Shareholder Proposals At Walmart, Netflix, Seek To Pressure Boards On Workers’ Rights

Shareholder proposals recently filed with Walmart, CVS Pharmacy, Neflix, Doordash and Gannett are an indication that workers’ rights issues may become a major governance concern this year. Corporate board members will need to collaborate with management to clarify company worker rights policies in anticipation of shareholder concerns regarding workers’ rights to organize unions.

New York State Comptroller Thomas P. DiNapoli filed the proposals, which advocate for workers’ freedom of association and collective bargaining rights, on behalf of the New York State Common Retirement Fund which manages an estimated $233 billion. The proposals at Walmart, CVS, Netflix and Doordash were also co-filed on behalf of the New York City Retirement Systems, which oversees an estimated $239 billion in assets. These filings come on the heels of several efforts by companies in 2022 to prevent workers from unionizing and at a time when companies continue to layoff thousands of workers due to recession fears. In fact, all the companies targeted by these proposals have been accused of past labor and workers’ rights offenses.

These massive pension funds’ efforts to advocate for workers’ rights may inspire other large institutional shareholders to file similar proposals. The Walmart and CVS proposals ask the companies’ boards to commission independent third-party assessment of the company’s commitment to workers’ freedom of association and collective bargaining rights. The proposals at Netflix, Doordash and Gannett ask their boards to publicly disclose their policy regarding upholding employee’s rights of freedom of association and collective bargaining.

DiNapoli defended the actions he has taken to push companies to respect workers’ rights to join unions and collectively bargain in a press release announcing the filing of the shareholder proposals. “It’s in the companies’ own interests, and in the long-term interests of shareholders, to ensure workers are treated fairly,” DiNapoli said.

Each individual board will have to decide what treating workers fairly means for their company. This year holds the possibility that any company that has had labor problems in the past could receive shareholder proposals asking for more transparency on their policies regarding employees organizing unions and engaging in collective bargaining. Additionally, companies will need to determine if there are potential workers’ rights issues that they are not aware of lurking under the surface that could cause operational disruptions and reputational damage in the future. Not all workers’ rights issues will result in shareholder proposals, but they can produce lawsuits that are equally troublesome. To lessen the possibility of shareholder proposals, boards should consider the following:

1. Build a corporate culture that strengthens relationships with employees.

Perhaps the best way to prevent employees forming unions is to have a corporate culture that truly respects employees. If employees feel that they are being paid a fair wage, have good benefits and adequate safety procedures to protect them, they will likely see less need to form a union. Additionally, ongoing employee engagement can potentially keep the board aware of issues employees may have with management before they become major problems.

2. Solicit feedback on workers rights issues from the largest shareholders.

As companies have periodic conversations with their largest shareholders, boards and management should be prepared to discuss company policies regarding employee unions and collective bargaining. Companies with low-wage workers should be acutely aware of what their largest shareholders think about workers’ freedom of association and collective bargaining because low-wage workers are more likely to want to form unions. Making sure the largest shareholders understand managements’ position regarding these matters can give the board an opportunity to craft a policy that most shareholders can live with.

3. Consider publicly stating the company’s position on freedom of association, collective bargaining and other employee rights.

Once the board and management have developed positions on freedom of association, collective bargaining and other employee rights, companies should consider communicating those policies publicly. Under the right conditions, full transparency will affirm the company’s commitment to its workers in a positive way. Also communicating how these policies contribute to the long-term growth of the company and the overall benefit of the workers should build good will with workers, shareholders and stakeholders.