Activist investor CtW Investment Group launched an initiative focused on companies' alleged unlawful, inequitable, and/or anti-competitive employment practices - namely, the use of non-competes, no-poaching agreements, non-disclosure agreements, and mandatory arbitration - that purportedly expose them to potential regulatory, litigation, reputational and other risks.
The initiative seeks to engage approximately 30 portfolio company boards via this form of letter, which details CtW's concerns about the adverse implications of these provisions on individual workers (e.g., reduced mobility, job opportunities, and earning power) and the workforce as a whole (e.g., reduced job growth and labor market efficiencies) and - more generally - emphasizes institutional investor focus on human capital management as relates to shareholder value creation.
Letter recipients are urged to:
- Review their company's employment contracting practices, including the use of any of the enumerated provisions;
- Report the board's findings to shareholders before their next annual meeting; and
- Commit to increased human capital management disclosure going forward.
The letters seek a response by September 30th affirming receipt of the letter and discussion of the concerns raised.