Wells Fargo changes the way it handles sexual harassment claims

Wells Fargo on Wednesday became one of the first banks to end the use of forced arbitration for sexual harassment claims, stopping a practice that critics said allowed companies to sweep complaints under the rug.

Hires made since December 2015 had been subject to mandatory arbitration for sexual harassment claims, Wells Fargo said in a press release.

Forced arbitration will still be in place for other non-harassment claims. Anti-harassment advocates praised the move.

Lift Our Voices, a group co-founded by former Fox News anchor Gretchen Carlson that seeks to end forced arbitration and the use of non-disclosure agreements, said in a statement that “Wells Fargo’s decision is yet another step in ending the secrecy and silence that survivors of sexual harassment and assault have been forced to endure at the hands of perpetrators and their enablers.”

The policy, common in Wall Street employment agreements, was seen as a reason why the #MeToo movement had a far more muted impact in finance than other industries.

“Wells Fargo has zero tolerance for sexual harassment,” wrote David Galloreese, Wells Fargo’s head of human resources, in an article posted on the company’s website. “We believe that this is the appropriate change to make at this time for our employees.”

Mandatory arbitration, a legally-binding resolution process that takes places outside the court system, has been shown in some studies to favor companies over employees by a drastic margin versus the courts.

The practice rose to prominence in the past two decades, led by Wall Street, to help corporations avoid costly lawsuits.

Wednesday’s move was prompted by a shareholder proposal from Clean Yield Asset Management, a Vermont firm that advocates socially responsibility in investing. The asset-managers has since withdrawn its proposal, Wells Fargo said.

The bank is based in San Francisco and has 27,000 employees in the Charlotte area, its biggest workforce in any city.

This story was originally published February 12, 2020 at 1:13 PM.