Vizcaino v. Microsoft
In Vizcaino v. Microsoft , No. 94-35770 (9th Cir.Oct. 3, 1996)the U.S. Court of Appeals for the Ninth Circuit finds that a class of certain employees who had been characterized as independent contractors by Microsoft Corporation were improperly denied participation in the company’s 401(k) and employee stock ownership plans. In reaching this conclusion the court relied upon the express language of the plan documents, the legal doctrine of construing certain ambiguous written instruments against the drafter and the nature of the relationship between the plaintiffs and Microsoft. One judge dissented and a request for rehearing by the entire Ninth Circuiten banc is likely. The decision illustrates the difficulties employment law faces in deciphering the employment relationship and determining the particular rights of workers in an ever changing environment. As employers increasingly turn to the “contingent workforce” of part-time employees and independent contractors to reduce wages and save benefit costs, they run a greater risk of being held retroactively liable to affected workers who successfully challenge their exclusion from benefits accorded regular employees. Still, the Vizcaino v. Microsoft decision contains language that suggests Microsoft might have prevailed if stronger language had been used in the controlling benefit plans. Employers need to carefully structure their relationships with independent contractors and classes of employees denied participation in benefits granted other employees to ensure that these exclusions will be upheld when challenged.