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Microsoft will require its suppliers to give their employees who do work for the Redmond company at least 15 days of paid leave each year — a new policy that could have a major impact on the outside vendors that collectively employ tens of thousands of Microsoft contract workers.

The policy, announced this morning, is putting a new twist on the national debate over paid sick leave, with Microsoft emerging as an example of how large companies have the potential to shape the course of the country as much or more than political leaders do. President Obama has been calling on Congress to pass a bill that would let U.S. workers earn up to seven days of paid sick leave annually.

Microsoft General Counsel Brad Smith
Microsoft General Counsel Brad Smith

“Over the past year there has been increasing debate about income inequality and the challenges facing working people and families,” said Microsoft general counsel Brad Smith in a post announcing the news. “While this is often discussed as a general topic, at times individuals have raised pertinent questions for companies in the tech sector, including Microsoft. This has led us to step back and think anew about the types of benefits policies we want to have with our suppliers.”

Supplier policies are no small issue at Microsoft, which relies on tens of thousands of “orange badge” workers provided by outside technology staffing companies, in many cases working alongside the “blue badge” employees who work directly for the company.

Smith this morning acknowledged that Microsoft’s new paid leave policy “may increase the costs for some of our suppliers.” He added, “We appreciate that this may ultimately result in increased costs for Microsoft, and we’ll put a process in place for addressing these issues with our suppliers.”

Microsoft’s policy will apply to suppliers with at least 50 employees in the U.S., requiring them to apply the paid leave to their workers who perform “substantial work” for Microsoft. The paid leave of 15 days will consist of 10 days of paid vacation and five days of paid sick leave, or 15 days of unrestricted paid time off.

The Redmond company’s own workers get 10 sick days and 15 to 25 vacation days, depending on tenure, according to the New York Times.

Paid leave is one of the issues raised by Microsoft contract workers who have been negotiating with vendor Lionbridge Technologies in an attempt to unionize. Philippe Boucher, a contractor worker and leader of the union push, noted this morning that Lionbridge has turned down paid leave provisions in their negotiations.

Boucher said in an email to GeekWire that it’s “gratifying” to see Microsoft moving in this direction, but there are many details to be worked out. Despite Microsoft’s assurances, he’s concerned that contractors may end up footing the bill in the form of reduced pay, and he also wishes that Microsoft would have consulted with contract workers as part of the process.

The Lionbridge employees have published a book and blog about their efforts. Microsoft’s Smith told the Seattle Times that the company has read what the contract workers have written, and it has influenced the company’s approach.

Microsoft last year instituted a new policy that requires more of its contract workers to take a six month break after doing 18 months of work for the company, a move that was seen as an effort by the company to reduce its reliance on workers supplied by outside vendors.

In making the announcement this morning, Smith cited studies showing the benefits of paid sick leave on employee health and happiness, including increases in retention and productivity, and reductions in health care costs and transmission of flu from one worker to another. He also cited studies showing that a lack of paid sick leave has a disproportionate impact on low-wage earners and minorities.

“Many of our suppliers already offer strong benefits packages for their employees, including paid time off,” Smith explained. “We don’t currently have data on how many do and how many do not provide paid time off, but our new policy will ensure that every supplier with 50 or more employees will do so for employees doing substantial work for Microsoft.”

Updated at 8:20 a.m. with info on unionization efforts.

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