giant. The plaintiffs, a group of 
seven current and former Microsoft employees, accuse the company of racial 
discrimination with regard to promotions and compensation, and also allege 
that Microsoft wrongfully terminated some of its black employees. The suit 
asks for at least $5 billion of compensatory and punitive damages.
"They have a plantation-type mentality when it comes to the treatment of 
African-American employees at the company," said Willie Gary, the 
high-profile plaintiffs' attorney bringing the suit, who also is involved in 
a similar case against Coca-Cola Co. "It borders on corporate slavery." 
Microsoft Chief Executive Steve Ballmer said he couldn't comment on the 
specifics of the suit, but said, "We have a fairly strong track record of not 
tolerating discrimination in any of our employment practices." 
The 66-page complaint takes issue with otherwise ordinary interactions among 
Microsoft employees, in contrast with some recent discrimination suits 
against other big corporations that featured accusations of abusive language 
toward black employees and of racist office displays, including nooses and 
swastikas. 
The suit alleges that some of the most widely replicated aspects of a New 
Economy workplace -- "flat" corporate hierarchies where workers can bypass 
managers and merit pay that isn't tied to an employee's seniority -- allowed 
Microsoft to systematically discriminate against its African-American 
employees. 
The suit amends an existing action filed on behalf of Rahn Jackson, an 
eight-year veteran of Microsoft's Washington, D.C., office who had led a team 
of employees selling software to the U.S. military. Mr. Jackson claims that 
despite receiving solid scores on performance reviews, he repeatedly was 
passed over for promotions that went to white employees. Mr. Jackson has 
since left Microsoft, and now handles corporate sales for one of the 
company's biggest competitors, Sun Microsystems Inc., of Palo Alto, Calif. 
The case could foreshadow a wave of similar claims against other 
high-technology companies, especially if the sector sheds thousands of 
workers amid the slowing economy. 
John C. Fox, who heads the employment-law practice at Palo Alto's Fenwick & 
West, said his law firm has spent weeks readying layoff plans for Silicon 
Valley companies, which are preparing for a major round of cuts slated for 
Monday. He declined to name the companies. 
But whenever there are layoffs, lawsuits inevitably follow, Mr. Fox said. 
"There will be a lot of discrimination claims. You can bet your bottom dollar 
on that," he said. He predicted, though, that because there are relatively 
few minorities working in Silicon Valley, most discrimination claims will 
come from white male workers more than 40 years old -- who are protected by 
the Age Discrimination in Employment Act. 
The Jackson suit against Microsoft focuses on the fact that at many 
companies, including Microsoft, managers are asked to grade their employees, 
with the scores used in awarding promotions, stock options and pay raises. 
Many younger employees cherish such systems, which allow skilled but 
relatively inexperienced workers to get paid more and rise faster than they 
would have under a traditional seniority system. The subjective nature of 
such evaluations, however, could permit managers to discriminate against 
employees because of their race (or age or sex), as the plaintiffs in the 
Microsoft case allege. 
Indeed, Mr. Jackson said in an interview that he and other black employees 
were being paid less than a third as much as comparably situated white 
employees and received fewer stock options. Microsoft denies black employees 
were routinely paid less than their white counterparts, though it refused to 
specifically address the suit, saying personnel matters are confidential. 
The suit also highlights the potential for controversy that exists when 
companies enact "flat" hierarchies designed to allow junior employees to 
freely interact with senior managers as a way to increase productivity and 
tear down barriers between workers. Mr. Jackson's suit, for instance, accuses 
Microsoft of fostering a hostile work environment by allowing a junior white 
employee to publicly challenge and defy him, and to bypass him in the 
office's formal chain of command. 
Microsoft's Mr. Ballmer, however, insisted his company has "worked very hard 
to promote minority and women employees," despite having to contend with a 
general shortage of engineering talent in the software industry. Microsoft 
has invested more than $100 million in initiatives to stimulate interest in 
science and technology among women and minorities, he noted. 
--- 
Rebecca Buckman contributed to this article.

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved. 


Business/Financial Desk; Section C
TECHNOLOGY
New Bias Lawsuit Is Filed Against Microsoft
By The New York Times

01/04/2001
The New York Times
Page 4, Column 3
c. 2001 New York Times Company

WASHINGTON, Jan. 3 -- Seven former and current employees of the Microsoft 
Corporation filed a lawsuit today contending that the company had engaged in 
racial discrimination in its employment practices, and seeking certification 
as a class action on behalf of all former and current black Microsoft 
employees. 
The suit, filed in federal district court here, builds on a discrimination 
suit brought in June by Rahn D. Jackson, a former account executive for 
Microsoft. Mr. Jackson's complaint was refiled today to include the six other 
plaiontiffs.
Mr. Jackson said today at a news conference here that he had raised his 
concerns with Microsoft before filing his suit, but that he received little 
response. 
''We really didn't want to have to be here today,'' he said. 
The plaintiffs are four former employees from Microsoft's office in the 
District of Columbia and two former and one current employee at its 
headquarters in Redmond, Wash. 
The case is scheduled to be heard by Judge Thomas Penfield Jackson, who 
presided over the government's antitrust case against Microsoft and ordered 
the company to be split into two parts. Microsoft, which is appealing, has 
argued that Judge Jackson committed substantive errors in the antitrust case. 
Deborah Willingham, vice president for human resources at Microsoft, said the 
company was ''100 percent committed to diversity.'' She declined to comment 
on the specific complaint because she had not reviewed it. 
Willie E. Gary, a lawyer for the plaintiffs, said at the news conference that 
Microsoft discriminated against black employees in evaluations, compensation, 
promotions and termination. 
''There are glass ceilings and glass walls in place for African- Americans at 
Microsoft,'' he said. 
Mr. Gary, who won a bias lawsuit against the Walt Disney Company last year, 
also represents four plaintiffs in a pending discrimination suit against the 
Coca-Cola Company. 
Mr. Gary presented employment figures that he said supported the complaint. 
In 1999, 2.6 percent of the company's employees were black, Mr. Gary said, 
and of the company's managers, just 1.6 percent were black. Mr. Gary said 
that he gathered the figures by speaking to Microsoft employees and from 
internal company documents. 
Ms. Willingham said that ''Microsoft has a zero-tolerance policy toward 
discrimination in the workplace.'' She added that, ''We take any allegations 
of discrimination very seriously, and immediately investigate any concern 
that is raised.'' 
A company spokeswoman said that 2.7 percent of Microsoft's domestic work 
force of 27,249 was black and that in the last three years, there had been an 
81 percent increase in the number of black employees. The percentage of all 
minority employees at the company has risen from 16.8 percent in 1997 to 
about 22 percent of the domestic work force today, she said. 
This is not the only lawsuit contending racial bias at Microsoft. In October, 
Monique Donaldson, a former program manager for Microsoft, filed a lawsuit 
against the company claiming racial and gender bias; that lawsuit is pending 
in federal district court in Seattle. 
And Peter Browne, who had been Microsoft's highest-ranking black executive 
before leaving the company in September, filed a discrimination lawsuit 
shortly after his departure.


Photo: Rahn Jackson is one of the plaintiffs in a suit against Microsoft. 
(Associated Press) 

Copyright , 2000 Dow Jones & Company, Inc. All Rights Reserved.