Honestly that doesn't sound all that bad. They even chose temporary staffing agencies that already paid benefits. The lawsuit was basically over whether recurring temp workers could utilize the stock-option plans that permanent employees got. The worst part about this case is that it went on for 8 years before Microsoft settled it.

In January, the U.S. Supreme Court rejected Microsoft's appeal of a lower-court ruling that as many as 10,000 workers hired on a temporary basis should have been allowed to take part in the stock-option plan that the company offers its permanent employees. The case was filed by the Seattle law firm of Bendich, Stobaugh and Strong PC.

Pilla noted that Microsoft changed its policies for temporary employees earlier this year. It now has a 12-month limit on temporary employment, after which workers have to take a 100-day hiatus, Pilla said, adding that the average length of a temporary employee's time at Microsoft has dropped to just 10 months. The company also tries to use temporary employment agencies that already pay benefits to the workers.

Despite the settlement, Pilla reiterated Microsoft's contention that it didn't set a formal policy aimed at keeping temporary workers on as virtually permanent employees in order to avoid having to pay benefits and Social Security taxes.

"I don't think you can look at it as a broad policy," he said. "A lot of times, it just happened. [Temporary workers] moved from project to project." But he added that Microsoft executives eventually "did recognize that" and moved to institute the new requirements for temporary workers.