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$20 Million Pinterest Gender Discrimination Settlement & the Problem with Severance Agreements

In June, two Black women blew the whistle on racism and sexism at Pinterest. They each left the company with less than a year in severance pay. By contrast, last week Pinterest agreed to pay $20 million to settle a gender discrimination lawsuit brought by its former white chief operating officer, Françoise Brougher.

The Brougher settlement has led to criticism that Pinterest still doesn’t get it. Critics have called it a “slap in the face.” So what’s going on? Is the Brougher settlement just another example of racism in the workplace? Is something else at play?

The short answer: Yes. The Pinterest outcry illustrates the harm done by one of employer’s favorite tools: the take-it-or-leave-it severance agreement forced upon resigning or terminated employees. These agreements do the most harm to workers with less power and less money in their savings accounts, the same workers our anti-discrimination laws are designed to protect.

Severance agreements, as they are most often used, are engines of economic inequality that restrict access to the justice system to those who can afford to refuse money now for the prospect of more money later.

Background on the Allegations of Sexism and Racism at Pinterest

In June 2020, two Black women who worked on Pinterest’s policy team, Ifeoma Ozoma and Aerica Shimiza Banks, spoke publicly about leaving Pinterest because of rampant discrimination and bias in the office. Ms. Banks complained of pay discrimination, racial hostility, and retaliation. (It’s unclear whether Ms. Ozoma or Ms. Banks hired lawyers or threatened lawsuits against Pinterest when they left the company.)

These allegations shook the internet. Why? In addition to exposing bias at a huge company, the Pinterest allegations hit particularly hard because Pinterest is known for being “nice,” a place where people, mostly women, aspire to a glossy lifestyle and refrain from the sort of name-calling and hostility they might find on other social media platforms.

Françoise Brougher’s Gender Discrimination Lawsuit Against Pinterest

The outcry got louder when Françoise Brougher, Pinterest’s chief operating officer from March 2018 through April 2020, sued the company in August alleging that she was fired after complaining about gender discrimination among the mostly-male executive team.

Ms. Brougher alleged that male executives were promised more favorable equity grants and vesting schedules than she was. She complained about this discrimination to HR and Pinterest caved to Ms. Brougher’s demands.

After she complained, Pinterest’s male executive team excluded Ms. Brougher from board meetings, team meetings, and consistently demeaned her and undermined her authority. Ms. Brougher alleged that one executive sarcastically asked her, “What is your job anyway?

In April, Ms. Brougher was fired. She sued in August.

Last week, Pinterest announced that it would pay $20 million to settle Ms. Brougher’s claims, plus dedicating $2.5 million to internal programs to fight discrimination.

Why Did Ms. Brougher Get $20 Million, While Ms. Ozoma and Ms. Banks Got Six Months’ Pay?

Ms. Ozoma and Ms. Banks publicly criticized the Brougher settlement, complaining that, while Ms. Brougher received $20 million, they received six months’ severance pay. As Ms. Banks told TechCrunch, “This follows the time-honored tradition in America where Black women come forward, blazing a trail, revealing injustice and white women coming in and reaping all the benefits of that.”

Ms. Banks is right. But the difference in treatment also illustrates the problem with severance agreements as they’re used by corporate America.

Today, the severance agreement is a tool that insulates companies from discrimination claims by its more vulnerable employees. It’s a high-pressure tactic used on vulnerable people.

Once you accept the money offered in a severance, it is almost impossible to revoke the agreement, with very few exceptions. For employees with bills to pay, severance pay can be a comforting bridge to new employment, and can help them stay in their homes, pay for childcare, and keep food on the table while they look for work. The prospect of rejecting a severance agreement and gambling on litigation is a dangerous one for many of these employees — even if they have solid claims of discrimination and could conceivably recover millions of dollars.

By contrast, Ms. Brougher, a long-time Silicon Valley executive, likely had millions in the bank when she was fired and could weather unemployment just fine, giving her plenty of time to find a lawyer, draft a complaint, and bring a public lawsuit that leveraged her considerable advantages to obtain a huge settlement.

Congress recognized that severance agreements can be abusive when it enacted the Age Discrimination in Employment Act and the Older Workers’ Benefit Protection Act. Under both Acts, workers over 40 must be given time to revoke a severance agreement; if they revoke, any releases are void, and they can bring a lawsuit for discrimination.

Workers under 40 aren’t entitled to any revocation period at all. They should be. If we are serious about combatting discrimination, we need to give people time to recover from the immediate trauma of termination and make informed decisions about their rights.

How to Protect Yourself When You’re Given a Severance Agreement

Be wary of severance agreements. Contrary to popular belief, you aren’t usually entitled to any severance at all, so employers only offer them to reduce “litigation risk,” i.e., to get you to waive claims against the company. Look at them with the skepticism they deserve.

Don’t sign anything on the spot. Your employer shouldn’t force you to sign anything on the spot. If they try, just calmly say you aren’t comfortable signing anything that affects your rights without taking it home, reviewing it, and thinking on it. Know that, if your employer wants you to waive your rights, they will probably allow you to accept the severance later — it’s not rational for them to revoke it. So take it home, and take your time.

Talk to a lawyer. Use that time to talk to a lawyer about whether you have claims and how much they might be worth. Most employment lawyers will provide free consultations. Other lawyers will charge a flat rate to review a severance and discuss the consequences of the agreement with you. This way, you’ll understand what you’re agreeing to when you sign.

Negotiate. Think it through and come to a meeting with bullet points as to why you should get more in severance. Maybe you think you were terminated in retaliation for complaining about something, which might be illegal. Maybe you drove the company’s sales last quarter and it’s a matter of principle. Know your pressure points and use them to try to get more money. And don’t be shy about this! What are they going to do, get mad at you? You’re already leaving the company.

Make an informed decision. After you talk to a lawyer and decide whether you want to negotiate on your own, you can make an informed decision about whether to accept what’s on the table. Maybe that means litigation; maybe it doesn’t. But at least you can protect yourself from the wildly disparate outcomes that stem from severance agreements, as illustrated by the Pinterest debacle.

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