Microsoft’s Decision to End Arbitration Agreements Is a Win for Women

Employees will be able to take sexual harassment claims to court

1 February 2018

In an unprecedented move for a technology giant, Microsoft changed its policies in December and eliminated the requirement that employees with sexual harassment claims fight their cases only through the arbitration process. I applaud the stand for transparency by Brad Smith, Microsoft's president and chief legal officer. “The silencing of people’s voices has clearly had an impact in perpetuating sexual harassment,” Smith said in an interview with The New York Times.

The U.S. Federal Arbitration Act has given unscrupulous employers an opportunity to mask violations of civil rights in the workplace. The Economic Policy Institute indicated in 2015 that overuse of the 1925 arbitration law by corporations deprived workers of their rights. It stated: “By delegating dispute resolution to arbitration, the [Supreme] Court now permits corporations to write the rules that will govern their relationships with their workers and customers and design the procedures used to interpret and apply those rules when disputes arise.”

I have been involved in advancing women’s rights for more than 40 years. I have advocated for legislative changes to eradicate discrimination, salary disparities, and workplace hostility. Much of my recent work has been under the auspices of the American Association of University Women (AAUW) in the role of a local branch president. While in this position, I witnessed several women who sought support from harassers in a multitude of fields, but especially in those related to STEM professions. They would have greatly benefited from a change in policy.


The abuse of the arbitration law by employers to avoid their accountability under Title VII of the 1964 Civil Rights Act has been no clearer to me than when I witnessed the journey of my engineer friend, who I will nickname Marie for this article. Marie’s story is the classic example of what turned into a hostile workplace environment when she filed a complaint with her employer of a male supervisor who was harassing her. Marie was let go after 12 years as a manager at the company. Her boss claimed that her position was no longer needed.

Marie was not the only female engineer targeted by that same abusive supervisor. Another colleague quit her job after a volley of threats from him.

Each person approaches these situations in different ways. My friend Marie chose to use the approved internal company policies to report her experience. When she was let go, she received no compensation. She therefore courageously sought help from the justice system.

That is when Marie became aware of the fine print in her employment contract. The arbitration clause was buried in the document and presented as a “desired perk” arranged by the employer. This arbitration requirement was a so-called benefit for all employees, giving them the opportunity for “a friendly and low-cost solution to resolving differences” between employees and the employer. Because of that misleading language, Marie had signed away all her legal protections under U.S. labor law for a courtroom trial with a jury.

Arbitration is a David versus Goliath litigation process. “The employer is automatically liable for harassment by a supervisor that results in a negative employment action such as termination, failure to promote or hire, and loss of wages,” according to the U.S. Equal Employment Opportunity Commission. When Marie filed a lawsuit against her supervisor, she was also automatically suing her former company. A company might be able to afford the cost of arbitration, but for an employee, the cost is exorbitant. Marie has spent, thus far, the equivalent of one year of salary in retainer fees for attorneys and expert witnesses.

In addition, awards in arbitration cases are usually far smaller than in court cases. If Marie’s case prevails, more than a third of the award would be retained by her lawyer, another chunk would be disbursed to the Internal Revenue Service, and the remainder would cover only part of the out-of-pocket expenses she paid to support the arbitration.

Microsoft’s decision to forgo arbitration leapfrogs current legislative proposals to combat institutionalized cover-ups of sexual harassment. It also enables several employees to unite in a legal case—which can never occur through the lonely process of arbitration. Arbitration legally enables only an individual to fight; if multiple employees are victims of the same abuser, they each must pursue their own arbitration case.

The decision by Microsoft is an exemplar of corporate employment responsibility, which is often lacking today.


AAUW reported in 2015 that the engineering field was losing more than 40 percent of female engineers by age 33. One major factor is that women are often pushed out by a hostile workplace environment. They typically start over in an unrelated profession that is far less lucrative but is more supportive of women.

Microsoft’s decision has given me hope that other tech companies will follow suit and accelerate the purging of harassers from their ranks. We face a shortage of engineers in the United States, not because of a lack of university engineering candidates but rather because we tolerate and cover up issues in secrecy while silencing the whistleblowers.

Thank you, Microsoft. You are leading the charge for more equity in the workplace, therefore enhancing working conditions for all. It truly is time for other companies to follow your example.

Sally J. Hibbitts is former president of the American Association of University Women branch in Thousand Oaks, Calif. For more than 40 years, she has advocated for the advancement of women in male-dominated fields.

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