Employment activists have railed against mandatory arbitration for decades, to little avail. But the #MeToo movement put a spotlight on the downsides of mandatory arbitration of sexual harassment and assault claims, and technology companies have begun responding.
Seven days after the November 1 walkout of 20,000 Google workers across the globe, outraged over a New York Times investigation of the company’s lenient treatment of sexual harassers, Google issued a stunning response. CEO Sundar Pichai sent a memo to employees saying arbitration would now be “optional” for individual claims of sexual harassment and sexual assault. Facebook announced a similar policy the next day. Since then, Airbnb and eBay also have said they’re dropping requirements binding employees to using arbitration for sexual harassment complaints. Microsoft, Uber, and Lyft, as well as the law firms Munger, Tolles & Olson and Orrick, Herrington & Sutcliffe, had already made similar changes over the past year.
It would be hard to argue that it isn’t good news. But even employee advocates caution that the changes lack a sturdy foundation. Washington, D.C. employment lawyer Joseph Sellers said it’s important to consider the motivation of recent policy changes by business, which he doubts are the result of some sudden bout of corporate righteousness. “There’s no question in my mind these were very carefully considered decisions where they considered the upside risk of litigation, the downside risk of losing workers, and the potential for improved morale this might create,” he said. In fact, even the positive news coverage “is itself part of the calculation.”
Sellers, who for 10 years has been fighting Sterling Jewelers in the arbitration of a class-action gender discrimination case, says he’d be surprised if the changes extend far beyond the tech sector. “I don’t see this as the beginning of a wave of excluding sex harassment or workplace discrimination claims from arbitration agreements,” he said, adding that technology companies were ripe to make changes. The job market is tight, and companies are competing for many of the same young, tech-savvy people who have developed “especially strong” feelings about harassment in the #MeToo era, Sellers said. “I’m not sure there are other industries where this kind of change in the rules would so fundamentally affect people’s attitude about their employers.”
Still, the news was embraced by employee advocates who have long fought closed-door arbitration, arguing that it has stifled exposure of sexual harassment and protected perpetrators. “Being shut up was key to the whole system,” said attorney Nancy Erika Smith, who represented former Fox News anchor Gretchen Carlson in her harassment suit against Roger Ailes. “I think the employer is going to have to struggle with doing things right for a change.”
It’s an abrupt shift from the employer-side momentum that launched in 1991, when the brokerage industry won a Supreme Court fight in Gilmer v. Interstate over forced arbitration of an employment dispute involving a civil rights claim. The Google walkout “sent shivers down the spines of many companies that didn’t want to be the next in line,” said San Francisco employment lawyer Cliff Palefsky. “It demonstrated the power that tech workers have at this point in history.”
- “I don’t see this as the beginning of a wave of excluding sex harassment or workplace discrimination claims from arbitration agreements.”