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$7 billion Slack is lagging on a key sexual harassment policy

Melody Hahm
Senior Writer

Recently, tech giants including Google and Facebook 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.

But one tech company that has been at the forefront of elevating women has been notably indecisive about ending its own practice of forced arbitration. In an interview for “Breakouts” on Yahoo Finance, Slack co-founder and chief technology officer Cal Henderson confirmed that Slack has not changed its policy on forced arbitration. Slack is a workplace messaging app that’s currently valued at $7.1 billion.

“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 said. “So we’re still looking at that.”

The issue of forced arbitration gained a national spotlight on November 1, 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.

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 seems off-brand.

When asked about what he views as the drawbacks of arbitration, Henderson cited regulatory complexities and suggested the practice has benefits for employees. “[This kind of] arbitration exists to give employees an option to be able to choose an arbitrator rather than a random judge,” he said. “And that’s historically why companies have had arbitration.”

Despite Henderson’s assertion that arbitration exists to give employees more choice, mandatory arbitration has arguably served as a mechanism to silence workers and to prevent them from obtaining lucrative court settlements. When asked whether he understands that women would feel this way, Henderson did acknowledge “that seems to be the big downside to it.”

Still, Henderson says, “We’re a company that operates in a lot of states and it’s complex to change our regulations.”

Indeed, 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.

But companies may not have a choice when it comes to forced arbitration, at least in some states. New York, Washington, Vermont and Maryland have made it illegal to force employees to sign mandatory arbitration clauses in their employment contracts, and more states may enact similar laws as the practice gains more scrutiny.

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.

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