Microsoft settles claims in California over employee time-off punishment.

• Microsoft has agreed to pay $14.4 million to settle allegations that the company mistreated California employees who took legally protected time off.
• Most of the settlement money will go to affected employees.
• If a judge approves the proposed settlement, both managers and human-resources workers will receive training.

The company is settling a case in California for $14.4 million over allegations that it retaliated against employees who took legally protected time off.

On Wednesday, California's Civil Rights Department announced a proposed settlement for workers who took parental leave, family care-taking leave or disability leave from 2017 to the present. After approval by a state judge, almost all of the money will be distributed to these workers who choose to participate in the settlement.

The agency stated that Microsoft's policies and practices that challenge workers who use or will use protected leave disproportionately affect women and people with disabilities, resulting in a discriminatory impact on sex and disability that Microsoft cannot justify based on business necessity.

The complaint alleges that Microsoft fails to take sufficient measures to prevent managers from considering protected leave when evaluating an employee's "impact," which is a crucial factor in determining annual bonuses, promotions, stock awards, and merit increases.

The complaint alleges that Microsoft, located in Redmond, Washington, has approximately 6,700 employees in California out of its global workforce of 221,000.

Microsoft didn't immediately provide a comment.

Microsoft has under CEO Satya Nadella sought to diversify its upper ranks and become more responsive to issues related to harassment and discrimination.

The percentage of women in leadership positions at Microsoft has risen from 27.6% in 2019 to 31.2% in 2023, as stated in the company's latest diversity report.

After an outside group found issues in Microsoft's handling of sexual harassment and gender discrimination complaints, the company announced in 2022 that it would revise its rules following a shareholder vote.

According to the California complaint, employees have reported feeling worried about retaliation after requesting protected leave. However, the proposed settlement states that Microsoft disputes the agency's claims.

Microsoft will provide training to managers and human-resources employees in California on bonuses and merit increases, and instruct them not to consider time off for protected leave when making "impact" decisions. A consultant, APTMetrics, will monitor compliance.

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