Mandatory arbitration and non-disclosure agreements: A new campaign from the New York City pension funds and comptroller Scott Stringer, joined by the federation of labor unions Change to Win, seeks an end to what they term “inequitable employment practices.” They have asked Alphabet, Amazon.com, CBRE Group, CBS, Citigroup, XPO Logistics and Yum Brands to adopt a policy not to
engage in any Inequitable Employment Practice. “Inequitable Employment Practices” are mandatory arbitration of employment-related claims, non-compete agreements with employees, agreements with other companies not to recruit one another’s employees, and involuntary non-disclosure agreements (“NDAs”) that employees are required to sign in connection with settlement of claims that any [company] employee engaged in unlawful discrimination or harassment.
In a December 14 press release, Stringer said a hostile working environment at Alphabet/Google and CBS has prompted “public lawsuits and mass employee walk-outs,” with practices that have “wide-ranging impacts on the broader economy as well as workers’ rights.” The release said the targeted practices have been “pinpointed as drivers behind corporate cover-up of harassment and tools used to retaliate against whistleblowers.” It said the consequences are damaging to workers, investors and the public.
Taking a similar approach, Clean Yield wants McDonald’s to report “on the potential impact on the company of emerging state and federal policies described in this proposal to prevent harassment and discrimination against any EEO-protected classes of employees by restricting nondisclosure and compulsory arbitration agreements.” The resolution takes note of a February 2018 letter from all 50 state attorneys general to Congress seeking an end to mandatory arbitration in sexual harassment cases, which said this would help end “the culture of silence that protects perpetrators at the cost of their victims.” It also points to related bills in 16 states and laws in seven states, while noting that several large companies have ended the practice. Companies face legal risks, damage to employee morale and productivity and other problems because of secret handling of problems, which are more acute for African Americans and Hispanics, according to the proposal.
The proposals have come out of work from a group of 25 large institutional investors called the Human Capital Management Coalition (HCMC), sponsored by the UAW Retirees Medical Benefits Trust, which in 2017, petitioned the SEC to require more disclosure of information about a company’s workforce and human resources policies. Members of HCMC include the Nathan Cummings Foundation (NCF), Trillium Asset Management, the Office of the NY State Comptroller, and the AFL-CIO Office of Investment, among others. NCF has not filed any proposals yet but is engaging at least ten companies in dialogue on this issue.
Director, Corporate & Political Accountability, Nathan Cummings Foundation
Principal, Whistle Stop Capital
“KEEP IT SECRET” POLICIES ENABLE CULTURES OF HARASSMENT AND DISCRIMINATION
Thanks to Tarana Burke’s Me Too movement, TIME’S UP and others, it’s no longer possible to ignore the devastating impacts of discrimination, harassment and sexual assault in the workplace. In the business world, we’ve seen many alleged harassers removed from positions of power. But while Les Moonves and his ilk may be gone, it’s not always clear whether companies are taking steps to eliminate not just the alleged harassers, but the policies and practices that helped shield them from accountability in the first place.
SEC action—McDonald’s has challenged the proposal at the SEC on the grounds that Clean Yield was not specifically authorized by a company stockholder to file the proposal, invoking SEC Staff Legal Bulletin 14I from November 2017.
In its challenge, Yum Brands is contending the resolution concerns ordinary business because it deals with its management of the workforce and is not a significant social issue. The challenge also says the board executive committee examined the issue and found only 0.2 percent of its workforce has a non-compete agreement and that even if they exist, they relate narrowly to potentially forfeited incentive compensation. It says only a “small number” of employees submit to mandatory arbitration at Yum, but that arbitration is “widely accepted” as a means to keep legal costs lower. Further, it says Yum has not settled “a significant number” of sexual harassment claims—whether or not they might be subject to non-disclosure agreements, and that such agreements can prevent reputational damage if employees are subject to baseless claims. In any event, the company’s sexual misconduct policy training addresses the concerns of the proposal, Yum says. Finally, the company says the proposal seeks to micromanage it.
Worker safety: The United Steelworkers have filed several proposals over the years about worker safety and this year the union is approaching HollyFrontier, asking it to “prepare a report to shareholders by the 2020 annual meeting...on process safety incidents, environmental violations, and worker fatigue risk management policies for the Company’s refineries.” The resolution will not go to a vote, however, because the SEC staff concurred with the company’s point that it was filed too late.