U.S. Markets close in 2 hrs 12 mins

Slack ends mandatory arbitration for sexual harassment claims

Melody Hahm
Senior Writer

As Slack transitions from a startup to a soon-to-be publicly traded company on the New York Stock Exchange, it is also grappling with some of the larger issues that have plagued its larger tech peers.

Google and Facebook have already ended their policies of forced arbitration for employees’ claims of sexual harassment and assault. That practice keeps those claims out of regular courts and within the power of employers. On Wednesday, Slack confirmed to Yahoo Finance that it has also ended its policy of mandatory arbitration.

“We changed our policy in November 2018 to give employees the choice of whether to arbitrate or litigate harassment claims. We think allowing this choice is best for employees and for Slack as a whole. One size does not fit all. There are some disputes where arbitration is a good venue, and some where litigation is a good venue. We want to make it clear to employees that they have a choice about claims of harassment,” a Slack spokesperson told Yahoo Finance.

Slack, the workplace messaging app that’s currently valued at $7.1 billion, has been at the forefront of elevating women but had been notably indecisive about ending its own practice of forced arbitration. In an interview for “Breakouts” on Yahoo Finance in December, Slack co-founder and chief technology officer Cal Henderson had said that Slack still required employees to waive their right to sue or participate in a class action lawsuit. 

“We’re still looking at our internal policies and how we want to evolve them, but we are very focused on making Slack a place where all people can thrive,” he had said.

Slack announced the changes to employees in November. At the time of the interview in early December, however, the company was still finalizing how to implement the change and was not ready to discuss it externally, according to the spokesperson. 

The issue of forced arbitration gained a national spotlight in November, when more than 20,000 Alphabet (GOOG, GOOGL) employees participated in walkouts around the world to protest how it handles sexual harassment and misconduct claims. A few days earlier, The New York Times published a damning report that Google paid the “father of Android” a $90 million exit package while he was accused of harassment.

One week after the walkout, CEO Sundar Pichai announced the company would no longer require arbitration for cases of sexual harassment and assault. Mandatory arbitration agreements don’t involve a judge or jury and often result in workers getting much less money in the chance they do win their cases.

The tech industry, in particular, has been scrutinized for normalizing this policy. But as employees push back against it, executives are forced to respond in kind. After Google decided to end the practice, Facebook (FB), Square (SQ), eBay (EBAY) and Airbnb followed suit. They join the likes of Microsoft (MSFT) and Uber, which stopped forced arbitrations over the last year. Salesforce (CRM), Twitter (TWTR), Amazon (AMZN), and Pinterest say they never had mandatory arbitration for such cases.

High profile tech IPOs expected in 2019

How Slack stacks up

Slack is well-known for having prioritized diversity and inclusion from its inception. And the numbers speak volumes. Forty-five percent of Slack’s global workforce is comprised of women. Thirty-four percent of technical jobs and 31% of leadership are females.

Compare that with Google, Facebook and Microsoft, where women hold between 19% and 28% of leadership positions. Females hold between 19% and 20% of technical roles at those companies, according to The Atlantic, citing those company’s most recently released figures. For a company that places such an emphasis on empathy, Slack’s reluctance to make mandatory arbitration optional felt very off-brand.

Slack operates in more than 100 countries and currently has over 1200 employees across 9 offices. While it certainly operates in multiple jurisdictions, Slack may not be able to use its multinational presence as an excuse for keeping forced arbitration. For example, Facebook CEO Mark Zuckerberg said the company will employ 10,000 people in Europe alone by the end of 2018, and it has ended forced arbitration.

Despite this recent trend among tech giants, forced arbitration remains a reality for many U.S. workers and has become a ubiquitous practice regardless of industry. According to data compiled by Vox, half of non-unionized workers at U.S. companies are subject to these agreements. That’s more than double the rate two decades ago.

Mandatory arbitration has arguably served as a mechanism to silence workers and to prevent them from obtaining lucrative court settlements. As Slack readies to hit the public markets, this is a welcome step in the right direction. 

Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm. She hosts Breakouts, a monthly interview series for Yahoo Finance featuring up-close and intimate conversations with today’s most innovative business leaders.

Read more: