On Saturday we published a letter sent out to some recently laid-off Microsoft employees explaining that they had been overpaid in severance – and that Microsoft wanted some of its money back. Something had clearly gone wrong during Microsoft’s first mass layoffs, as we began to receive more reports that ex-employees had gotten similar letters, and that some had actually been underpaid. One original tipster has detailed how he felt when he initially got the notice:
Right away I was angry because when I got my severance check, I immediately created a budget to stretch this out as long as possible. I know we’re in a recession now and I don’t know how long I’ll be unemployed. And now here comes this letter totally destroying the budget and on top of that, there’s no detailed information on how the error occurred, no details breaking down the severance pay.
Microsoft initially refused to provide any details on the incident, instead stating that it was a “private matter between the company and the affected people”. And then the news began to spread.
Since Saturday, well over 300 news outlets have covered the story. Many of them have deemed this to be a huge PR misstep, but it’s likely that Microsoft PR never even knew about the letter in the first place, and were only alerted to it after the fact. In any case, it’s clear that nobody ever considered how people would react if the letter leaked to the public.
Today Microsoft has announced that it will allow the former employees to keep any overcompensation they were sent (with overpayments averaging around $4,500), and that those who were under-compensated would be paid in full immediately:
Last week, 25 former Microsoft employees were informed that they were overpaid as a part of their severance payments from the company. This was a mistake on our part. We should have handled this situation in a more thoughtful manner. We are reaching out to those impacted to relay that we will not seek any payment from those individuals.
While there was some speculation that the issue could have been widespread (perhaps extending to many of the 1,400 employees laid off on January 22nd) only around forty five people in total (including 20 who were underpaid) were affected by the billing issue. Each of them is being personally contacted by Microsoft HR chief Lisa Brummel.
Wow. Way to go Microsoft.
“Microsoft error in your favor”. Sounds like the “Monopoly” game of Tech Stocks.
Ironical that not so long ago MS was a Monopoly.
It is a bad position to be in, and there is no good way to deal with what happened here. But I still think it is a double standard.
If Microsoft messed up and short changed some people they want extra money but Microsoft messes up and gives extra the people don’t want to give it back.
Personally I I get it from a PR standpoint, but I think it also shows just how self-centered people can be. Being bitter that you lost your job doesn’t give you the right to steal from Microsoft.
Just think if you are at a local store and they give you the wrong change and realize it right away and you just walk out. The cops will be coming for you. Again, it sucks for the ex-employees, but it my eyes it just makes them look bad not Microsoft.
Aren’t they prohibited legally from getting their money back? I was under the impression that once you pay a worker, it’s their money.
That about sums it up for me. There was discussion of the legal issues before, but in my mind this is on par with common thievery. To be honest, if I worked for M$ I’d be glad these people were given the boot, not exactly trustworthy.
The shareholders should be outraged that Microsoft caved to what amounts to PR blackmail.
The laid off workers were promised a fixed amount of severance – no more – no less.
Those who got less should be made whole. Those who got more should be compelled to give it back.
Wow, surprised to see so many comments now that its repealed defending Microsoft. Yesterday, when I read this story people were cheering for the ex-employee who posted the letter, and said Microsoft is in the wrong to ask for it back. Now, the people who want to keep their severance are “self-centered”, “not to be trusted” and committing “thievery”!?
First of all – do we know if Microsoft is claiming an error because the checks didn’t match the written agreed amount, or because they are now re-thinking the written agreed amount (they ARE Microsoft after all, everything needs at least a 2.0 after it to be considered usable)? We don’t know that.
Secondly, these people are now out of a job. If they want to keep a check that was sent to them as severance, they are ANYTHING but “self-centered” – they’re trying to plan on how to stretch that to provide for their lives and families!
There is a big difference in “thievery” and an “error in your favor.” The money already changed hands, it NO LONGER BELONGS to Microsoft, as they gave it away. They have no right to ask for it back, because they made an error.
If I give too much money to a friend for their birthday, I can’t ask for it back. If it was a mistake, that doesn’t make my friend a thief, or untrustworthy. It makes me bad at math. End of story.
So companies should not be held accountable for their mistakes? I’m not condoning thievery by any means but if you get a severance check in the mail or direct deposit for a specific amount, then you receive a letter in the mail demanding some of it back because of an overpayment but the letter is without any details explaining why and no calculations explaining how? You wouldn’t be at least a little upset about that?
Let’s be reasonable. Companies AND people should always be held accountable for their mistakes. It’s bad enough these layoffs are occuring as it is. When these people received their severance checks, as described above, they started planning for a budget based on those amounts.
If a company is going to screw up and pay some of their people more, then they deserve to lose their money. It’s not like this is an easy mistake to make, right? Just some simple math. How do you accidentally overpay someone? I think the whole thing is ridiculous and, because I hate money and how everyone is greedy for it, I think companies that make this mistake deserve to lose it.
each of them is being questioned to figure out if they leaked the memo
BS, there’s no way they can figure it out. Things like this get posted on the internet all the time on sites like http://f2bb.com – and regardless, it was a scanned image so no electronic trail.
“In any case, it’s clear that nobody ever considered how people would react if the letter leaked to the public.”
What a retarded statement.
Really, you know, and this is clear. No one at MS ever thought about this? That’s a huge assumption you’ve got there.
lets backtrack as fast possible to prevent a pr nightmare
“affected by the billing issue”
Wait! What? M$ puts severance pay through a billing system?
Glad to see extra cash going to (ex) employees. WOW! One of the only positive headlines found on TechCrunch in ‘09. Good start!
I said it yesterday:
Get rid of WhitePlains. Buy PeopleSoft….or Siebel….or just go down to the closest Fry’s and get QuickBooks.
Ooops, sorry! Fry’s is having a fire sale on all those Western Digital HDD’s that the Sales VP bought to finance hos escapades to Vegas and the monthly Ferrari payment.
Go to Circuit City to get your QuickBooks…
Oooops! My bad again!
I think most of us heard this 12 hours ago. You lose, TC!
Waaah! Big f’ing deal! with m$ on your resume, you should ‘technically’ be able to get another job anywhere.. well, maybe!…
Who cares. MSFT holders are selling off anyway.
They’re not going to piss anybody off worse by doing this or downgrade their share price?
It’s other people’s money.
TC quells last.fm fire storm, issues apology
hi
Where else would money that didn’t belong to someone not be returned?
Can you imagine a bank saying “Sorry we made a mistake and deposited an extra $5000 in your account. But, since there was so much negative publicity about us aksing for our money back, we’ll let you keep it.”
This is Bizzaro world.
You have a big gold mine. You had to fire a few of your friends. Only 5 of the gold coins in the mine are yours.
You overpaid your friends 10 gold coins each.
Do you let them keep it?
How much do you want to bet that this “leak” was engineered from inside Microsoft ???
Only a nerd would know what they did. People that read TC and Digg are such suckers. Highly intelligent people don’t make such careless errors without catching them immediately.
I am guessing this whole piece of theater was contrived. And good job to them.
@Chris: if “People that read TC and Digg are such suckers”, what does that make people who leave comments?
Perhaps Hypocrites?
These people were not customers of Microsoft… they were employees who spent part of their lives to build value for the company. I’m sure Microsoft had no issue with allowing/requiring them to work more than the 8 hours that they were paid for each day.
And did you hear what their HR head, Lisa Brummel, said… that it makes sense for companies to recover money if it makes an accounting error and saying the company actually overpaid her at one point during her long tenure. “It actually happened to me and I wrote the company a check,” she said. “It may have happened to others.”
Are you kidding me! Wrong! Receiving an overpayment for an executive bonus is not the same thing as what happened to these people. Unless you were laid off through no fault of your own, had limited savings, and wondered how you were going to stretch your severance to pay your rent or mortgage and feed your family while you worried about finding a job in this economy before your money ran out, then YOU HAVE NO IDEA what their situation is like and IT DID NOT HAPPEN TO YOU!
You have this type of accounting accident when it’s one person.
When you’re compensating hundreds of people you QA the numbers before running the checks and direct deposits.
If you think this was an accident, I do not agree with you.
Miki Mullor and Daniel Feussner and anti-freeze comes to mind.
I love the quoted scenario – I got fired, they gave me some money, I made a budget and then they wanted some back. As if this all happens on the fly. As if the terms of the severance were not discussed or communicated in any other way except by the deposit that showed up in your account? So MS and the severed employees had no understanding as to what the amount would be. That was all decided at the time of and by the amount that MS direct deposited – yea right.
People knew what they were supposed to get and any of them that can balance a checkbook knew that they erroneously got more than what was previously discussed.
You know this makes me think the ones who got laid off deserved to get laid off.
Microsoft could really do without employees displaying this level of lack of professionalism.
Employees can really do without HR/Management displaying this level of lack of professionalism. Bugs in code are coders’s responsiblity. Bugs in severance packages are whose?
Said employees could really do without working at Microsoft. And, Microsoft could without HRpersonnael and payroll software displaying this level of lack of professionalism.
There is a formula for calculating how much you receive based on your level, length of service, unpaid vacation, etc. When you factor in income tax withholding, a difference in $4000-$5000 is not something that really stands out as an error.
And these people were not fired. Their positions were eliminated. The offer of a severance package is done in the spirit of recognizing the contribution and commitment that the employee has made to the company and providing them with something to help them out while they transition. Likewise, when you leave a company on your own volition, you typically give them at least two weeks notice and often help in transitioning someone else into your position. It’s common courtesy.
Maybe these concepts are beyond you. There are some things you just don’t do… like placing a donation into the collection plate and then going back after the service and asking the pastor for some of the money back because you think you put too much in. You know what… you can afford it and it’s going to help people who are in need. This is the same thing. It was shameful for Microsoft to ask for the money back from these people. Absolutely shameful!
You actually think the management have shame?
OMFG are you naive. You don’t work in the software industry do you?
should be “has shame”, that was very balkie of me.
#1 Speaking as one that has gone through layoffs before. The exact dollar amount of the severance payment may not be disclosed in the initial paperwork. Most of the time the paperwork is generic fill in the blanks, where the dollar amounts are hand written and based on calculations that have been agreed upon between management and employee representative committees or union representatives if not solely decided by management in companies where the employees have absolutely no representation and the numbers that are presented are always underscored with the disclaimer that these are strictly initial figures only and that your actual compensation may not match the initial calculations. I have had severance payments that were greater than the initial figures, and it was not an accounting error.
#2 The severance package numbers that are presented are those that are derived from the same payment processing company that is issuing the checks. If they made a mistake entering the parameters for the severance payments, caught and corrected their mistake after some payments had been issued, and distributed the shortfall across the last few payments to balance the funding account. It is completely conceivable that Microsoft and the employees being laid off would not have been aware of the mistakes until the fund was audited. Don’t laugh, just remember Enron and understand that accounting can do some great numbers juggling to make everything look great up front.
#3 The severance package form is only one of several dozen forms that employees that have been laid off are being presented with and being asked to sign. Most layoffs have employees being presented with their severance package, at best on a single page if not being drawn out over several pages, 401 or similar retirement investment fund options, employee stock options, life, medical, and health insurance options, legal discloser’s, proprietary information disclosures, non-comp exiting forms, etc…
So the numbers not exactly matching is easy to understand as most of the employees getting laid off would have understood that the numbers on their severance were initial numbers, and a multi-billion dollar company wanting to get the 100G’s or so that was over paid is understandable, but I think that the payment processing company that made the mistake should be the ones to be held responsible and from the looks of the letter it is the payment processing company that is trying to get the over payments back in Microsoft’s name. While times are tough I would think that Microsoft would have known the kind of negative publicity that asking laid off employees to return a portion of their severance payment would cause and would have simply accepted losing that amount as part of their maintain good public relations budget. Especially with the advertising budget that MS has set to keep Vista going until they get it replaced (and you would have thought that MS would have learned its lesson with ME).
Microsoft goes ebonics and says my bad
Although it kind of sucks that the people that didn’t get over compensated are stuck with the money they got. Probably everyone should get the same. I’m sure a lawsuit is coming. What if they laid off a maintenance guy and he got four thousand dollars more that say the guy who helped developed vista. Nevermind now that I think about it I don’t see a problem. j/k
The guy who developed Vista should be FINED four-thousand dollars for developing garbage.
Only four-thousand?
Of course MS had to do this, from a PR standpoint. They really had no choice, so it didn’t shock anyone who’s familiar with how big companies need to “spin” things.
At least former MS employees got severance. Rearden Commerce laid off its employees and didn’t give them a dime.
This is crazy! Microsoft of all companies??
I am a Microsoft supporter (I know I am in the minority) but I think this time Microsoft really fucked up in allowing people to keep the extra money. They showed they have no balls and bow to people’s pressure even when they have made a genuine mistake and are not asking for more than they are rightfully owed. This was a PR disaster only because it was Microsoft to mess up and got attacked; any other companies would have not received the same treatement.
Losing faith in Microsoft and the vox populi.
I think this response from Microsoft is not to please the laid off employees – the odd 1400, or the affected 45. It is to retain the faith of the remaining 70,000 that Microsoft is a good organization that cares about its employees and ex-employees.
If you look it in that sense, this move seems perfectly right.
Hmmm. My husband’s position was cut a week ago from Sypris Electronics here in Florida. They were so generous with the severance compensation.
I wonder if they are going to ask for the “1/2″ week back?
Accounting errors happen all the time. Just because it’s Microsoft doesn’t mean it can’t happen to them.
There’s bound to be some issues when it’s the first time in history that Microsoft had layoffs. Maybe other companies have more practice and don’t make n00b mistakes.
M$ as always fucking up everybody, even their own employees.
Wow, great job microsoft! I can’t believe they made this mistake, but good for the people that got to keep some extra cash…
I’m sure they added a couple accounting/payroll folks to the pinkslip list after that screwup!
Good.This is one of the rare occasions when sensationalized journalism (ahemm.. techcrunch) can help
eFF M$ and eFF all managers dumping people in the street that they don’t like. Companies effing employees out the door while hiring from the other door. Seems like the good old days of are back.
Time for some officespace like come uppance.