The Supreme Court ruled earlier this year that companies could require employees to resolve their employment law claims through individual arbitration rather than by class action or ordinary lawsuits. After the ruling, it was widely expected that companies would eagerly adopt such policies, as arbitration is thought to benefit the employer. However, Google, Facebook, Airbnb and other technology giants have recently announced they will not require arbitration.
Google’s decision not to require individual arbitration in sexual harassment and misconduct cases came after more than 20,000 employees walked off the job on Nov. 1 in protest of the company’s conduct in previous cases. According to the New York Times, the walkout was prompted by revelations that Google had given a senior executive a $90 million “golden parachute” even though he was credibly accused of sexual harassment.
The company agreed to “make arbitration optional for individual sexual harassment and sexual assault claims,” according to its CEO. That language seems to preclude the possibility of class actions, however.
Google changes its sexual-harassment reporting process
Additionally, Google announced it would revamp its reporting process for sexual harassment and assault, be more transparent about incident reports, and dock employees’ performance if they fail to complete required anti-sexual harassment training.
The move by Google might have prompted other West Coast tech firms to follow suit. Facebook has dropped its mandatory arbitration requirement for allegations involving sexual misconduct. Also, director-level executives and higher will now have to disclose when they date employees.
Airbnb, Inc. has gone even further. It dropped the arbitration requirement for employees in any case involving allegations of discrimination. However, Airbnb hosts and guests with discrimination claims must still settle them in arbitration.
Earlier this year, Uber Technologies, Inc., dropped its arbitration mandate for sexual harassment cases. Microsoft has removed its requirement, as well.
Why arbitration is frowned upon
The practice of requiring individual arbitration has been criticized, especially in cases involving sexual harassment or misconduct.
Arbitration is private and creates no precedent. Particularly when used in combination with nondisclosure agreements, arbitration can restrict victims from speaking out in an effective way about their experiences. That, in turn, can allow harassers and abusers to fly under the radar of management and continue to break the law.