WeWork, the beleaguered workspace property company, has been hit by a new scandal after its founder and former CEO Adam Neumann was this week accused of gender discrimination.
Medina Bardhi, a former WeWork employee, has filed a sexual discrimination lawsuit against Neumann, who was forced to step down in September amid claims of financial mismanagement.
Bardhi alleges that she was “harassed and demoted” after she told Neumann of her first pregnancy, adding that during her second pregnancy she was “replaced by a less-qualified male employee”, CBS News reports.
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The suit also contains allegations that female employees at WeWork are “regularly paid less for the same work than male employees”, the news site adds.
WeWork has denied the discrimination allegation, stating that it plans to “vigorously defend itself” and that it has “zero tolerance for discrimination of any kind”. Ex-CEO Neumann has also denied any wrongdoing.
The allegations are the latest in a long line of accusations against the company and its executives. CNN reports that over the past year, there have been “other complaints filed by former employees who say they were retaliated against and ultimately fired for reporting incidents internally”.
As the company looks to defuse the situation – as well as silencing some of the ridicule around its extraordinary financial losses in recent months – one question remains: where did it all go so wrong for WeWork and Adam Neumann?
What is WeWork?
Launched in 2010 by Neumann, the real estate firm provides shared workspace for start-ups at lower costs than they would spend hiring space of their own.
Investopedia reports that as the demand for communal workspaces grew, WeWork was eventually “valued as high as $47 billion [£36m] at its high point” in early 2019.
But, while it was once heralded as one of the most exciting start-ups in the world - with investors lining up to back it once the firm went public - 2019 has been a disastrous year for WeWork.
It made headlines in the business world after filing an S-1 form – laying out its plans to go public – this summer, but after further investigation investors gradually began expressing concern about WeWork’s business model and operational practices.
Business Insider says WeWork’s “mounting losses, corporate governance, and the behaviour and business dealings of its eccentric CEO have been increasingly criticised, eventually leading it to shelve its plan to go public indefinitely”. The company’s value dropped to $7.5bn (£5.8bn) in a matter of months, according to CNBC.
Under pressure from investors, Neumann agreed to step down as chief executive in September, saying it was in the “best interests” of the company. CBS reports that the company was reportedly “weeks away from running out of cash until it was bailed out this month by its largest investor, Japanese firm Softbank”.
What is this week’s news about?
This week, news emerged that Neumann’s former chief of staff Medina Bardhi is suing WeWork – which has now rebranded as The We Company – for allegedly “sustaining a substantial gender pay gap, smoking marijuana in front of her and discriminating against her and other women for becoming pregnant and taking maternity leave, among other allegations”, CNBC reports.
According to the lawsuit, a new male recruit for the chief of staff position, with the “same job scope and role” as Bardhi’s “was offered an annual salary of $400,000 [£309,000] with a $175,000 [£135,000] signing bonus payable in January 2017”, the broadcaster adds, noting that this is “far more than double the annual salary of $150,000 [£116,000] that Bardhi was being paid in the same job”.
She also alleges that Neumann referred to her maternity leave as “retirement” and “vacation”, and claims the former CEO had a “penchant for bringing marijuana on chartered flights and smoking it throughout the flight while in the enclosed cabin”, which she said posed a threat to her unborn child.
Bardhi claims that other women at the company had faced similar discrimination but had not come forward, says the BBC.
“For years, they have been subjected to a work environment in which female employees are demeaned for taking maternity leave, excessive alcohol consumption fuels offensive sexual conduct towards women, and where it is common for women to be paid less than their male colleagues,” she said.
Douglas Wigdor, Bardhi’s lawyer, has also taken aim at Neumann’s fellow executives for giving him a severance package of $1.7bn (£1.3bn) upon his resignation in September.
“It is astonishing that WeWork could reward Adam Neumann’s blatant sexist behaviour with a staggering and unprecedented golden parachute worth over a reported $1 billion [£772m],” Wigdor said, claiming his lawsuit “will send a loud and clear message to WeWork and other start-ups that pregnant women cannot be forced out of their jobs, that women must be paid fairly and afforded equal opportunities, and that you cannot retaliate against any person who voices a complaint of discrimination”.
A WeWork spokesperson said in a statement: “We are committed to moving the company forward and building a company and culture that our employees can be proud of.”
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