Tens of thousands of Microsoft contract workers will get the option to take paid parental leave under a new policy announced by the company this morning for its U.S. suppliers, bringing their benefits closer to those of the tech giant’s direct employees.
The expanded policy, modeled after a mandatory parental leave law passed by the Washington state legislature last year, applies to Microsoft’s U.S. suppliers who perform “substantial work” for the company and have more than 50 employees. It requires those companies to offer a minimum of 12 weeks of paid time off to their employees after the birth or adoption of a child. The companies are also required to pay two-thirds of workers’ wages, up to $1,000 a week.
Microsoft has been offering paid parental leave for years to its direct employees, who number 131,000 worldwide, including 78,000 in the United States. Microsoft does not disclose the number of people employed by third-party suppliers to do work for the company through contract assignments and vendor agreements, but this large “shadow workforce” has long been a key labor source for Microsoft and other tech companies, allowing them to shift the liabilities and responsibilities of employment to outside firms.
Increasingly, however, the relationship between tech companies and contract workers has come under scrutiny. A recent Bloomberg report explored the aftermath of a labor dispute between a Microsoft contract firm and a team of workers who unionized.
Microsoft, which was embroiled in a landmark “permatemp” lawsuit in the late 1990s, revised its policy again in 2015 to require a six-month break for many contract workers. The same year, the company announced plans to require suppliers to provide 15 days of paid leave.
“That was a first step, and we view this as a second step,” said Dev Stahlkopf, Microsoft general counsel and corporate vice president, referring to the new parental leave policy in an interview with GeekWire this week. “It’s a good opportunity for us to be able to focus our resources on doing business with companies that share similar core values with us, around increasing workforce inclusion and providing support to employees and families.”
Washington passed one of the most generous parental leave laws in the nation last year, requiring companies to give 12 weeks of paid time off for new moms and dads. Funded through a payroll tax, with exemptions for small companies with under 50 employees, the law will take effect in 2020.
Microsoft said it didn’t want to wait that long and wanted to cover the bulk of its U.S. vendors, not just Washington workers.
The company plans to immediately begin working with vendors to amend their contracts to include paid parental leave. Microsoft gave a timeline of about a year to fully implement the new leave policy, which would mean a head start of only a couple months on the state law, but Stahlkopf said she anticipates it won’t take that long.
The United States is one of only a handful of countries without a national paid parental leave policy. That has forced states and companies to lead the way. As younger generations grow up, parental leave policies have become a perk at top tech companies, with giants like Amazon, Facebook and Netflix putting in place generous packages in recent years.
At least for Microsoft, Stahlkopf said, the leave policies aren’t about recruiting.
“When we took a step back and took a look at the problems, we saw that only 13 percent of private sector workers receive paid parental leave, and we felt like it was an area where we could make a difference,” she said.