Google parent company to pay $310M to settle shareholder sex harassment suit

Dive Brief:

Alphabet, the parent company of Google, Inc., has agreed to pay $310 million to settle a shareholder lawsuit involving alleged sexual harassment and misconduct, according to a statement from Bottini & Bottini, Inc., one of the law firms involved. The firm said the settlement is "the largest and most holistic settlement in a shareholder derivative case stemming from sexual misconduct or harassment."
In January 2019, a coalition of law firms filed several lawsuits on behalf of Alphabet shareholders against the company, alleging board members "participated in or acquiesced to a culture that fostered a long-standing pattern of sexual harassment and discrimination." The plaintiffs alleged that the directors’ and officers’ actions breached their fiduciary duties to shareholders, employees and users and caused reputational and financial damage to the company.
The $310 million will fund diversity, equity and inclusion at the company over 10 years. The agreement also eliminates mandatory arbitration for all Alphabet companies in any harassment, discrimination or retaliation-related dispute; limits Google’s use of non-disclosure agreements; and enforces the adoption of "best-in-class employment policies related to sexual harassment as well as misconduct" and mandatory sexual harassment and fiduciary duty training for the board of directors.

Dive Insight:

Workplace harassment claims are nothing new, but recent years have brought an increased focus on senior executive management and boards of directors, Skadden attorneys wrote last year.

Such actions claim harm to the corporation, such as a stock price reaction because of the executives’ and the board’s response or lack of a response to the allegations and related disclosures, according to the law firm.

Employers have experienced shareholder pressure in other areas as well in recent years, namely pay equity and diversity and inclusion. Alphabet, in particular, is no stranger to such efforts. Shareholders last year proposed several changes for the company, including improved human rights protections and gender pay parity.