Activist group asks Tesla, Apple for labor policies

Leslie Patton
Bloomberg News
Tesla Model S sedans parked in front of the Tesla Factory in Fremont, California.

An activist firm is asking more than 30 big-name companies from Tesla Inc. to Apple Inc. to disclose more information on employment practices that it warns may be anti-competitive.

CtW Investment Group, which works with a coalition of union pension funds with more than $250 billion in assets, is sending letters to more than 30 companies seeking disclosure on their policies that it says can set workers up for reduced mobility, lower pay or even the inability to escape workplace harassment. The letters target non-compete agreements, no-poaching rules, mandatory arbitration or non-disclosure agreements, and ask directors to ultimately provide reports to shareholders on the practices.

“Investors increasingly recognize that for companies to succeed over the long term, they’ve got to be investing in their own workforce,” said Richard Clayton, research director at CtW, which works to promote shareholder activism in areas including governance and labor policies.

“A company that isn’t investing in that workforce faces a significant risk of falling behind,” he said.

CtW argues that requiring workers to solve conflicts through arbitration, instead of in a judicial court, could mean practices such as wage theft and discrimination aren’t detected or stopped.

Such agreements have all come under harsher scrutiny in recent years amid the rise of the #MeToo movement and the sluggishness of wage growth. Last week, the Economic Policy Institute, whose board is chaired by AFL-CIO President Richard Trumka, released a proposed workplace reform agenda for Congress that includes banning forced arbitration, as well as almost all non-competes.

Massachusetts also recently signed a law restricting enforcement of companies’ non-compete clauses. And earlier this month, the Washington State Attorney General announced agreements with eight restaurant chains, including Applebee’s and Panera Bread, to remove clauses from their contracts with franchisees that prevent them from hiring away each others’ employees.

CtW is also sending letters to companies such as McDonald’s Corp., Intel Corp. and Inc. While McDonald’s agreed to remove no-poach provisions from its franchise agreements earlier this summer, CtW said it’s looking for more transparency from companies on how they plan to monitor businesses to make sure anti-competitive practices aren’t happening on an informal level.

CtW in the past successfully lobbied Chipotle Mexican Grill Inc. investors to reject certain pay plans, arguing that the company’s recent stock performance didn’t justify its executive compensation. And Amazon earlier this year formally adopted a policy to consider women and minorities for all open board seats after advocacy from shareholders including CtW.

A confidential Tesla severance agreement obtained by Bloomberg News in June included clauses that would bar a worker being dismissed from disclosing “business-related” information, and required that disputes be handled in individual arbitration rather than via class-action lawsuit.

That agreement, which was presented to one of the more than 3,000 workers the company dismissed that month, required acknowledgement that the worker “had the opportunity to raise any safety concerns, safety complaints, or whistle-blower activities against the company, and that if any were raised during your employment, they were addressed to your satisfaction.”

Labor advocates said such terms could chill ex-employees from publicizing problems. But a Tesla spokesman said at the time that the language about safety matters was meant to ensure that any outstanding issues get addressed.

“The non-disclosure issues at Tesla are key,” Clayton said. “It may be limiting what people on the outside know, and it may even be limiting what the board of directors knows.”