Wall Street faces a reckoning over #MeToo—and mandatory arbitration

Good morning. Fortune Senior Writer Maria Aspan here. 

Five years after #MeToo went viral, the financial industry has remained relatively untouched by any sort of visible reckoning over gender bias and sexual harassment. But that may be about to change, as two long-simmering lawsuits head towards trial this spring, I recently reported for this Fortune feature.

One of the lawsuits is a class-action alleging gender discrimination at Goldman Sachs, according to 1,400 plaintiffs who are current and former employees. It’s an incredibly hardy case that began 17 years ago–yes, all the way back in 2005—when former Goldman vice president Cristina Chen-Oster left the bank and filed a gender-bias complaint with the U.S. Equal Employment Opportunity Commission. (After the EEOC closed its investigation, Chen-Oster filed suit in 2010.) The other is an individual lawsuit brought by Sara Tirschwell in 2018 against her former employer, bond-giant TCW Group, alleging that she had been sexually harassed by her boss and then fired in retaliation for reporting it.

Goldman Sachs, TCW, and Tirschwell’s former manager all deny the respective allegations. Tirschwell’s lawsuit is now scheduled to go to trial in May, followed by a June trial date for the Goldman Sachs class-action lawsuit.

Regardless of what happens next, it’s kind of amazing that either lawsuit has survived to this point—or even exists in the first place. Big banks, like many large employers, often require their employees to sign mandatory arbitration agreements, which keep all kinds of workplace disputes out of court—and out of the public eye. About 60 million workers are subject to forced arbitration, according to a 2018 report from the left-leaning Economic Policy Institute.

Both Chen-Oster and Tirschwell told me that they were only able to file suit—and talk to me—because they hadn’t been required to sign arbitration clauses when they worked for the companies they’re now suing. And it’s clear that this was the exception, rather than the rule: In an almost 30-year career on Wall Street, “TCW is the only place that I worked where I didn’t have an arbitration clause,” as Tirschwell puts it.

Starting in late 2017, the #MeToo movement drew plenty of public scrutiny to these arrangements, thanks in part to the ongoing advocacy of former Fox News anchor Gretchen Carlson. Some big tech companies and financial firms—including Google, Facebook, and Wells Fargo—eventually eliminated arbitration clauses for sexual misconduct claims.

But employers’ overall reliance on arbitration has continued to climb: Between 2018 and 2020, the number of employee disputes that were resolved in arbitration rose 66%, according to a report last year from the American Association for Justice.

A new federal law, signed by President Biden in March, decrees that employers can no longer force sexual misconduct claims into arbitration. However, the law does not apply to claims of gender bias or any other discrimination—which are at the heart of the Goldman Sachs class-action lawsuit. And Goldman, which in 2021 defended its use of arbitration clauses for sexual harassment despite shareholder pressure, spent the past 12 years successfully fighting to send many of Chen-Oster’s fellow plaintiffs to arbitration. 

(In emailed statements, a Goldman spokesperson says the bank “has a long and distinguished record of supporting and promoting women,” and has “zero tolerance for discrimination, harassment, or retaliation of any kind,” while a TCW spokesperson says the company has a “longstanding commitment to a diverse and inclusive culture, and has zero tolerance for any form of harassment or discrimination.”)

Whatever the ultimate outcome of these two lawsuits, their very existence—and endurance—sheds some light onto claims that many, many more employees aren’t allowed to air publicly. As Chen-Oster puts it: “Arbitration doesn’t allow for things to be more broadly broadcasted, or for there to be greater consequences.”

Read the full story here.

Maria Aspan
Twitter: @mariaaspan
Email: maria.aspan@fortune.com
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