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SAN FRANCISCO-In an unusual move, the 9th U.S. Circuit Court of Appeals has agreed to rehear a 1996 case in which a three-judge panel ruled 2-1 that Microsoft Corp. was required to pay employee benefits to independent contractors.

A panel of 11 judges is scheduled to hear oral arguments in Donna Vizcaino vs. Microsoft Corp. on March 27, according to a spokesman for Redmond, Wash.-based Microsoft Corp. Such rehearings rarely are granted.

"This is just one step in a lengthy process," said the spokesman. "We're confident that when the court reviews all the facts, they'll agree that we've treated all our workers appropriately."

Victor Schachter, an employer attorney with Schachter, Kristoff, Orenstein & Berkowitz in San Francisco, said he thinks the court's agreement to rehear the case is a "very promising sign" that it will take a "fresh look" at the original decision.

Last year, the appellate panel found that Microsoft was liable to provide benefits to long-term independent contractors, even though they had signed contracts stating they were responsible for their own benefits (BI, Oct. 21, 1996). Justice Stephen Reinhardt said that, based on the Internal Revenue Service finding that these contractors were employees for tax purposes, and on Microsoft's plan language, the workers were eligible for benefits.

Meanwhile, the plaintiff in a case in which a leased employee was found ineligible for benefits, Anne Navey Clark vs. E.I. du Pont de Nemours & Co. Inc., has not decided whether to appeal the ruling (BI, Jan. 20). Some observers think that ruling from the 4th U.S. Circuit Court of Appeals in Richmond, Va., clashes with the Microsoft decision.