Most of the resolutions over the last couple of years about working conditions have zeroed in on how companies handle sexual harassment complaints. New York City Comptroller Scott Stringer began a new campaign last year, joined by the union Change to Win, about mandatory arbitration and non-disclosure agreements. This year’s proposals focus more specifically on mandatory arbitration, which can shield the accused and help perpetuate problems—as shown in many high profile cases such as that against disgraced movie mogul Harvey Weinstein.
Mandatory arbitration: Twelve pending resolutions ask for reports on the use of arbitration and one asks for its end; four are not public:
Invoking a new California law, the New York City pension funds face SEC challenges at Dollar General and Dollar Tree for a proposal that seeks a report
on the use of contractual provisions requiring employees of Dollar General to arbitrate employment- related claims. The report should specify the proportion of the workforce subject to such provisions; the number of employment-related arbitration claims initiated and decided in favor of the employee, in each case in the previous calendar year; and any changes in policy or practice [the company] has made, or intends to make, as a result of California’s ban on agreeing to arbitration as a condition of employment.
The resolution notes high profile sexual harassment cases at companies such as Fox News, Google and Uber about sexual harassment, adding that it is concerned about wage theft, too. It points to a law signed by California Governor Gavin Newson in October 2019 that would have banned mandatory arbitration requirements. The law, AB 51, was to have gone into effect in January, but was put on hold by a federal judge in Sacramento at the end of the year after the Chamber of Commerce and the National Retail Federation sued to block it, claiming it violates the Federal Arbitration Act. At the end of January the judged issued a preliminary injunction that blocks implementation; the law now appears headed for the 9th Circuit Court of Appeals.
Change to Win has returned to Walmart with a resolution similar to its request last year, using the same formulation as the NYC proposals. Last year, a proposal from company employees in the group Organization United for Respect to the company about sexual harassment earned 10.8 percent support. That proposal sought more board oversight of sexual harassment, consideration of it in executive pay, and a review of company policies.
Change to Win has filed a proposal using the 2020 request for a report on mandatory arbitration at Yum Brands, as well.
Nia Impact Capital, a socially responsible investing firm from California, has a similar proposal at Tesla Motors and two small firms, Natus Medical and Pattern Energy. It asks for a report “on the impact of the use of mandatory arbitration on [company] employees and workplace culture. The report should evaluate the impact of [the company’s] current use of arbitration on the prevalence of harassment and discrimination in its workplace and on employees’ ability to seek redress.”
Withdrawal—The Nathan Cummings Foundation withdrew its proposal to Nordstrom that made the same request as the Nia Impact proposal, following an agreement in which the company agreed to review its use of arbitration and the implications for its corporate culture. The proposal noted the high prevalence of workplace discrimination for African American and Hispanic women, and the company’s current requirement for arbitration of any employment-related claims—saying it creates “a long tail risk for Nordstrom,” where two-thirds of employees are women and more than half are people of color.
SEC action—Dollar General and Dollar Tree both have lodged challenges to the NYC proposal at the SEC, arguing it concerns ordinary business. The commission has yet to respond. Yum Brands is making the same argument on its resolution from Change to Win, saying this is a workforce management concern; last year, Yum successfully challenged a proposal seeking an end to mandatory arbitration on these grounds.
Sexual harassment: A few arbitration proposals make the link to sexual harassment in their resolved clauses. Five resolutions come from a union and two socially responsible investing firms:
Arjuna Capital wants Comcast “to conduct an independent investigation into and prepare a report (at reasonable expense, omitting confidential and proprietary information) on risks posed by the Company’s failures to prevent workplace sexual harassment.”
At XPO Logistics, the shipping company, the Service Employees International Union (SEIU) has resubmitted proposal asking the company to “strengthen XPO’s prevention of workplace sexual harassment by formalizing the Board’s oversight responsibility, aligning senior executive compensation incentives, reviewing (and if necessary overseeing revision of) company policies,” with a report by the end of the year. The proposal is a resubmission that earned 18 percent support in 2019, after the company unsuccessfully challenged the proposal at the SEC on several grounds. One more proposal like this is pending at an additional company that has yet to be made public.
SEC action— JPMorgan said its proposal was submitted late and dealt with ordinary business since it’s too detailed, and the proponent withdrew. In still-pending challenges, Comcast says the proposal concerns ordinary business because it discusses legal compliance, while Wells Fargo says it would be moot after a report it planned early this year.
Human capital management: Five new resolutions ask for reports about how companies are managing both diversity and labor law issues, invoking the Sustainability Accounting Standards Board (SASB) standards in three instances:
At Advance Auto Parts, the proposal is for a report
describing the company’s policies, performance, and improvement targets related to material human capital risks and opportunities by 180 days after the 2020 Annual Meeting, at reasonable expense and excluding confidential information, including at a minimum reporting on average hourly wage and percentage of in-store employees earning minimum wage; voluntary and involuntary turnover rate for in-store employees; and total amount of monetary losses as a result of legal proceedings associated with labor law violations.
At McDonald’s, the resolution looks at the company’s restaurant ownership structure, asking for a report
on actions the company is taking to ensure decent work practices are upheld in the company’s owned and franchisee operations, including: Information on the company’s overall approach and board-level oversight of human capital management in the context of emerging workforce-related risks and opportunities in the quick service restaurant sector; and Comprehensive workforce metrics that effectively demonstrate the success and/or challenges the company faces in its management of human capital.
At three companies—Genuine Parts, O’Reilly Automotive and Ulta Beauty, the resolution is for a report on policies performance and improvement targets related to material human capital risks and opportunities by 180 days after the 2020 Annual Meeting at reasonable expense and excluding confidential information prepared in consideration of the metrics and guidelines set forth in the SASB Multiline and Specialty Retailers Distributors standards provisions on workforce diversity and inclusion and labor practices requirements.
Withdrawal—As You Sow withdrew at Advance Auto after reaching an agreement.
SEC action—Genuine Parts unsuccessfully challenged its proposal at the SEC on procedural grounds. Still awaiting SEC responses are challenges from two companies. McDonald’s says the proposal concerns ordinary business because it relates to workforce management, while O’Reilly Automotive contends the resolution is both too long and also moot. As You Sow withdrew a sustainability reporting proposal in 2019 after the company agreed to produce the report, and the company’s challenge this year notes its current sustainability report includes a section on diversity and inclusion.
Worker safety: The United Steelworkers have filed several proposals over the years about worker safety and this year the union approached 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 was filed too late for consideration last year, and has been withdrawn this year after an SEC challenge in which the company argued that it concerned ordinary business as it dealt with worker safety and legal compliance matters, and that it was too vague. The withdrawal came before any response from the commission.
A new resolution is still pending at Amazon.com, from the AFL-CIO. It asks for a report “on the steps the Company has taken to reduce the risk of accidents. The report should describe the Board’s oversight process of safety management, staffing levels, inspection and maintenance of Company facilities and equipment and those of the Company’s dedicated third-party contractors.” Amazon is contending at the SEC that it relates to ordinary business.
Plant closures: The AFL-CIO is asking United Technologies to report on the impacts of plant closures. The resolution wants to see “a committee, with members drawn from representatives of the employee workforce and management of the Company, to prepare a report regarding the impact on communities from the closure of Company manufacturing facilities and alternatives that can be developed to help mitigate the impact of such closures in the future.”
