Corporate Governance

Virus Requires SEC Action on Workforce Disclosures, Lawmakers Say

May 19, 2020, 8:38 PM

The Securities and Exchange Commission should push companies to disclose details of their workforce management practices in the wake of the coronavirus pandemic, two Democratic lawmakers said.

Sen. Mark Warner (D-Va.) and Rep. Cynthia Axne (D-Iowa), in a letter sent Tuesday to SEC Chairman Jay Clayton, urged the agency to issue guidance on the “critical” human capital information companies should disclose to investors and the public.

The Covid-19 pandemic has underscored the need for companies to disclose critical information including employee engagement and sick leave policies, workplace cleaning practices, varying work schedules, and protective equipment for workers, the letter said.

“Now, more than ever, investors and the public should have access to comprehensive, timely, and comparable information related to companies’ human capital management practices,” the lawmakers wrote.

Both Axne and Warner have introduced legislation (H.R. 5930 and S. 3361) requiring the disclosure of human capital metrics by publicly traded companies, and have asked the SEC to update Regulation S-K —establishing various reporting obligations— to include quantitative items such as employee turnover rates. Axne’s bill advance out of the House Financial Services Committee on Feb. 28 and is awaiting action by the full chamber.

The commission in 2019 voted 5-0 to release a proposal that would require companies to report on “human capital measures or objectives that management focuses on in managing the business.” The plan faced pushback from General Motors and other companies.

Metrics should include topic with a high value across industries, including violations of workplace safety regulations and whether workers are full-time or contractors, the lawmakers said.

These disclosures “will better enable investors to assess the impact of future health or economic crises on the company’s workforce, which are material to company performance, investment and voting decisions,” they added.

To contact the reporter on this story: Jacob Rund in Washington at jrund@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com

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