Google's $310 million sexual harassment settlement aims to set new industry standards

Key Points
  • Google's recent $310 million settlement includes more than 80 updates or changes to its handling of sexual misconduct, discrimination and retaliation cases, the settlement filing shows.
  • The company's settlement terms target policy gaps that executives were allegedly able to exploit.
  • The parties hoped the settlement would also act as a progressive bellwether for Silicon Valley, whose problematic handling of misconduct by executives surfaced amid the #MeToo movement.
Sundar Pichai, CEO of Google, speaks during the company's 2017 Cloud Next event in San Francisco.
Bloomberg | Getty Images

Google parent company Alphabet has agreed to more than 80 updates or changes to its policies and procedures around sexual misconduct and harassment as part of an extensive legal settlement. The overhaul is meant to fill gaps that executives allegedly exploited to engage in sexual misconduct or harassment, and to serve as an example for other Silicon Valley tech companies.

The settlement, which includes $310 million devoted to new diversity, equality and inclusion measures, comes after a group of shareholders accused the leadership team of mishandling employee complaints of sexual misconduct and discrimination. If the settlement is approved by a judge, it will be the largest such commitment among tech companies, beating Intel's $300 million diversity pledge it made in 2015.

In an email to employees, CEO Sundar Pichai encouraged them to read the highlights of the settlement, saying "I hope these commitments will serve as a strong signal to all of you that we are not going back in time." 

The company publicly disclosed some of the terms, including "five guiding principles," in a blog post on Friday. But the much more expansive settlement filing, which spans 177 pages, lays out dozens of updates or changes to its policies, ranging from hiring, governance, internal investigations and disciplinary processes. 

The filing shows structural gaps executives with power were allegedly able to exploit, as well as existing policies they allegedly bypassed.

"The excuse has always been that these were just a few bad apples," said Julie Goldsmith Reiser, a lawyer for the plaintiffs, referring to Google's defense and as well as the broader Silicon Valley. "This is the first time they're saying in detail 'it's bigger than that and we aren't going to allow this.'"

NDAs, arbitration and mandatory training

The parties wanted to use the settlement as an opportunity not only for Google to meet basic structural demands, but also to set a tone for the tech industry, which has been among the industries most plagued by transgressions and power differences during the #MeToo era, according to documents and conversations with the plaintiffs' attorneys.

Over the last two years, Silicon Valley employees complaining of power differentials have spurred mass events and bad press for companies — the largest being the 2018 Google walkout, in which more than 20,000 Google employees walked out of offices worldwide to protest multimillion-dollar payouts to executives accused of sexual misconduct or harassment as they left the company. 

One of the most significant terms in the settlement is limiting the use of nondisclosure agreements for Google employees, which had been a point of contention among employees in discrimination and harassment cases at Google and beyond. 

Companies originally used NDAs to protect trade secrets, but they've gradually expanded to cover a blanket of topics, including workplace conditions, which critics say silences victims and enables perpetrators. Under the settlement terms, workers can now discuss facts of cases related to harassment or discrimination. In addition, employees can now bring someone with them when they report complaints as support and to bear witness to the conversations.

The company also agreed to make arbitration — a practice that prevents employees from taking cases to court and has been criticized for suppressing victims' testimonies  — optional for all Alphabet workers, including contractors and employees at the company's "Other Bets" divisions like Waymo self-driving cars. Following the 2018 walkout, the company said it would end forced arbitration, but the provision only applied to full employees at Google.

The corporate governance updates, which include a number of new oversight committees and regular reports and training programs for Google's board members and executives, were designed to be "best in class," filing materials show. There will also be training for HR staff, investigators and managers on subjects such as empathetic listening, clarifying relationship standards, proper off-site behavior and alcohol consumption, the filing shows.

Google's $310 million fund nearly doubles its recent $175 million commitment toward Black businesses and leadership diversity, although it's not immediately clear whether there will be overlap. A new diversity, equity and inclusion advisory council will be responsible for overseeing a wide array of issues, including hiring and retaining people from underrepresented groups, as well as tracking investigation outcomes, pay equity and retaliation cases. The group is required to meet at least once a quarter. 

The chief diversity officer won't be the only person publicly held responsible for the commitments, either — a departure from the commonplace standards in Silicon Valley. Pichai, Google's global affairs chief, Kent Walker, and core engineering Senior Vice President Jen Fitzpatrick are all expected to hold an accountability role in the DEI council's diversity initiatives.

The DEI council will include outside experts such as former EEOC Commissioner Fred Alvarez, who was tasked with monitoring Uber for three years as a part of the self-driving car company's own misconduct settlement.

HR policies were ignored or bypassed

While executives couldn't be held responsible for nonexistent policies, the filings also expose the ways in which executives allegedly exploited gaps and bypassed some existing company policies. The litigation and internal leadership boards reviewed more than 1,600 internal documents that included board packages, communications, meeting agendas and minutes, and existing policies, the filings show.

"We found that Google's human resources department actually had some capable, smart processes and people in place but the powerful people didn't feel the need to adhere to HR," Reiser said. 

The Alphabet leadership team "improperly" approved large payments to executives including a $90 million severance package to Android co-founder Andy Rubin and $45 million to Amit Singhal after allegedly finding credible misconduct allegations, the filing states. Google agreed to require more layers of approval for actions related to executives involved in misconduct allegations, including creating oversight for the compensation committee, which approved Rubin's and Singhal's payouts, the filing said.

Google executives in 2018 said they fired 48 people over the course of two years for sexual harassment, including 13 "senior managers and above." At the time, they said none received exit packages.

The settlement terms also state that Google will formalize a policy of not providing severance to any employee or senior executive who is the subject of an investigation or lawsuit, nor will it allow them to amend their stock plans. The filing highlights how Google's chief legal officer, David Drummond, allegedly amended his stock plan plan while he was under investigation for misconduct.

"Plaintiffs also would have sought damages related to Defendant Drummond's $222 million in stock sales while under investigation for misconduct and after altering his 10b5-1 trading plan in the months preceding his departure from the Company," the filing states.

The terms also target Google's investigations process. The settlement terms show the company will add more tools to track employees' interactions with HR and investigations teams to prevent retaliation and keep everyone on the same page, which employees vocally alleged was a problem. It also agreed to check in with employees who are involved in harassment, discrimination or retaliation investigations at least every six months over the course of two years.

The company will also create a "rapid response" team that will work on cases involving senior executives as well as the most serious allegations, the settlement filing shows.

At the end of the day, each of the structural changes and executive realizations will ultimately depend on how the company enforces them.

"The people at Google who wanted to harass thought they could get away with it," said Frank Bottini, a lead counsel on the settlement. "I think these measures are a start to stopping that."

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