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Google and Facebook ended forced arbitration for sexual harassment claims. Why more companies could follow.

This Thursday, Jan. 3, 2013, file photo shows Google's headquarters in Mountain View, Calif. (AP Photo/Marcio Jose Sanchez, File)

Last week, two of Silicon Valley’s biggest tech heavyweights said they were ending their policy of forcing workers to settle sexual harassment claims through private arbitration, allowing employees to pursue those claims in court. Google’s announcement came Thursday, following pressure from 20,000 employees who staged a walkout to protest the company’s handling of sexual misconduct allegations, and Facebook’s came just a day later.

They weren’t the first to take the leap away from a controversial tactic that critics say can, in some cases, protect serial harassers and silence victims who might not come forward, unaware of other claims that may be shielded from public view. In December 2017, Microsoft said it had eliminated forced arbitration for employees who had sexual harassment claims. Several big law firms, including Munger Tolles & Olson, said in March they would end the practice after complaints by law students. And in May, Uber and Lyft said they would no longer require victims of sexual assault or sexual harassment to pursue allegations through arbitration.

“It’s taken a little bit of time for other tech companies to follow [Microsoft’s] lead, but I think it does point out the importance of corporate leadership on this issue,” said Maya Raghu, director of workplace equality and senior counsel at the National Women’s Law Center. At the very least, “it does show the importance of its impact on peers,” or competitive firms.

Still, whether more corporations will jump in line — reversing an approach that has been scrutinized in the #MeToo era — is not yet clear. Even if they do, the new policies apply only to individual sexual harassment or assault claims — not other discrimination or harassment complaints — and come at a time when, because of a recent U.S. Supreme Court ruling, companies may be even more motivated to add arbitration agreements to the documents they have workers sign.

Mandatory or forced arbitration is made possible when workers, often at the time they are hired, sign documents in which they agree to settle disputes out of court, where an arbitrator rather than a judge and jury decides a case on its merit. Research has found that employers win more often when they use the same arbitrator repeatedly, suggesting companies may return to arbitrators who do not rule in favor of employees, as well as that employees tend to see much lower damage awards in arbitration than they do in outcomes decided by federal or state courts.

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“I do think you’re going to see more of it,” said Debra Katz, a Washington-based lawyer who frequently represents plaintiffs in harassment and discrimination cases. “If you want to have as a principle of your company that you care about sexual harassment, this is a minimal gesture.”

The prevalence of such arbitration agreements can be hard to pin down precisely because of their private nature, but one study by the Economic Policy Institute, a left-leaning think tank, found that more than 60 million workers may have signed such an agreement. Terry O’Neill, executive director of the National Employment Lawyers Association, a trade group of lawyers who represent workers, said her organization believes that 80 of the companies in the Fortune 100 utilize arbitration and at least 52 use forced arbitration.

“It’s remarkably difficult to find that out,” she said, “because these are secret employment agreements.”

An email to Facebook’s media address seeking further information about its policy change, which was reported by the Wall Street Journal on Friday, was not immediately returned. In an email, a Google spokeswoman said arbitration would now be optional for sexual harassment and sexual assault claims and noted that Google “has never required confidentiality in the arbitration process."

Some lawyers who represent employers say it’s too early to tell how many companies will follow suit.

“Our clients are evaluating what is the best course of action given their strong support for the benefits of arbitration and their respect for the goals of the #MeToo movement,” Margaret Rosenthal, a partner at BakerHostetler, said in an email.

Others think it could spread to industries such as Hollywood or entertainment that have come under fire amid the #MeToo movement or that are more competitive when it comes to recruiting and retaining top employees.

“Certain industries like high tech are probably more receptive to that because of the competitiveness of their job market,” said Benjamin Ebbink, a lawyer with Fisher Phillips in Sacramento. Tech “has been a very high-profile industry for many years now about their employment practices, and I think they’re uniquely receptive to these issues in that industry."

Supreme Court rules that companies can require workers to accept individual arbitration

Ebbink said that he hasn’t yet seen companies act out of political considerations, even if there have been state and federal efforts to ban forced arbitration for sexual harassment claims. New York state’s budget for fiscal year 2019, signed into law this spring, included a provision that said employment agreements could no longer include mandatory arbitration clauses for sexual harassment claims. A few other states have proposed or enacted related laws, which could prompt large national employers to want to set similar standards across state lines.

Yet lawyers say such laws may still be challenged because of the way federal courts have interpreted the Federal Arbitration Act to say state or local laws can’t interfere with its enforcement. A U.S. Supreme Court decision in May of this year ruled that employers can mandate workers use individual arbitration rather than class-action lawsuits. A broader bill in California, meanwhile, was vetoed by Gov. Jerry Brown, who cited the Supreme Court’s interpretation of the federal arbitration law in his decision.

Still, even if it’s unclear how widespread the practice could become, some applauded the move by Google and Facebook.

“It’s just one minuscule part of one statute, but do I think it’s positive? I absolutely think it is,” said Angela Cornell, director of the Labor Law Clinic at Cornell University’s law school. “I can’t see how enforcement of sexual harassment can be done effectively with mandatory arbitration language in place.”

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