With the Georgia Senate race and control of the Senate hanging in the balance, a Biden Administration’s ability to enact new employment-related legislation is questionable. However, with the stroke of a pen, a Biden Administration can make significant changes through Executive Order. In this post, we attempt to identify several areas where rule by Executive Order may come.
On October 21, 2020, OFCCP released a highly anticipated Request for Information (“RFI”) seeking information from federal contractors, federal subcontractors, and employees of federal contractors and subcontractors regarding diversity-related training, workshops, or similar programming provided to employees. This RFI follows President Trump’s recent Executive Order on Combating Race and Sex Stereotyping (“Executive Order”), which purportedly prohibits federal contractors from promoting race or sex stereotyping or scapegoating through workplace training (see prior blogs on this subject here and here). READ MORE
On October 7, 2020, OFCCP issued initial guidance regarding President Trump’s recent executive order prohibiting certain diversity-related training by federal contractors (“Executive Order on Combating Race and Sex Stereotyping”). As we previously reported, under this Executive Order, all government contracts entered into after November 21, 2020 must contain certain provisions related to the prohibition of workplace trainings that encompass “race or sex stereotyping” or “race or sex scapegoating,” and covered contractors are prohibited from implementing such trainings in their workforces. READ MORE
On September 22, 2020, President Trump issued an Executive Order on Combating Race and Sex Stereotyping prohibiting certain diversity-related training in the federal workforce and among government contractors. Specifically, the executive order provides that the United States will not promote “race or sex stereotyping or scapegoating” in the federal workforce or in the Uniformed Services, the government will not allow grant funds to be used for those purposes, and federal contractors cannot “inculcate such views in their employees.” While the executive order may have significant implications for contractors, the lasting impacts are currently uncertain, including in light of the upcoming election and expected legal challenges. READ MORE
New York State enacted the “Women on Corporate Boards Study” on December 30, 2019, with the goal of improving diversity on corporate boards. Effective June 27, 2020, the law requires the New York Department of State and Department of Taxation and Finance to conduct a study on the number of women who serve on boards of directors of companies doing business in New York State. To facilitate the study, the law requires foreign and domestic corporations to report to the Secretary of State the number of directors on their boards and to specify how many of those directors are women as part of the corporation’s filing statement.
The study will analyze the number of women directors and the total number of directors that constitute the board of each corporation, the change in the number of women directors from previous years, and the aggregate percentage of women directors on all boards in New York. The law also provides that the Department of State will publish a report regarding the study on or before February 1, 2022, with a new report required every four years thereafter.
The law is described as a “proactive approach to address historical inequality and end discriminatory practices,” with New York leading the way. In signing the legislation, Governor Cuomo stated, “[f]rom new pay equity laws to strongest-in-the-nation sexual harassment policies, New York is leading the fight for gender equality in the workplace—but our work won’t be done until women are better represented at the highest levels of organizations.” Cuomo further stated that the new study would “help shed light on the problem and guide the development of new policies to ensure more women have a seat at the proverbial table.”
The Growing National Trend in Board Diversity Efforts
New York is not the only jurisdiction to implement corporate reporting aimed at increasing board diversity. Illinois passed a corporate reporting law in August 2019, requiring corporations to include additional board composition information in annual reports submitted to the Secretary of State. The additional required information includes the gender of each board member, various processes for identifying and appointing executive officers, and the corporation’s policies and practices for promoting diversity and inclusion among its board and executive officers. Maryland also enacted reporting requirements effective October 2019, requiring certain corporations to include in their annual reports the number of women serving on the board of directors and the total number of board members.
This legislation follows in the footsteps of California’s first-of-its-kind law requiring women to be represented on boards. As we previously reported, in 2018, California passed a law requiring publicly held corporations based in California to have at least one woman director by the end of 2019. The law also provides that by the end of 2021, corporations with five or more directors on the board must have at least two female board members, and boards with six or more board seats must have at least three women board members. The law—currently being challenged on constitutional grounds—imposes significant penalties for failing to comply and calls for publishing the names of compliant and non-compliant companies.
Legislation to increase board diversity and to require corporations to report board diversity is a growing trend in response to the #MeToo movement. Employers should take heed of the growing interest in legislation aimed to increase board diversity and should remain on watch for developments in the jurisdictions where they operate. Indeed, board diversity has piqued Congressional interest, as exemplified by the House’s passage of the Improving Corporate Governance Through Diversity Act of 2019, which would require public companies to annually disclose the gender, race, ethnicity, and veteran status of their board of directors, nominees, and senior executive officers, and would require the Securities and Exchange Commission to establish a Diversity Advisory Group to study strategies for increasing gender, racial, and ethnic diversity among boards of directors. In addition, some companies are already taking the reins in pressuring businesses to increase board diversity: for instance, Goldman Sachs recently announced that it would not take companies public in the U.S. and Europe if they do not have at least one diverse board director.
Consistent with the mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Treasury Department issued a proposed rule that would require contractors doing business with the agency to confirm their commitment to equal opportunity in employment and contracting. The rule would amend the Department of the Treasury Acquisition Regulation to require any entity entering a contract with the agency to insert a statement in each contract that it has made affirmative efforts to include women and minorities in its workforce. If the contractor in turn enters into a subcontractor arrangement to carry out the government contract, the contractor must include the same provision in any such subcontract that has a monetary value of more than $150,000.
In addition to the specific contractual provisions, the proposed rule would provide the Treasury Department with an opportunity to request information from the contractor to demonstrate that the contractor has made a “good faith effort” to satisfy its commitment to diversity. The proposed regulation explains that the documentation that may be requested to demonstrate this “good faith effort” can include: (1) an EEO-1 report of the contractor’s employees, detailing the number of employees and the number of minority and women employees; (2) a list of subcontract awards under the contract at issue, including the dollar amount of such subcontract award, the date of the award, and the subcontractor’s race, ethnicity and gender; (3) EEO-1 data for subcontractors performing work under the contract; and (4) the contractor’s plan to ensure that minorities and women “have appropriate opportunities to enter and advance within its workforce, including outreach efforts.” Failing to comply with these obligations can result in loss of the contract. READ MORE