September 25, 2020
Google parent Alphabet Inc. has agreed to spend $310 million on diversity and inclusion initiatives to settle California litigation alleging the company misled investors by covering up sexual harassment and abuse by executives, the shareholders’ attorneys said Friday.
The company has also agreed to “sweeping policy reforms” that include ending the use of forced arbitration of harassment, discrimination and retaliation-related employment disputes, narrowing confidentiality agreements so workers can discuss the facts of their case, and ensuring workers companywide are punished equally for the same misconduct, plaintiffs firm Cohen Milstein Sellers & Toll PLLC said.
“The settlement fundamentally alters Alphabet’s workplace policies,” Cohen Milstein attorney Julie Goldsmith Reiser said. “These changes, along with the financial commitment to [diversity, equity and inclusion] initiatives, position Alphabet to lead as much in workplace equity as it does in technology and innovation.”
The deal, which the parties signed last month and submitted Friday to Santa Clara Superior Court, would if approved end a series of linked lawsuits accusing Alphabet executives of breaching their fiduciary duty to investors by covering up misconduct.
The Northern California Pipe Trades Pension Plan’s January 2019 complaint alleges Alphabet’s board engaged in a “pattern of concealment” to protect company interests at investors’ expense, including by hiding sexual misconduct and having lax customer data safeguards. The complaint points to $135 million in combined severance payouts to former executives Andy Rubin and Amit Singhal who left the company following credible sexual harassment allegations. The suit was consolidated in California state court with several similar suits in May 2019.
Under the settlement, Alphabet will allocate $310 million over up to 10 years to fund various initiatives meant to diversify its workforce from top to bottom. The company has agreed to improve tech education among historically underrepresented groups by investing in computer science programs; to hire, promote and retain underrepresented talent; to foster a respectful and equitable workplace culture; and to help underrepresented groups succeed in tech by supporting events and increasing access to opportunities.
The deal also sets out an anti-sexual harassment program that includes a commitment from company officials to foster a respectful working environment, empathy for workers who come forward, transparency about the frequency of harassment complaints, fairness toward involved parties and accountability. Alphabet must incorporate these principles into formal policies and convene a panel known as the diversity, equity and inclusion advisory council to oversee its efforts for at least five years. Regarding the privacy-related allegations, Alphabet has agreed to more closely monitor data breaches.
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The shareholders are represented by Julie Goldsmith Reiser and Molly Bowen of Cohen Milstein Sellers & Toll PLLC and Francis Bottini, Albert Chang, Anne Beste and Yury Kolesnikov of Bottini & Bottini Inc.
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