Google parent Alphabet settles shareholder suit over sexual misconduct allegations

Google parent company Alphabet has settled a shareholder lawsuit over the company's handling of sexual misconduct allegations.

As part of the settlement, announced Friday, Alphabet will commit $310 million to corporate diversity initiatives, as well as form an advisory board dedicated to diversity and equality issues. The board will include CEO Sundar Pichai as well as outside experts. 

"The settlement fundamentally alters Alphabet's workplace policies," said Julie Goldsmith Reiser, a partner at Cohen Milstein Sellers & Toll, one of the firms representing Alphabet shareholders. "These changes, along with the financial commitment to DEI initiatives, position Alphabet to lead as much in workplace equity as it is does in technology and innovation."

The lawsuit stemmed from sexual misconduct allegations reported two years ago against Andy Rubin, creator of Google's Android mobile operating system. In the face of those allegations, Alphabet's board reportedly granted Rubin a $90 million exit package. The claims sent off shockwaves inside Google, leading to a historic walkout in which more than 20,000 employees around the world marched out of their offices in protest. 

Alphabet is also making changes to its arbitration policies, a subject of focus for activists inside Google when they organized the walkout. Last year, Google ended forced arbitration for employment disputes. Now Alphabet is removing arbitration requirements for the parts of the company outside of Google, or "other bets" including its self-driving-car division Waymo or health sciences arm Verily. Google will also be more limited in its use of nondisclosure agreements. 

As part of the changes, Google is also prohibiting executives from receiving severance if they're the subject of a pending investigation for sexual misconduct, harassment or retaliation, Eileen Naughton, the company's human resources chief, said in a blog post Friday. 

"Over the past several years, we have been taking a harder line on inappropriate conduct, and have worked to provide better support to the people who report it," she wrote. "Protecting our workplace and culture means getting both of these things right, and in recent years we've worked hard to set and uphold higher standards for the whole company."

In addition to Pichai, Google executives on the new diversity council will include Chief Legal Officer Kent Walker, Chief Diversity Officer Melonie Parker, and Senior Vice President Jen Fitzpatrick. Outside members will include Nancy Gertner, a Harvard Law School lecturer and retired federal judge, and Fred Alvarez, a former member of the Equal Employment Opportunity Commission.