Signage is displayed in the exhibition hall during the Microsoft Inspire partner conference at the Verizon Center in Washington, D.C., U.S. (Photographer: Andrew Harrer/Bloomberg)

Microsoft Intern’s Rape Claim Highlights Struggle to Combat Sex Discrimination

(Bloomberg) -- The woman was an intern when her Microsoft colleagues took her out for drinks in Seattle’s Capitol Hill neighborhood. She lived miles away in Redmond, the home to Microsoft’s suburban campus, so after a night of drinking, she crashed with a male intern and his friend who lived in a group house nearby. She fell asleep in the basement, while the other intern and his friend played guitar.

But during the night, her lawyer would later write to Microsoft, the male intern sexually assaulted her—or “forcibly penetrated her while she was sleeping,” according to her lawyer’s letter. When she woke, naked and with just flashes of memory, she rushed to the hospital for a rape exam and later filed a police report. She reported the incident to her supervisor at Microsoft as well as the company’s human resources department, which promised a prompt investigation.

In the meantime, she was required to keep working alongside the man. When she discussed getting a restraining order with Microsoft, HR told her if she wanted one, she’d need to change teams, her lawyer wrote. She liked the work and her boss, so she stayed put for the rest of the summer. Microsoft later offered her a full-time job.

And despite the allegations against him, Microsoft also hired her accused rapist.

The company assured her she wouldn’t be located near the man, nor would they have to work together, her lawyer wrote. She took the job and signed a one-year lease for housing, even though she was still waiting to hear about the investigation.

The intern told her story in a February 2014 settlement letter to Microsoft, part of a trove of internal files unsealed Nov. 29 in a two-year-old class action lawsuit alleging gender discrimination at Microsoft. The documents shed new light on the company’s struggle to deal with reports of harassment and on internal debates over whether women were treated fairly. While personal information such as names, dates and departments are largely redacted, the confidential files detail harassment complaints made by company veterans, incidents investigated by human resources, and internal skepticism over the equal pay data Microsoft publicizes. That the stories are seeing the light of day is remarkable, given the numerous legal hurdles many companies use to keep employee complaints under wraps.

A Microsoft representative said in a statement that the company works “hard to create a safe work environment for every employee.” The company said that while the intern’s alleged incident didn’t occur at work, it took her claims “very seriously,” and its security and investigations team met with her. “We encouraged her to take her complaint to law enforcement, and offered to connect her with additional resources such as victim advocacy groups,” the spokesperson said, adding that Microsoft also took “practical steps to address concerns she had about her safety.”

The personal stories, along with expert reports, have emerged in a case brought by three female employees in 2015 alleging systemic disparities in the pay and promotion of women in technical and engineering roles at Microsoft. As part of the court process to share evidence in the case, Microsoft had to give the women’s lawyers at Lieff Cabraser Heimann & Bernstein LLP and Outten & Golden LLP more than 150,000 internal documents, including several allegations of harassment and assault, like the intern’s letter.

The current wave of sexual harassment allegations against influential companies and powerful men has prompted scrutiny on the legal tools that have limited how women can go public in cases like these. When employees are hired, their contracts increasingly include what are known as pre-dispute arbitration clauses, which say that employees can’t sue the company in court. When accusers resolve their complaints in private, through arbitration or a settlement, there usually is no public disclosure or record. And the terms of settlements regularly include non-disparagement clauses and non-disclosure agreements, which prevent employees from saying anything negative about the company or even acknowledging a settlement exists. For those cases that do make it to court, companies fight to keep the most damaging records sealed.

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“I don’t think companies are motivated to truly change their internal culture when there are issues until they are publicly held accountable,” says Erin Pulaski, an employment attorney at Rudy Exelrod Zieff & Lowe, the San Francisco law firm that represented Ellen Pao, a venture capitalist who brought a landmark gender-discrimination lawsuit against Kleiner Perkins Caufield & Byers. Pao lost the suit in 2015.

The Microsoft intern’s allegations are public—whether or not she wanted them to be—because of a rare confluence of events. While about two-thirds of workers at large employers have signed mandatory arbitration agreements, they are not standard at Microsoft. The plaintiffs requested Microsoft turn over individual complaints, and an NDA doesn’t necessarily prevent an employer from disclosing those documents in court, even if it would have prohibited a woman from telling her own story publicly. The letter on behalf of the former intern, for example, included a proposed settlement for severance, and in exchange offered “a full and complete mutual release.” Details about how things worked out for the intern weren’t included in the disclosures. Her attorney, Robin Williams Phillips, didn’t respond to several requests for comment, and a search of court records found no cases brought by Phillips against Microsoft. The company spokesperson said, “We don’t and we won’t allow non-disclosure agreements to become a tool to enable those who engage in such conduct to continue with this type of wrongdoing.”

This October, the women bringing the lawsuit filed a motion to have their class certified on behalf of more than 8,600 other women. They attached as evidence individual allegations, including the intern’s; some of Microsoft’s internal communications; and the plaintiffs’ own expert data analysis. The documents were originally sealed, but after the plaintiffs objected Microsoft allowed some of them to be unsealed and is still fighting over others.


Much of the dispute over what internal information the plaintiffs could have and disclose centered on an internal study of equal pay that Microsoft publicly touted. To mark Equal Pay Day in 2016, Microsoft published a blog post declaring that for every $1 paid to men at the company, women of the same job title and level were paid 99.7 cents. Not equal but pretty close, the company emphasized.

In court, though, Microsoft argued that it shouldn’t need to reveal the underlying data and communications about the study, saying it fell under various legal confidentiality rules. In June, a neutral arbiter—known as a special master—appointed by the judge for these types of disputes recommended that the company disclose more details to the plaintiffs. “Fundamental fairness,” the special master wrote, “suggests that Microsoft should not be allowed to publicly tout its favorable diversity data, including providing statistics on its success, and then claim the data and resulting method to reach its statistics are privileged.”

The documents recently unsealed by Microsoft include a deeply skeptical internal response to the software maker’s announcement on pay equality. Some of the documents indicate that the move backfired, generating a wave of employee concerns, indignation and even accusations the company wasn't taking the issue seriously.

Comments to Microsoft’s executive vice president of human resources, Kathleen Hogan, derided the study, pointing out that it ignored how women had a harder time progressing to higher-paid positions. “Without that data, I view this as a vanity metric,” one employee wrote. Another told Hogan: “While I understand the desire to focus on the positive when reporting numbers, I think it's virtually meaningless that people in the same level with the same job title have nearly equal salaries. The real disparities, as we know, are in hiring, promotion, leadership positions, and representation in non-traditional roles.”

There were other missteps that indicated the company was struggling with its approach to improving gender equality. In 2014, at a conference promoting women in technology, then-new Microsoft Chief Executive Officer Satya Nadella advised women not to directly ask for raises, but instead to keep silent and rely on the “karma” of hard work to reward them. Criticism was immediate, and Nadella swiftly apologized. The women filed their class action lawsuit the following year.

While he was saying sorry, Nadella also said equal pay wasn't enough if women didn't have opportunities to do equal work. But Microsoft is still fighting to keep its own data on diversity and gender equity private, as well as top-line numbers on harassment and discrimination complaints to HR and how they were resolved. It did agree to unseal statistical analyses, conducted by the plaintiffs’ experts, including one by Princeton University economics professor Henry Farber. Farber found that women in engineering and IT operations at Microsoft, through the first nine levels in the company hierarchy, were paid 8.6 percent less than their male peers.

“We have a strong commitment to building a diverse and inclusive workforce where all employees have the chance to succeed,” Microsoft said in its statement. “While we’ve made important progress over the years including increasing diverse representation and expanding training, we are constantly learning and working to improve. We’ve reviewed the plaintiffs’ claims and strongly disagree with the contentions in the case because data and other information is mischaracterized.”

Natasha Lamb, a managing partner at Microsoft investor Arjuna Capital, which has used shareholder proposals to push Microsoft and other companies to publicly disclose pay equity data, says there’s every reason for Microsoft to be more forthcoming, despite the potentially unflattering results.

“We have this society-wide gender gap, and compensation has been locked up in a black box,” she says. “Women think that they’re being underpaid, and so you need to prove that they’re not and that’s how you’re going to remain competitive and keep that female talent.”

Once she became a full-time employee, the intern discovered she’d be working in the same building as the man she said raped her, and later, after a reorganization, would need to be on the same team—a situation her lawyer called “alarming.” She stopped taking a Microsoft internal shuttle bus after seeing him try to take the same shuttle. When she later asked HR about their investigation, the letter says, she was told that because the police didn’t charge the man, Microsoft dropped the case. “It is unfathomable that Microsoft would hire [an] individual against whom a criminal complaint of rape had been made by a co-employee,” her lawyer wrote. An employer’s responsibility “to keep a safe, hostile-free work environment is not premised on whether a harasser can be criminally charged,” the lawyer said.

Police deem only about 5 percent of rape cases to be baseless, according to a 2015 analysis of federal data by the nonprofit investigative newsroom ProPublica, but many complaints don’t result in charges. Without a criminal case, an employer still must decide how to handle the accused. “Law enforcement did not ultimately file any charges,” the company spokesperson said. “Given this, and our own findings, we took the action we deemed appropriate related to the accused employee. We continued to work with the employee who raised the complaint to provide support.”

©2017 Bloomberg L.P.

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