Removing the Veil of Secrecy

22 December 2017

On December 19th, 2017, the New York Times reported that Microsoft has “eliminated forced arbitration agreements with employees who make sexual harassment claims and was also supporting a proposed federal law that would widely ban such agreements.” (Wingfield, N. and Silver-Greenberg, J., “Microsoft Moves to End Secrecy in Sexual Harassment Claims,” NY Times, December 19, 2017).

Why is this important? This makes Microsoft the most prominent company to take steps to “end legal agreements that have been criticized for helping to perpetuate sexual abuse in the workplace. Forced arbitration lets companies keep harassment and discrimination claims out of court, effectively cloaking them from public view and, in some cases, allowing serial harassers to continue their conduct for years.” (emphasis added).

Too many companies require their employees to agree to mandatory, and binding arbitration as a condition of employment. In fact, “according to the Economic Policy Institute, more than half of American workers are bound by arbitration clauses.” Now, however, the tide may be turning, at least as it pertains to harassment claims.

As the Times reports, “this month, a bipartisan group of senators, including Lindsey Graham, Republican of South Carolina, and Kirsten Gillibrand, Democrat of New York, proposed legislation that would make forced arbitration in harassment cases unenforceable under federal law.”

“Ms. Gillibrand said that getting rid of the arbitration agreements would benefit employers in the long run. ‘Without the secrecy of mandatory arbitration agreements, serial predators will be less likely to continue climbing the corporate ladder and employees won’t be forced to stay quiet about the harassment they have faced at work, which is good for employees and good for business,’ she said in a statement.”

This is also important because studies have shown that mandatory arbitration clauses result in unfair treatment of employees. As the Times notes:

By using the arbitration clauses to bar people from joining together as a group, employers — both large and small — have effectively taken away one of the few tools that workers have to fight harassment or discrimination. . . In arbitration, the rules tilt heavily in favor of businesses, employment experts said. Part of the problem is that instead of judges, cases are decided by arbitrators who sometimes consider the companies that routinely bring them business their clients, according to interviews with arbitrators.

The more often companies head to arbitration, the better their chances of winning the case, according to the conclusion of a 2011 analysis by Alexander J. S. Colvin, a professor at Cornell University’s School of Industrial and Labor Relations.

Microsoft’s decision to eliminate this mandatory arbitration clause in sexual harassment claims is an important first step. Let us hope that other companies follow Microsoft’s lead.