Google Announces an End to Forced Arbitration in All Disputes
By Lynn Fugaro, Staff Writer
In November 2017, more than 20,000 Google employees and contractors walked off the job in response to how the company had handled sexual assault and harassment claims. One of their demands in order to end the walkout was that Google put an end to its forced arbitration clauses in employment contracts. Google responded by agreeing to end the requirement for sexual harassment and assault complaints but refused to end the practice for all complaints. Last week, however, the tech giant announced it would be putting an end to its forced arbitration policies for all disputes.
The massive walkout by Google employees all started when the New York Times published an article in October 2018 that revealed Google had paid Andy Rubin, a high-ranking executive at the company, a $90 million exit package. The amount of the exit package, while shocking for most, was not the problem. The problem was that an employee at Google had lodged sexual misconduct and harassment claims against Rubin, Google investigated and found them credible and still paid him the very generous amount while insisting Rubin resign.
Just one month after the New York Times report, the employees staged their walkout. While the walkout started with Andy Rubin, the employees who walked out also demanded that Google end its forced arbitration policy before they would return to work. In 2013, when the allegations against Rubin first came to light, Google had forced arbitration clauses in all of their employment contracts, which meant that any and all disputes against the company could only be resolved through arbitration and that all employees waived their rights to sue the company or join a class action lawsuit.
Dangers of Forced Arbitration
If you’ve ever been employed or even bought any item, ever, you’ve likely agreed to forced arbitration without your knowledge. Forced arbitration clauses require any disputes between a consumer or an employee and a company to be settled in arbitration. It might sound good at first – agreeing to air the dispute to a third party to come to a resolution – but forced arbitration clauses require the consumer or employee to waive their right to litigation, including joining a class action lawsuit. This waiver of litigation rights does not usually apply to the company, however.
While most companies defend forced arbitration clauses by saying that they save both the employee or consumer and the company money, that is a misconception. Lawsuits can be very expensive, yes, but arbitration usually costs far more. The employee is required to pay a hefty filing fee just to get the process started, and they are also required to pay their share of the arbitrator’s hourly fee.
In addition to costing more money, arbitration often gives the advantage to the company. While an individual will likely only need the service of an arbitrator one time, companies use them regularly. Thus, many arbitrators tend to see things in favor of the company in order to ensure they are hired the next time the company needs their services.
Forced arbitration also makes it much easier for companies to keep any allegations quiet and out of the public eye. This is likely how no one knew about the Andy Rubin allegations and payout until the New York Times article was published.
Arbitration is not always a bad thing, though. In fact, it can provide the opportunity for disputes to be decided fairly and far faster than the traditional court route, but forced arbitration is another matter entirely. Most people who agree to forced arbitration clauses are entirely unaware of the fact that they have done so, and that is where the problem arises.
Google has taken a big step in agreeing to do away with the forced arbitration clauses in their employment contracts, and hopefully more companies will follow their lead.