If upheld, the decision could redirect millions of dollars to Microsoft temps hired through outside agencies.
The ruling, issued by a panel from the Ninth Circuit U.S. Court of Court of Appeals, overturned lower court decisions that had drastically limited the number of employees eligible to qualify for benefits.
Yesterday's ruling holds that contract employees who perform the same tasks as regular workers are entitled to participate in Microsoft's discount stock purchase plan, said Stephen Strong, an attorney for the plaintiffs in the case.
The ruling could cost Microsoft between $15 million and $20 million, estimated Rob Enderle, an analyst at Giga Information Group, as the decision means contract employees who have worked at Microsoft since 1986 are eligible to be compensated.
Microsoft's reliance on contract employees has fluctuated throughout the years, but a lawyer for the plaintiffs in the case estimated that the company now employs about 6,000 temporary workers.
"We're very pleased with the court's decision," said Strong, the plaintiffs attorney at Bendich, Stobaugh & Strong. "Microsoft has as of today several thousand long-term employees that it pretends are employees of agencies. Microsoft can't pretend they're employees of the agency simply by filling out pieces of paper."
Microsoft spokesman Dan Leach said the company's attorneys were still reviewing the opinion. He added, however, that the use of contract employees was important to the computer industry.
"Microsoft and many other companies in the industry continue to believe that it's important to have the flexibility that contingent employment provides," he said, adding that temporary employees frequently receive greater flexibility and higher wages.
The ruling may extend to any business that uses contract employees, Giga Information's Enderle said.
"This is a ruling about how you treat temporary classes of employees across the nation," said Enderle. "Once you have a ruling like this it applies to all temporary employees."
Temporary workers first sued Microsoft in 1992, alleging that its refusal to pay them the same benefits as regular employees violated the law. Contract employees filed a second class-action lawsuit last year. An earlier court ruling required Microsoft to allow contract employees to participate in a program that sells stock at a 15-percent discount. A separate opinion had limited the number of employees to about 500.
In January, Microsoft dropped contract language requiring barring employees from benefiting from the suits, after the federal judge hearing the case sharply rebuked Microsoft in court.