Microsoft Has New Weapons in The Talent War Between Big Tech

The software giant is making several changes to attract and retain employees.

Tech giants such as Microsoft are in a bidding war for talent as pressure from employees have resulted in non-competes being overturned, greater pay transparency and more enforcement on sexual harassment and discrimination claims.

Software engineers and other employees are seeking more transformational changes at tech companies that go beyond salary increases and unlimited vacation, resulting in more accountability from management.

Less Non-Compete Agreements

Microsoft ( (MSFT) – Get Microsoft Corporation Report), which is headquartered in Redmond, Washington, began a series of changes in their policies in June, including some that were a direct response to state labor laws changing and enforcing more responsibility from the companies to comply.

Non-compete laws have long been a thorn for employees who have sought to move to other tech companies or start their own companies but were forced to resign and typically not work for six months to a year. 

The state of Washington passed a law in 2019 that banned non-compete agreements for workers who earned under $100,000. But the loophole in the law meant that Microsoft and other tech companies could still use these clauses for more senior software engineers whose salaries exceeded that threshold.

In June, Microsoft opted to eliminate non-compete clauses in the U.S. except for senior management or those at the “partner” level in order to attract and retain highly skilled tech employees. Only employees at that level such as vice presidents, general managers and other executives with higher rankings must still comply with non-compete clauses.

The company said it has not filed a lawsuit to enforce a non-compete clause since Satya Nadella became CEO, Microsoft President Brad Smith said in an interview with GeekWire last week at his office in Redmond, Washington.

“We’ve got something now that is, perhaps more than anything else, right for the times,” he said. “For this time, for this decade, I think this is the right approach.”

Pay Transparency

Smith did not comment on why non-compete clauses were not also revoked for higher levels of management and only said, “I think this was an important step. I never, on any of these issues, look at a step we take and say that’s the last step we’ll ever take. We’ll see. I think this was the right step at the right time.”

Increasing pay transparency was another move made by Microsoft recently to attract employees and to be in compliance with a new state law. The software company said it would list the salary range for job listings, which also is in response to a Washington state law requiring them by Jan. 1, 2023.

“And I think if you want to succeed as a company, you’re going to have to change, at least we’re going to have to change if we’re going to succeed in recruiting and retaining what we hope will be the most creative and talented workforce in the tech sector,” he said.

Sexual Harassment and Discrimination Policies Under Scrutiny

Microsoft said it will also commit to undergoing a civil rights audit of the company’s workforce policies next year by a third party and hired an outside firm to examine its sexual harassment and gender discrimination policies in response to a shareholder proposal that received 78% of votes.

The company said it would provide more transparency and information about sexual harassment cases in response to allegations that Microsoft co-founder Bill Gates sent messages to a female employee that were “inappropriate” in 2007. The proposal came from investment firm Arjuna Capital that said it is “a champion of workplace concerns for minorities and women.”

Microsoft hired Washington, D.C. law firm Arent Fox to evaluate its policies and practices and to “benchmark us against other companies.” A final report should be ready by early fall, Smith said.

Another policy change is that Microsoft will not require non-disclosure clauses in settlement and separation agreements with employees in the U.S. any longer. The previous clause stopped employees from revealing allegations of misconduct. Washington state passed a law on this practice and it became effective in June.


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