San Francisco Chronicle

Suits on harassment claims settled

- By Daisuke Wakabayash­i

Google’s parent company, Alphabet, has settled a series of shareholde­r lawsuits over its handling of sexual harassment claims, agreeing to greater oversight by its board of directors in future cases of sexual misconduct and committing to spend $310 million over the next decade on corporate diversity programs.

The settlement, filed Friday in Santa Clara County Superior Court, also said employees would no longer be forced to settle disputes with Alphabet in private arbitratio­n. Workers had demanded that change after details of sexual harassment cases at the company became public two years ago.

In addition, Alphabet said it would limit confidenti­ality restrictio­ns when settling harassment and discrimina­tion cases and ban workplace romances between managers and subordinat­es.

The Mountain View company was hit by a wave of shareholde­r lawsuits after the New York Times reported in 2018 that the board of directors had approved a $90 million exit package for a star executive, Andy Rubin, even after an in

vestigatio­n deemed a sexual harassment claim against him credible. Rubin has denied the claim and others against him.

Five lawsuits in California were eventually consolidat­ed into one case. One of them, brought by James Martin, an Alphabet shareholde­r, said board members had allowed illegal conduct to proliferat­e, ignored their fiduciary duty and became enablers of sexual harassment and discrimina­tion.

Other shareholde­r suits are awaiting action in federal court and in Delaware, where Alphabet is incorporat­ed. The federal cases are on hold pending the outcome of the California suits, while the matter in Delaware is in mediation.

“The settlement is truly historical and designed to change the culture at Google and set a new standard throughout Silicon Valley,” said Joseph Cotchett, a partner at Cotchett, Pitre & McCarthy in Burlingame, who worked on the team of attorneys on the case.

The settlement with Alphabet does not direct money to the people who sued, but it does steer funding and policies to prevent the bad behavior from recurring.

Julie Goldsmith Reiser, a partner at Cohen Milstein Sellers & Toll, another firm representi­ng Alphabet shareholde­rs, said the $310 million agreement is meaningful because the tech giant is paying the money directly and it is earmarked to address one of the root problems at the company.

“The settlement fundamenta­lly alters Alphabet’s workplace policies,” Reiser said. “It feels like we’ve given the company the tools to become a better workplace.”

Reiser hailed it for setting a new level of corporate governance. The level of board involvemen­t and executive accountabi­lity, she said, “goes far beyond what we’ve seen in other settlement­s.”

According to Mark Molumphy, another partner at Cotchett, Pitre & McCarthy who worked on the case, the settlement will hold Alphabet and its management accountabl­e for making significan­t institutio­nal changes to increase diversity, both in the workplace and the boardroom.

“It will also serve as a model for diversity and inclusion efforts throughout the technology industry,” he said.

As the lawsuits started piling up, Alphabet’s board created a committee of independen­t directors to investigat­e the claims, interviewi­ng current and former directors and employees. After the review, the committee determined that it should try to resolve the claims, according to the settlement. Alphabet and its directors denied any wrongdoing in the document laying out the agreement.

The company has undergone a significan­t changing of the guard in the last few years. Larry Page and Sergey Brin, who founded Google more than two decades ago, stepped down from a daytoday role at the company in late 2019.

David Drummond, a longtime company lawyer who kept his job even after details of an extramarit­al relationsh­ip he had with a woman who worked for him became public, left

Alphabet this year. Eric Schmidt, the former CEO, who was known to appear at company events with women he was seeing in extramarit­al relationsh­ips, left the board in 2019.

“Recent years have involved a lot of introspect­ion and work to make sure we’re providing a safe and inclusive workplace,” Eileen Naughton, vice president of Google’s people operations, wrote in a blog post on the company’s website. “I’m grateful to everyone, especially our employees and shareholde­rs, for providing us with feedback, and for making sure that the way we tackle these vital issues is better today than it was in the past.”

As part of the settlement, Alphabet agreed to form an advisory council focused on diversity, equality and inclusion made up of four executives — including CEO Sundar Pichai — and three outside experts including Nancy Gertner, a retired federal judge.

The group will take on a wide range of issues, including hiring and retention, compensati­on, and how the company responds to and investigat­es employee complaints.

In addition, Alphabet’s board will receive more informatio­n about how the company is handling claims of sexual harassment, discrimina­tion and retaliatio­n, and directors will receive regular reports on the compensati­on of any senior executives found to have engaged in serious misconduct.

Shortly after the report about the payouts to Rubin and other Google executives accused of sexual misconduct, 20,000 workers staged a walkout demanding changes to how the company treats employees. In response, Google agreed to stop forced arbitratio­n in individual cases of sexual harassment or assault. It later expanded the policy to all employee disputes with the company.

Alphabet said it would now extend the policy to its 11 other subsidiari­es, like the selfdrivin­g car company Waymo. Some of those businesses have thousands of employees.

Google employees will no longer be bound by nondisclos­ure agreements preventing them from discussing the underlying facts or circumstan­ces of incidents when settling sexual harassment and retaliatio­n claims. Alphabet said it would encourage its subsidiari­es to do the same but was not requiring the change.

In an attempt to address problems of executives dating subordinat­es, Alphabet said, it changed its workplace romance policy so that managers are no longer allowed to date employees they supervise. The previous policy “strongly discourage­d” such relationsh­ips.

Alphabet also agreed that employees who are being investigat­ed over claims of sexual misconduct, sexual harassment or retaliatio­n when they depart Google will not receive severance or other compensati­on. That is already the case for employees fired for misconduct. Under the new policy, even if an employee is not fired, the misconduct will be taken into account in determinin­g his or her severance, the company said.

 ?? Jim Wilson / New York Times 2018 ?? Google workers stage a walkout in 2018 to protest the handling of sexual harassment complaints. The company has settled shareholde­r lawsuits over the issue.
Jim Wilson / New York Times 2018 Google workers stage a walkout in 2018 to protest the handling of sexual harassment complaints. The company has settled shareholde­r lawsuits over the issue.
 ?? James Tensuan / Special to The Chronicle ?? Former Google exec Andy Rubin got a $90 million exit package even after a sexual harassment claim was deemed credible.
James Tensuan / Special to The Chronicle Former Google exec Andy Rubin got a $90 million exit package even after a sexual harassment claim was deemed credible.

Newspapers in English

Newspapers from United States