On June 15, 2020, Americans for Financial Reform (AFR), a nonprofit coalition founded in the wake of the 2008 financial crisis, called on the Securities and Exchange Commission (SEC) to require public companies to disclose how they are protecting employees from coronavirus (COVID-19), citing that consistent, comprehensive information is critical to investors and public health.

Although the SEC Division of Corporate Finance issued Staff Guidance in March 2020 providing companies with its views on COVID-19 disclosures, followed by a joint statement on COVID-19 disclosures in April 2020 by SEC Chairman Clayton and Corp Fin Director Hinman which statement recommended that companies “provide as much information as is practicable” about how they are responding to the pandemic, AFR claims that these efforts were only one step in the right direction.

The letter, signed by 98 investors, state treasurers, public interest groups, labor unions, asset managers and securities law experts, recommends that the SEC give its guidance the force of law by mandating that firms provide “consistent, reliable data to investors about the economic impact of the pandemic on their business, human capital management practices, and supply chain risks.” AFR organized its recommended disclosures into the following 11 categories:

  1. Workplace COVID-19 Prevention and Control Plan – Companies should disclose a written infectious disease prevention and control plan including information such as the company’s practices regarding hazard identification and assessment, employee training, and provision of personal protective equipment;
  2. Identification, Contact Tracing, and Isolation – Companies should disclose their policies for identifying employees who are infected or symptomatic, contact tracing and notification for potentially exposed employees and customers, and leave policies for infected employees who are isolating;
  3. Compliance with Quarantine Orders and phased reopening orders – Companies should disclose how they are complying with federal, state, and local government quarantine orders and public health recommendations to limit operations;
  4. Financial Implications – Companies should disclose the impact of the COVID-19 pandemic on their cash flows and balance sheet as well as steps taken to preserve liquidity such as accessing credit facilities, government assistance, or the suspension of dividends and stock buybacks;
  5. Executive Compensation – Companies should promptly disclose the rationale for any material modifications of senior executive compensation due to the COVID-19 pandemic, including changes to performance targets or issuance of new equity compensation awards;
  6. Employee Leave – Companies should disclose whether or not they provide paid sick leave to encourage sick workers to stay home, paid leave for quarantined workers, paid leave at any temporarily closed facilities, and family leave options to provide for childcare or sick family members;
  7. Health Insurance – Companies should disclose the health insurance coverage ratio of their workforce and whether the company has a policy to provide employer-paid health insurance for any employees who are laid off during the COVID-19 pandemic;
  8. Contingent Workers – Companies should disclose if part-time employees, temporary workers, independent contractors, and subcontracted workers receive all the protections and benefits provided to full-time company employees, including those outlined above;
  9. Supply Chains – Companies should disclose whether they are current on payments to their supply chain vendors. Timely and prompt payments to suppliers will help retain suppliers’ workforces and ensure that a stable supply chain is in place for business operations going forward;
  10. Workers’ Rights – Companies should disclose their policies for protecting employees who raise concerns about workplace health and safety from retaliation, including whistleblower protections and contractual provisions protecting workers’ rights to raise concerns about workplace conditions;
  11. Political activity – Companies should disclose all election spending and lobbying activity, especially money spent through third parties like trade associations and social welfare 501(c)(4) organizations;

More information on AFR’s letter to the SEC can be found on the group’s website.

Julia Jansen, legal assistant, contributed to this post.