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Bill Gates Fallout: Microsoft to Review its Sexual Harassment Policies

The review will include allegations that a board committee investigated beginning in 2019 involving Bill Gates.
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After months of criticism and passage of a shareholder resolution, Microsoft  (MSFT) - Get Microsoft Corporation Report has finally decided to look into its sexual harassment and discrimination practices, including any sexual harassment investigations in recent years against its directors and senior executives.

The company said Thursday that the review will include allegations that a board committee probed beginning in 2019 involving co-founder and former CEO Bill Gates.

Microsoft vowed to release "a transparency report assessing the effectiveness of the company's workplace sexual harassment and gender discrimination policies, training, and related policies."

The review will be conducted by an outside law firm, Arent Fox, retained by the board of directors. It comes following the passage of an advisory shareholder proposal from Arjuna Capital, that passed at its latest annual meeting in 2021.

"We urge Microsoft to independently investigate and confront these issues transparently, as sexual harassment and gender discrimination can harm shareholder value -- resulting in higher turnover, lower productivity, increased absenteeism, and higher sick leave costs", wrote Arjuna Capital.

“Our culture remains our number one priority and the entire Board appreciates the critical importance of a safe and inclusive environment for all Microsoft employees', Microsoft Chairman and CEO Satya Nadella said Thursday, in a statement. "We’re committed not just to reviewing the report but learning from the assessment so we can continue to improve the experiences of our employees. I embrace this comprehensive review as an opportunity to continue to get better”

The law firm will submit a report to the board with recommendations, and executives will show the board a plan to act on the recommendations. Then the board will release a report to the public showing how Microsoft intends to adjust its approach to handling harassment.

Gates No Longer Sits on Microsoft's Board

This announcement comes several months after reports from The New York Times that Gates had pursued a sexual relationship with an employee in 2000. Microsoft received a report on the matter, and a board committee looked into it.

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The company said Thursday that its report will summarize the results of investigations, including the one involving Gates.

Gates left Microsoft’s board in 2020. He and his wife, Melinda French Gates, divorced last year.

The board report will also consider reports of harassment and discrimination that female employees made in a 2019 email chain and the company’s response.

In addition to the Gates case and the emails, Arjuna Capital alluded, in its shareholder proposal, to a class action suit filed in March 2018 against Microsoft in which 238 employees claimed harassment.

The case showed that "Microsoft’s human resources team continuously overlooked and denied these allegations, only deeming one as founded. Claims resurfaced in April 2019 after several women activated a company-wide email chain claiming Microsoft disregarded such complaints", said Arjuna Capital.

In a lawsuit dropped in 2020, former Microsoft employee Katie Moussouris alleged that Microsoft had developed a habit of sex discrimination against women in technical and engineering positions.

Other Big Tech Are Not Spared

Apple  (AAPL) - Get Apple Inc. Report and Alphabet's Google  (GOOGL) - Get Alphabet Inc. Class A Report have also being sued by former employees for harassment and discrimination. In 2020 Google settled a lawsuit with shareholders over allegations that they mishandled misconduct among executives, and the company announced a slate of new practices.

"If there are allegations against any executives, a specialist team will be assigned and the results of any case will be reported to the Board’s Audit Committee", Eileen Naughton, Google VP, People Operations, wrote on September 25 in a post announcing the settlement.