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Microsoft Hit with $2 Million Judgment in Sexual Harassment and Discrimination Case


Inter-office romances can create awkward situations in the workplace, but when they occur between a worker and a supervisor, things can get a lot more complicated, as Microsoft found out the hard way last week.

Michael Mercieca, a Japanese-American, was one of Microsoft's top salesmen in Austin, Texas who has worked for the company for the last 17 years. He was a single dad, and had a sexual relationship with Lori Aulds, a co-worker, which ended at his request. In 2007, she became his direct manager. According to the complaint, she told Mercieca, "You have ruined me for sex with my boyfriends," and commented at the office on her sexual relationships with her new boyfriends. According to trial evidence, she insisted that he get involved in her and her new boyfriend's relationship disputes -- even though he told her several times that it made him uncomfortable.

Things got much worse in 2009, when Aulds had a sleepover with Tracey Rummel, a marketing consultant whom Microsoft would soon hire. They hatched a plot where Rummel made a false charge that Mercieca had sexually harassed her. Rummel passed on the phony claim to her boss, National Sales Director David Tannebaum and then to his supervisor, Eddie O'Brien, a Microsoft Vice President.

Rather than take formal action, the managers created the hostile workplace from hell. Mercieca noticed he was being treated differently at work -- people would scatter when he came to the water cooler and he was excluded from customer events and conferences. Aulds cut his expense budget, questioned his vacation requests and cut him off from customer communications. Tannebaum chastised him for missing a deadline by only three hours and criticized him for not doing his job well. He and VP O'Brien called Mercieca's customers trying to dig up dirt about him. Aulds made disparaging remarks about Japanese people and questioned his green card status.

Mercieca filed an internal complaint with the company. Two weeks later, now-employee Tracy Rummel filed a formal sexual harassment charge against him. An HR worker who was in on the scheme helped her write the complaint. Through legal discovery, Mercieca's lawyers learned that she had conspired with Aulds to file the trumped-up charge. After 16 straight months of abuse, Mercieca sent a letter saying Microsoft had constructively terminated him. Mercieca filed a defamation suit against Tracy Rummel in 2011, also charging Microsoft with harassment, discrimination based on sex, age, and national origin.

In April Mercieca won his case at trial, and last week a Texas judge ordered Microsoft to pay him $2 million in damages.

The takeaway: Some workplaces seem to resemble high school, but the consequences, unlike those in high school, can be permanent and life-altering. And in the workplace, such behavior is illegal.

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