Microsoft Lets FIred Employees Keep Severance Pay

In January, Microsoft laid off about 1400 employees - the first layoff in its history.  Like most humane companies in layoff situations, Microsoft paid a severance to the departing employees.  On Friday, February 13, 2009, Microsoft sent letters to about 25 of the employees claiming it overpaid severance and asked for some of the severance back.  Apparently, Miscrosoft short changed about 20 employees and overpaid 25 employees between $4,000 - $5,000 each.  

Word got out that Microsoft asked its former employees to return some of the severance pay.  Microsoft went through this effort to collect $100,000 - $125,000 from the employees it fired.  Realizing the idiocy of its decision, on Monday, February 23, 2009, Microsoft reversed its position and magnanimously decided to let its former staff to keep the severance pay.  You can't buy good public relations like that!

I would be curious to see what Microsoft's legal position would have been.  Typically severance pay is accompanied by a separation agreement that includes among other things, a release of the employer and an agreement to continue some agreements like confidentiality and non-competes.  The agreements also specify the amount to be paid in severance.  I don't know what agreements Microsoft offered, but they would be hard pressed to ask for the money back after an agreement was reached.