The company agreed at the beginning of this year to formally recognize a union representing around 300 QA workers at ZeniMax Media, the parent company of Bethesda that Microsoft bought in 2021. As part of bargaining talks that have been ongoing since April, Microsoft has agreed to hire 77 temporary workers and incorporate them into the ZeniMax Workers United-CWA (Communications Workers of America) union.

Microsoft is hiring 23 of the workers as full-time, permanent employees with a pay increase of 22.2 percent. The other 54 workers are getting an immediate pay bump from $18 per hour to $20.75 an hour. Once the collective bargaining agreement is ratified, Microsoft will hire those workers as temporary employees.

According to the CWA, the new employees will now receive paid holidays and sick leave. The latter was previously only available if contractors lived in a jurisdiction that requires paid time off for illness. In addition, all of the workers will receive a copy of Starfield, the blockbuster game they had worked on. The CWA says it was not standard practice for contractors to get copies of the games they help to ship.

The CWA says the union will keep fighting for more contractors to have a pathway to permanent roles. “We look forward to continued good faith negotiations as we work towards a collective bargaining agreement,” Microsoft vice president Amy Pannoni told Bloomberg.

“We are now stronger at the bargaining table and are working to secure a fair contract for all workers — direct employees and contractors," Chris Lusco, associate QA tester and a member of ZeniMax Workers United-CWA, said in a statement. "We are all a part of ZeniMax Studio’s success and we all deserve our fair share. We hope to set a new precedent for workers across Microsoft and the entire gaming industry so that all workers, regardless of their employment status, are able to improve their working conditions through collective bargaining."

Last year, while Microsoft was attempting to win regulatory approval to buy Activision Blizzard, the company said it would remain neutral when the publisher's employees wished to unionize. A pact it reached with the CWA to that effect is set to come into force on December 12, 60 days after the Activision deal closed.

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This came to pass as part of negotiations with the Communications Workers of America (CWA) union and involves contract language that covers a few hundred staffers at Microsoft’s game studio ZeniMax, which includes well-known subsidiaries like Bethesda and Arkane, among others.

The gist here is that the contract language incorporates Microsoft’s previously-announced AI principles, sort of a ten commandments type deal. The language dictates that AI systems will “treat all people fairly” and “empower everyone.” To that end, it will give employees covered under the contract an avenue of recourse should they feel that Microsoft isn’t holding up its end of the bargain. Microsoft even hired dozens of ZeniMax contract workers as full-time employees, potentially as a show of good faith.

“The goal is to ensure tools and technologies benefit rather than harm workers,” the contract states. The language stipulates that Microsoft must inform the CWA whenever AI or related automation technology is implemented in a way that could impact workers. If requested, the company must enter into good-faith negotiations regarding the change. This is a big first step, considering Microsoft’s massive play into the AI space via integration with OpenAI products.

This would be news on its own, given Microsoft’s former hesitance to engage with unions in any way, shape or form. However, there’s more. The company also entered into a partnership with the AFL-CIO, the country’s largest federation of unions. The entities struck a deal that ensures Microsoft will remain neutral in efforts by unions to encourage workers to join up.

The partnership also creates an “open dialogue” to discuss AI and how it impacts workers. The AFL-CIO calls this team-up the “first of its kind between a labor organization and a technology company.” Microsoft has committed to share information with labor leaders regarding impactful AI trends and consider “worker perspectives” when developing new technologies.

Why the about face? There’s a whole lot of uncertainty out there regarding artificial intelligence and how it will impact workers across multiple industries. It looks like Microsoft is setting itself up to be the “adult in the room” when compared to rival entities. It’s worth noting, though, that Microsoft shareholders rejected a proposal last week that would slow down AI spending until a risk-assessment project could be conducted.

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The contract was ratified after workers overwhelmingly voted to unionize last year. It covers around 150 people working in various departments throughout the company, including brand marketing, games as a service, localization, sales and quality assurance. The union is called the Allied Employees Guild Improving Sega (AEGIS-CWA) and it organizes with the Communications Workers of America.

There are already some provisions in place for workers as part of the contract, including a minimum pay increase of 4 percent in 2024, 3 percent in 2025 and 2.5 percent in 2026. There are also layoff protections, codified benefits like health insurance, a severance inclusion and a commitment to credit all workers on games.

“We’re hopeful that in the midst of extensive layoffs, workers across the video game industry will see organizing as a pathway to improve working conditions for all of us,” wrote Jasmin Hernandez, a member of AEGIS-CWA, in a statement provided to Engadget.

Sega wasn’t exactly happy about the push toward labor rights and unionization. The company faced an unfair labor practice complaint after it announced plans to lay off 40 percent of the union's bargaining unit. The company did lay off some of these people, as promised, but the union was able to reach an agreement to keep many workers employed.

Labor is having a moment in the games industry. ZeniMax Workers United joined with the CWA last year to offer union protection to 300 quality assurance workers. Over 600 Activision QA testers have joined a union, making it the biggest worker-formed organization in video games. Avalanche Studios, Raven Software and several small development studios have all also unionized in the past year or so.

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