Monday, February 23rd 2009
Microsoft Severance Pay Blunder Costs Mostly Unemployed Ex-Employees
In what could come as a rude shock to certain Microsoft ex-employees, the individuals the company fired as part of its recent workforce reduction schemes, as reactions to a deteriorating world economy, the company wants portions of the money it gave as severance packages back, which it finds as an overpayment caused due to an administrative error. As part of Microsoft's penny-saving schemes, the company sought to axe as many as 5,000 jobs, 1,400 of which were lost in this month alone.
Microsoft's human-resources department admitted to the error when working out and issuing severance packages to some ex-employees. If the ex-employees weren't unfortunate enough already for having lost their jobs, Microsoft now demands the portion of its severance package that is overpaid, back from its recipients. In a letter sent to all liable individuals, the company expresses sincere apologies as it asks for the overpayment to be returned. The letter is posted on Scribd and can be read here. Microsoft gives its ex-employees, most of whom are unemployed at the moment, 14 days to return the money.
UPDATE (02/24): In a fresh report by MSNBC, Microsoft admits to the fact that administrative glitches caused it to pay more severance than intended to some laid-off employees, and the company intended to ask for the overpaid amount back through private communication. The plan took a sour turn with a copy of the letter surfaced on the internet, turning out to be embarrassing for the company. Lisa Brummel, senior VP for human resources, in an interview to MSNBC shared some figures: only 25 out of the 1,400 recently laid-off employees were sent the letter, the degree of discrepancies measured around US $4,000~5,000 per odd payment. The executive reportedly called most of the 25 laid-off employees Monday to personally tell them Microsoft would not seek repayment after all.
Sources:
TechCrunch, MSNBC
Microsoft's human-resources department admitted to the error when working out and issuing severance packages to some ex-employees. If the ex-employees weren't unfortunate enough already for having lost their jobs, Microsoft now demands the portion of its severance package that is overpaid, back from its recipients. In a letter sent to all liable individuals, the company expresses sincere apologies as it asks for the overpayment to be returned. The letter is posted on Scribd and can be read here. Microsoft gives its ex-employees, most of whom are unemployed at the moment, 14 days to return the money.
UPDATE (02/24): In a fresh report by MSNBC, Microsoft admits to the fact that administrative glitches caused it to pay more severance than intended to some laid-off employees, and the company intended to ask for the overpaid amount back through private communication. The plan took a sour turn with a copy of the letter surfaced on the internet, turning out to be embarrassing for the company. Lisa Brummel, senior VP for human resources, in an interview to MSNBC shared some figures: only 25 out of the 1,400 recently laid-off employees were sent the letter, the degree of discrepancies measured around US $4,000~5,000 per odd payment. The executive reportedly called most of the 25 laid-off employees Monday to personally tell them Microsoft would not seek repayment after all.
40 Comments on Microsoft Severance Pay Blunder Costs Mostly Unemployed Ex-Employees
It doesn't always work like that. Besides, if an employee did turn out to be underpaid, MS would be under legal obligation to pay them their full share in full - as per whatever agreement the employees had signed during their stay, or signed onto when hired.
As to a company being able to reclaim any overpayments, it's largely based upon the state in which the company resides. For most states, though, the company is entitled to - when it comes to actual payroll earnings . . . severance packages can be viewed entirelly different as they are not typically something that's part of the employees "wages and benefits." It's a buy out, the company is making the employees and offer if they were to go ahead and resign . . . instead of the forthcoming inevitable pink slip with no pay.
Some states can and do view such severance packages as part of an employee's earnings and income, but not contractual. In which case, any overpay on part of the company, and it could end up being declared a "business loss" should it ever go to court, and the company is still out of their money. Again, it entirelly depends on state law.
Either way, MS screwed up. They took the right action by sending the former employees a letter notifying them of the mistake, and asking for repayment (notice in the letter, MS hasn't demanded the amount to be returned, simply requested). It's in the employees hands, they can more than likely work something out with MS - either payment in full, monthly amounts, or even negotiate the amount owed . . . failure of the employee to respond at all, and it could possibly end up in court.
Plain and simple - both sides are wrong, and both sides are right.
If I was the guy getting the extra money I wouldn't want to give it back.
But if I was the owner in the company I would want it back. its greed
but most likely if I was the owner or whatever and was as big a MS I would just let them keep it.
But I'm not going to turn around and say MS is wrong tho.
If there is no legal obligation for the employee to have to return any overpayments, then there is no legal obligation for Microsoft to return the underpayments either. And even still, most here don't care about the legal aspect. What I was talking about were the people say "Microsoft screwed up, now they have to live with it". Well yeah, they did, so I guess those 20 employees that got underpaid are screwed by most people here's logic.
Microsoft admitted it was accidental and not criminal so, if Microsoft were to take it to court now, they wouldn't stand a chance unless they have substantial evidence that proves it was criminal.
If it were criminal, (someone was funnelling excess funds away to eventually have those people pay it back, for instance) the law would be on Microsoft's side.
Just because one entity writes a check and gives it to another entity, that doesn't mean the first entity can't legally get the money back if the check was an error. Checks are not legally binding contracts, they are only representations of money used to transfer money from one entity to another. There are exceptions to this. A check can be used as legally binding if "Final Payment" or "Payment in Full" etc. is writen in the memo line. If the party cashes the check with such phrases writen on them, then it is considered that the party cashing the check is in agreement with it. Again, this is something that varies greatly from state to state though.
There are plenty of legal statutes stating that an overpayment may be collected by the employer, of course they vary from state to state. Indiana Code 22-2-6-4 covers the what rules the employer has to follow to deduct the money from the employee's pay. Clearly giving legal statute that overpayments can be collected by the employer. I'm sure other states have similar laws governing this. In any event, the employee must return any overpayment, regardless of state, as long as the overpayment was caught and the employee was notified in a timely manner(again what constitutes a timely manner varies from state to state, but in this situation they were notified in under 10 days, which would be considered a timely manner in any state). Yes, the employee can try to fight it, but in the end the company is entitled to sue the person, and the company would win in any US court.
And how quickly they look like a bunch of cheap idiots in one move, for $125,000? Lol big time fail.
repost ;)
Try being a little less uncouth in how you present your statements. It's something that seems to come up occasionally based upon how you respond to others.I didn't say there wouldn't be any legal obligation for the ex-employees to return the funds . . . or didn't you read [/i]my[/i] post? It entirelly depends upon the state legistalture . . . and last I checked, I know absolutely squat about WA state law.
Otherwise, the money that MS owes to the ex-employees that were underpaid - MS would be under federal mandated law to pay them the amount that is owed.
Although most here don't seem to care about any legal aspect, that's aside the point as there is definitely a legal aspect involved.
We're beyond any moral obligations here, though. If the ex-employees that were over payed don't want to pay MS, that's their deal. MS has already taken the proper course of action by informing the former employees of the mistake, and requesting the payment to be returned, and that the former employees can contact MS to work things out. If the former employees don't return the money, and MS decides to take them to court for it - MS is already on better ground than they would be.
If a former employee doesn't feel they're entitled to repaying the full amount, they're more than willing to contact MS and negotiate the situation as well.
If its an HR error, then its a different story.