Microsoft to curb use of non-competes, drop NDAs from worker settlements, disclose salary ranges, launch civil rights audit

Microsoft CEO Satya Nadella has said repeatedly that he wants the “lived experience” of employees to match the company’s ideals. (GeekWire File Photo / Kevin Lisota)

Bending to employee sentiment and legislative mandate, Microsoft announced a series of reforms Wednesday that will curtail or end some of its most controversial workplace policies and practices.

  • The company says it will no longer include non-competition clauses in its U.S. employment agreements, and will remove these clauses from existing agreements. This applies to all employees except senior leaders.
  • Microsoft will no longer include non-disclosure clauses in settlement and separation agreements with U.S. workers that would prevent them from disclosing allegations of misconduct. A law targeting this practice takes effect this week in Washington state, where Microsoft is based.
  • The company will publicly disclose salary ranges in job posts in the U.S. starting in January 2023. This also coincides with the scheduled implementation of a new law requiring such disclosures in Washington state.
  • Microsoft says it will commission and publish findings from a third-party civil rights audit, to be completed in its upcoming fiscal year, scrutinizing workforce policies and practices that impact diversity and inclusion.

Amazon in April announced that it would launch a civil rights audit led by former U.S. Attorney General Loretta Lynch.

Non-compete clauses, limiting the ability of employees to go to work for competitors, were narrowed to apply only to employees who make more than $100,000 per year in Washington state under a law enacted in 2019.

Microsoft says its new policy against non-compete agreements does not apply to leaders at the “partner” level and above, which includes general managers, vice presidents and higher-ranking executives.

Amazon has, in recent years, been more active in enforcing non-compete agreements against departing employees and executives. Non-competes have long been considered unenforceable in California.

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Microsoft publicly posts equal pay data as part of its annual Diversity & Inclusion report. The new practice of publishing salary ranges will go further, extending the upcoming Washington state law nationally for the company.

The company boosted salaries and stock-based compensation in May in effort to retain more of its workforce.

In a post Wednesday afternoon describing the latest changes, Microsoft corporate vice president Amy Coleman and deputy general counsel Amy Pannoni detailed several prior efforts launched by the company, including its ongoing Racial Equity initiative, but acknowledged that Microsoft has more work to do.

The latest changes, Pannoni and Coleman wrote, are “aimed at further deepening our employee relationships and enhancing our workplace culture.”

Despite its efforts to date, the company has struggled in its quest to ensure that the “lived experience” of its employees, a phrase commonly used by CEO Satya Nadella, matches its ideals for fair and equitable treatment.

A 2019 email thread in which large numbers of women at Microsoft detailed their experiences with sexual harassment caused a reckoning inside the company, with promises of reforms from top executives.

The scrutiny grew with allegations that surfaced last year against Microsoft co-founder Bill Gates, going back to his tenure as an executive.

In an advisory vote in November, shareholders backed a proposal calling on Microsoft to issue a report “assessing the effectiveness of the company’s workplace sexual harassment policies,” citing the allegations against Gates.

More recently, a report by Insider detailed allegations of misconduct against leaders including Alex Kipman, the technical fellow who led the company’s HoloLens business. Kipman is leaving Microsoft as part of a larger reorganization of the mixed reality unit, Microsoft announced internally Wednesday night.

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