Workforce Investment Disclosure Act of 2023
This bill requires publicly traded companies to disclose information annually regarding workforce management policies, practices, and performance. This includes
The Securities and Exchange Commission may exempt emerging growth companies from certain disclosures.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4578 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 4578
To amend the Securities Exchange Act of 1934 to require issuers to
disclose to the Securities and Exchange Commission information
regarding workforce management policies, practices, and performance,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 12, 2023
Ms. Garcia of Texas introduced the following bill; which was referred
to the Committee on Financial Services
_______________________________________________________________________
A BILL
To amend the Securities Exchange Act of 1934 to require issuers to
disclose to the Securities and Exchange Commission information
regarding workforce management policies, practices, and performance,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Workforce Investment Disclosure Act
of 2023''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) One of the keys to the 20th century post-war economic
success of the United States was the ability to prepare workers
over the course of their lives for success through multiple
sectors across society. Unfortunately, during the several
decades preceding the date of enactment of this Act, there has
been a shift in business norms and in society. While Congress
recognizes that the technology and job skills required for some
jobs has changed dramatically, the private and public
partnership to hire workers at different education levels and
invest in them for the long-term is broken.
(2) Available data from the 10-year period preceding the
date of enactment of this Act suggests that businesses are
investing less in worker training during that time period, not
more.
(3) In the wake of the 2008 global financial crisis, there
was a well-documented decline in overall business investment.
That decline coincides with the wage polarization of workers
and an increase in spending on share buybacks and dividends,
leading several researchers to conclude that companies are de-
emphasizing investment at the expense of increasing returns for
shareholders. The onset of a global pandemic may make that
trend worse, especially with respect to investments in workers.
(4) As part of the overall decline in investment described
in paragraph (3), publicly traded companies are being provided
with incentives to prioritize investments in physical assets
over investments in their workforces, meaning that those
companies are investing in robots instead of individuals. In
fact, there are already signs that automation has increased
during the COVID-19 pandemic.
(5) More than ever, the Federal Government, through company
disclosure practices, needs to understand exactly how companies
are investing in their workers. Over the several months
preceding the date of enactment of this Act, companies across
the United States have taken extreme actions to adapt and
respond to evolving workforce challenges presented by COVID-19.
(6) JUST Capital has been tracking the responses of the
Standard and Poor's 100 largest public companies to their
workers and has found wide variation in the policies
implemented, as well as with respect to the disclosure of those
policies. Through different responses to their workforces, from
layoffs to workplace safety to paid leave, the COVID-19
pandemic is exposing the myriad ways that workforce management
practices of companies pose operational and reputational risks
for short- and long-term financial performance.
(7) Even before the COVID-19 pandemic, there was a growing
body of research establishing a relationship between measurable
workforce management, which is the way that companies manage
their employees, and firm performance. In a study of 2,000
large companies, Harvard Law School's Labor and Work Life
Program found that forward-thinking workforce policies that
prioritize workers, such as how companies train, retain, and
pay their workers, are correlated with long-term financial
performance.
(8) Disclosure of workforce management policies should be
part of a government-wide economic recovery strategy. Just as a
set of generally accepted accounting principles (commonly known
as ``GAAP'') was urgently adopted after the Great Depression,
standardized, comparable metrics of workforce disclosure
requirements in the context of the COVID-19 pandemic are
critical for investors to accurately measure and project
company performance, both in the present and in the future.
(9) Because many companies already track workforce metrics
internally, moving towards a transparent disclosure regime
would allow investors to better judge whether companies are
managing risks and making the investments in their workforces
that are needed for long-term growth.
(10) Businesses increasingly rely on workforce innovation
and intellectual capital for competitiveness. Workplace
benefits, particularly paid sick leave, medical leave, and
flexible work arrangements, critically support employee mental
and physical well-being.
(11) Race- and gender-based workplace discrimination have
been tied to negative health outcomes, as well as lower
productivity, trust, morale, and satisfaction and higher rates
of absenteeism and turnover. Organizational reporting on
practices to reduce discrimination can increase employee job
satisfaction, performance, and engagement.
(12) According to the Centers for Disease Control and
Prevention, work-related stress is the leading occupational
health risk and, per the American Institute of Stress, job
stress costs United States industry more than $300,000,000,000
per year in accidents, absenteeism, employee turnover,
diminished productivity, and medical, legal, and insurance
costs.
(13) Employee health and well-being is a key asset to
delivering long-term value, with 80 percent of public companies
that took concrete actions on health and well-being having seen
larger improvements in financial performance.
(14) Organizational well-being interventions can create
cost savings of up to 10 dollars for every dollar invested.
Specifically, for every dollar that employers spend on
workplace disease prevention and well-being programs, there is
a $3.27 reduction in employee medical costs and a $2.73
reduction in absenteeism costs. Employers that implement
workplace health promotion programs have seen reductions in
sick leave, health plan costs, and workers' compensation and
disability insurance costs of approximately 25 percent.
(15) The Centers for Disease Control and Prevention has
found that preventable chronic conditions are a major
contributor to insurance premium and employee medical claim
costs, which are at an all-time high, and a Milken Institute
study shows that employers paid $2,600,000,000,000 in 2016 for
the indirect costs of employee chronic disease due to work
absences, lost wages, and reduced economic productivity.
(16) The COVID-19 pandemic has severely impacted employee
physical, mental, and emotional well-being by increasing
stress, depression, burnout, and mortality rates of chronic
disease and by reducing work-life balance and financial
security, with these challenges likely to persist due to
uncertainty and instability even as employees return to work.
Before the COVID-19 pandemic, but especially in the face of
that pandemic, employers that advance policies and practices
that support workforce health, safety, and well-being are
likely to outperform competitors and benefit from lower costs.
SEC. 3. DISCLOSURES RELATING TO WORKFORCE MANAGEMENT.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m)
is amended by adding at the end the following:
``(t) Disclosures Relating to Workforce Management.--
``(1) Definition.--In this subsection, the term `contingent
worker' includes an individual performing work on a temporary
basis or as an independent contractor.
``(2) Regulations.--Not later than 2 years after the date
of enactment of this subsection, the Commission, in
consultation with the Secretary of Labor, the Secretary of
Commerce, the Secretary of Treasury, and the Attorney General,
shall promulgate regulations that require each issuer required
to file an annual report under subsection (a) or section 15(d)
to disclose in that report information regarding workforce
management policies, practices, and performance with respect to
the issuer.
``(3) Rules.--Consistent with the requirement under
paragraph (4), each annual report filed with the Commission in
accordance with the regulations promulgated under paragraph (2)
shall include disclosure of the following with respect to the
issuer filing the report for the year covered by the report:
``(A) Workforce demographic information,
including--
``(i) the number of full-time employees,
the number of part-time employees, and the
number of contingent workers (including
temporary and contract workers) with respect to
the issuer, which shall include demographic
information with respect to those categories of
individuals, including information regarding
race, ethnicity, and gender;
``(ii) any policies or practices of the
issuer relating to subcontracting, outsourcing,
and insourcing individuals to perform work for
the issuer, which shall include demographic
information with respect to those individuals,
including information regarding race,
ethnicity, and gender; and
``(iii) whether the percentage of
contingent workers with respect to the issuer
has changed, including temporary and contract
workers, as compared with the previous annual
report filed by the issuer under this
subsection.
``(B) Workforce stability information, including
information about the voluntary turnover or retention
rate, the involuntary turnover rate, the internal
hiring rate, and the internal promotion rate, and the
horizontal job change rate by quintile and demographic
information.
``(C) Workforce composition, including--
``(i) data on diversity (including racial,
ethnic, and gender composition) for senior
executives and other individuals in the
workforce; and
``(ii) any policies, audits, and
programming expenditures relating to diversity.
``(D) Workforce skills and capabilities,
including--
``(i) information about training and cross-
training of employees and contingent workers by
quintile and demographic information,
distinguishing between compliance training,
career development training, job performance or
technical training, and training tied to
recognized postsecondary credentials;
``(ii) average number of hours of training
for each employee and contingent worker;
``(iii) total spending on training for all
employees and contingent workers;
``(iv) average spending per employee or
contingent worker;
``(v) training utilization rates; and
``(vi) whether completion of training
opportunities translates into value added
benefit for workers, as determined by wage
increases or internal promotions.
``(E) Workforce health, safety, and well-being,
including information regarding--
``(i) the frequency, severity, and lost
time due to injuries, physical and mental
illness, and fatalities;
``(ii) the scope, frequency, and total
expenditure on workplace health, safety, and
well-being programs;
``(iii) the total dollar value of assessed
fines under the Occupational Safety and Health
Act of 1970 (29 U.S.C. 651 et seq.);
``(iv) the total number of actions brought
under section 13 of the Occupational Safety and
Health Act of 1970 (29 U.S.C. 662) to prevent
imminent dangers;
``(v) the total number of actions brought
against the issuer under section 11(c) of the
Occupational Safety and Health Act of 1970 (29
U.S.C. 660(c));
``(vi) any findings of workplace harassment
or workplace discrimination during the 5 fiscal
year period of the issuer preceding the fiscal
year in which the report is filed; and
``(vii) communication channels and
grievance mechanisms in place for employees and
contingent workers.
``(F) Workforce compensation and incentives,
including information regarding--
``(i) total workforce costs, including
salaries and wages, health benefits, other
ancillary benefit costs, and pension costs;
``(ii) workforce benefits, including paid
leave, health care, child care, and retirement,
including information regarding benefits that
are provided--
``(I) to full-time employees and
not to part-time employees; or
``(II) to employees and not to
contingent workers;
``(iii) total contributions made to
unemployment insurance by the issuer, how many
employees to whom those contributions apply,
and the total amount paid in unemployment
compensation to individuals who were laid off
by the issuer;
``(iv) policies and practices regarding how
performance, productivity, equity, and
sustainability are considered when setting pay
and making promotion decisions; and
``(v) policies and practices relating to
any incentives and bonuses provided to
employees and any policies or practices
designed to counter any risks created by such
incentives and bonuses.
``(G) Workforce recruiting and needs, including--
``(i) the number of new jobs created,
seeking to be filled, and filled, disaggregated
based on classification status;
``(ii) the share of new jobs that require a
bachelor's degree or higher;
``(iii) information regarding the quality
of hire for jobs described in clause (i); and
``(iv) the retention rate for individuals
hired to fill the jobs described in clause (i).
``(H) Workforce engagement and productivity,
including information regarding policies and practices
of the issuer relating to--
``(i) engagement, productivity, and mental
well-being of employees and contingent workers,
as determined in consultation with the
Department of Labor; and
``(ii) freedom of association and work-life
balance initiatives, including flexibility and
the ability of the workforce to work remotely,
as determined in consultation with the
Department of Labor.
``(4) Disaggregation of information.--To the maximum extent
feasible, the information described in paragraph (3) shall be
disaggregated by--
``(A) the workforce composition described in
subparagraph (C) of that paragraph;
``(B) wage quintiles of the employees of the issuer
for the year covered by the applicable annual report;
and
``(C) the employment status of individuals
performing services for the issuer, including whether
those individuals are full-time employees, part-time
employees, or contingent workers.
``(5) Treatment of emerging growth companies.--The
Commission may exempt emerging growth companies from any
disclosure required under subparagraph (D), (E), (F), (G), or
(H) of paragraph (3) if the Commission determines that such an
exemption is necessary or appropriate in the public interest.
``(6) False or misleading statements.--
``(A) In general.--Except as provided in
subparagraph (B), it shall be unlawful for any person,
in any report or document filed under this subsection,
to make or cause to be made any untrue statement of a
material fact or omit to state a material fact required
to be stated in the report or document or necessary to
make the statement made, in the light of the
circumstances under which it is made, not misleading.
``(B) Exception.--A person shall not be liable
under subparagraph (A) if the person shows that the
person had, after reasonable investigation, reasonable
ground to believe, and did believe, at the time the
applicable statement was made, that the statement was
true and that there was no omission to state a material
fact necessary to make the statement made, in the light
of the circumstances under which it is made, not
misleading.
``(C) No private right of action.--Nothing in this
paragraph may be construed as creating a private right
of action.
``(7) Exemption.--This subsection shall not apply to an
investment company registered under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8).''.
SEC. 4. BACKSTOP.
(a) Definitions.--In this section--
(1) the term ``Commission'' means the Securities and
Exchange Commission;
(2) the term ``covered issuer'' means an issuer that is
required to file an annual report under section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a), 78o(d)); and
(3) the term ``issuer'' has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
(b) Compliance.--If, as of the date that is 2 years after the date
of enactment of this Act, the Commission has not promulgated the
regulations required under subsection (t) of section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m), as added by section 3
of this Act, a covered issuer, during the period beginning on that date
and ending on the date on which the Commission promulgates those
regulations, shall be deemed to be in compliance with such subsection
(t) if disclosures set forth in the annual report of the covered issuer
satisfy the public disclosure standards of the International
Organization for Standardization's ISO 30414, or any successor
standards for external workforce reporting, as supplemented or adjusted
by rules, guidance, or other comments from the Commission.
SEC. 5. SEC STUDY.
(a) Definitions.--In this section, the terms ``Commission'' and
``issuer'' have the meanings given those terms in section 4(a).
(b) Study.--The Commission shall conduct a study about the value to
investors of--
(1) information about the human rights commitments of
issuers required to file annual reports under section 13(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)),
including information about any principles used to evaluate
risk, constituency consultation processes, and supplier due
diligence; and
(2) with respect to issuers required to file annual reports
under section 13(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a)), information about--
(A) violations of the Fair Labor Standards Act of
1938 (29 U.S.C. 201 et seq.) by those issuers;
(B) violations of worker misclassification by those
issuers;
(C) surveys regarding employee satisfaction, well-
being, and engagement;
(D) the number and overall percentage of quality
jobs, as determined by compensation above median wage
and comprehensive employer-provided benefits; and
(E) information about workforce investment trends,
as determined by at least a 3-year time period.
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Commission shall submit to Congress a report that
contains the results of the study required to be conducted under
subsection (b), with recommendations for additional disclosure
regulations based on the findings, and any actions the Commission plans
to take to enhance disclosures based on the findings.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Financial Services.
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