diversity Archives - Compliance Chief 360 https://compliancechief360.com/tag/diversity/ The independent knowledge source for Compliance Officers Fri, 20 Dec 2024 22:06:53 +0000 en-US hourly 1 https://compliancechief360.com/wp-content/uploads/2021/06/cropped-Compliance-chief-logo-square-only-2021-32x32.png diversity Archives - Compliance Chief 360 https://compliancechief360.com/tag/diversity/ 32 32 Court Invalidates Nasdaq Board Diversity Requirements https://compliancechief360.com/court-invalidates-nasdaq-board-diversity-requirements/ https://compliancechief360.com/court-invalidates-nasdaq-board-diversity-requirements/#respond Wed, 18 Dec 2024 21:07:47 +0000 https://compliancechief360.com/?p=3889 A U.S. Court of Appeals court ruled that Nasdaq can no longer enforce its board diversity rules, vacating the Securities and Exchange Commission’s approval of a rule that requires disclosure of each board member’s racial, gender, and LGBTQ+ identification. The court found that the SEC went beyond the scope of its authority in requiring board Read More

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A U.S. Court of Appeals court ruled that Nasdaq can no longer enforce its board diversity rules, vacating the Securities and Exchange Commission’s approval of a rule that requires disclosure of each board member’s racial, gender, and LGBTQ+ identification. The court found that the SEC went beyond the scope of its authority in requiring board members to disclose such information.

In the case of Alliance for Fair Board Recruitment v. SEC, the Fifth Circuit court held that the SEC’s approval of the Board Diversity Rules was “arbitrary and capricious” and as a result an overreach of power. In reaching its decision, the court found that the SEC did not give adequate reasons as to why such rules were in line with the Securities Exchange Act of 1934. The court held that such Diversity Rules were unnecessary and unimportant within the context of the 1934 Act and overruled the SEC’s approval on a constitutional basis.

Case Analysis

The court consistently noted that the purpose of the 1934 Act is to protect investors from fraud and other similar types of harm. Due to this, the court held that such disclosures are permitted to be required “only if it is related to the elimination of fraud, speculation, or some other Exchange Act-related harm.” Ultimately, the court found that since the Rules (i) did not “promote just and equitable principles of trade” because they are not directed toward the unethical practices this Exchange Act language addresses, (ii) did not “remove impediments to” or “perfect the mechanism of a free and open market” because they are not related to a free and open market in the execution of securities transactions as the Exchange Act intends, and (iii) were not “designed . . . in general, to protect investors and the public interest”  they were not related to the more specific purposes states in the 1934 Act.

“SEC has intruded into territory far outside its ordinary domain,” U.S. Circuit Judge Andrew Oldham who wrote for the majority opinion. “It is not unethical for a company to decline to disclose information about the racial, gender, and LGTBQ+ characteristics of its directors,” the ruling stated. “We are not aware of any established rule or custom of the securities trade that saddles companies with an obligation to explain why their boards of directors do not have as much racial, gender, or sexual orientation diversity as Nasdaq would prefer.”

Under the original rule, companies were required to have at least one woman, racial minority or LGBTQ person on the board or explain why they do not. Additionally, the rule required that companies also disclose how board members identify in those categories.

This case represents the ongoing of court rulings overturning SEC rulemaking such as share repurchase rules and the private fund rules. The Fifth Circuit has, for a while, been known to limit agencies’ authority to make rules as was seen when the court affirmed a case using the Loper Bright approach, also known as the case that overruled the Chevron Doctrine. This case once again indicates that judicial system seems to be leaning away from agency rulemaking and authority.   end slug


Jacob Horowitz is a contributing editor at Compliance Chief 360°

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Activision Blizzard to Pay $54 Million to Settle Discrimination Suit https://compliancechief360.com/activision-blizzard-to-pay-54-million-to-settle-discrimination-suit/ https://compliancechief360.com/activision-blizzard-to-pay-54-million-to-settle-discrimination-suit/#respond Mon, 18 Dec 2023 17:23:16 +0000 https://compliancechief360.com/?p=3370 The California Civil Rights Department (CRD) announced it has reached a $54 million settlement agreement to resolve allegations that gaming company Activision Blizzard discriminated against women at the company. Headquartered in Santa Monica, California, Activision Blizzard is known for many popular video game franchises, including “Call of Duty,” “World of Warcraft, “Guitar Hero,” and “Diablo.” Read More

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The California Civil Rights Department (CRD) announced it has reached a $54 million settlement agreement to resolve allegations that gaming company Activision Blizzard discriminated against women at the company. Headquartered in Santa Monica, California, Activision Blizzard is known for many popular video game franchises, including “Call of Duty,” “World of Warcraft, “Guitar Hero,” and “Diablo.”

Under the agreement, which is subject to court approval, Activision Blizzard will take additional steps to help ensure fair pay and promotion practices at the company and provide monetary relief to women who were employees or contract workers in California between October 12, 2015 and December 31, 2020.

According to an investigation conducted by the CRD, Activision Blizzard discriminated against women during that time period, including by denying promotion opportunities and paying them less than men for doing substantially similar work.

“California remains deeply committed to promoting and enforcing the civil rights of women in the workplace,” said CRD Director Kevin Kish. “If approved by the court, this settlement agreement represents a major step forward and will bring direct relief to Activision Blizzard workers. At the California Civil Rights Department, we will continue to do our part to fight for the rights of our state’s residents.”

Violations of California’s Equal Pay and Fair Employment Acts

After more than two years of investigation, CRD filed a lawsuit against Activision Blizzard in 2021 for alleged violations of California’s Equal Pay Act and Fair Employment and Housing Act — civil rights laws intended to protect Californians against discrimination. In the lawsuit filed before the Los Angeles County Superior Court, the department sought relief on behalf of the State of California and a class of women employees and contract workers who allegedly experienced discrimination in compensation, promotions, and other aspects of Activision Blizzard’s workplace.

The settlement is in addition to measures Activision Blizzard has implemented through a separate 2021 consent decree with the U.S. Equal Employment Opportunity Commission and other proactive recruitment and retention steps as described in the company’s 2022 Environmental, Social, and Governance Report.

Consent Decree Details

If approved by the court, the settlement agreement will require Activision Blizzard to:

  • Pay approximately $54,875,000 to cover direct relief to workers and litigation costs. Of the total, approximately $45,750,000 will go to a settlement fund dedicated to compensating workers.
  • Distribute any excess settlement funds to charitable organizations focused on advancing women in the video game and technology industries or promoting awareness around gender equality issues in the workplace.
  • Retain an independent consultant to evaluate and make recommendations regarding Activision Blizzard’s compensation and promotion policies and training materials.
  • Continue its efforts regarding inclusion of qualified candidates from underrepresented communities in outreach, recruitment, and retention.

Past Compliance Problems

The settlement is not the first big compliance failure for Activision Blizzard. In February, the company agreed to a cease-and-desist order and to pay a $35 million penalty in a settlement with the Securities and Exchange Commission resulting from disclosure control failures and violations of the SEC whistleblower protection rule.

According to a complaint filed by the SEC, between 2018 and 2021 Activision Blizzard “lacked controls and procedures designed to ensure that information related to employee complaints of workplace misconduct would be communicated to Activision Blizzard’s disclosure personnel to allow for timely assessment on its disclosures.”

In September 2021, it reached an $18 million settlement with the Equal Employment Opportunity Commission (EEOC) to resolve allegations that its employees faced “severe or pervasive” sexual harassment, and that Activision Blizzard “failed to take corrective and preventative measures” upon receiving reports of sexual harassment, according to the EEOC’s initial complaint.   end slug


Joseph McCafferty is editor and publisher of Compliance Chief 360°

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California Lawmakers Pass Pay Transparency Bill https://compliancechief360.com/california-lawmakers-pass-pay-transparency-bill/ https://compliancechief360.com/california-lawmakers-pass-pay-transparency-bill/#respond Wed, 31 Aug 2022 21:21:13 +0000 https://compliancechief360.com/?p=2137 Legislation passed by California lawmakers on Aug. 31 would require employers in the state with 15 or more employees to disclose their hourly pay or salary range for all job postings. Governor Gavin Newsom has until Sept. 30 to approve or veto the bill, S.B. 1161, which passed by a 43-15 vote. If passed, California Read More

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Legislation passed by California lawmakers on Aug. 31 would require employers in the state with 15 or more employees to disclose their hourly pay or salary range for all job postings.

Governor Gavin Newsom has until Sept. 30 to approve or veto the bill, S.B. 1161, which passed by a 43-15 vote. If passed, California would become the first state in the nation to require companies with more than 100 employees to disclose their median hourly pay for race, ethnicity, and gender within each job category.

The bill also would require employers, upon request, “to provide to an employee the pay scale for the position in which the employee is currently employed,” according to the legislation.

California-based companies hiring outside the state wouldn’t be required to include pay ranges on job listings, while companies based out-of-state and hiring for jobs to be performed in California will be required to disclose pay ranges. Critics of the bill say it doesn’t matter, because large companies typically standardize their hiring practices anyway. The California Chamber of Congress stated that the bill “imposes administrative and recordkeeping requirements that are impossible to implement.”

Employers would be required to maintain records of a job title and wage rate history for each employee for a specified timeframe, open to inspection by the Labor Commissioner.

Additionally, the Labor Commissioner would be authorized “to investigate complaints alleging violations of these requirements” and “order an employer to pay a civil penalty upon finding an employer has violated these provisions,” the bill states.

If Governor Gavin signs S.B. 1161 in law, California would join many other cities and states nationwide that require companies to be more transparent about their pay and hiring practices. Colorado, Washington, New York City, and New York State are among those that have enacted similar pay transparency laws requiring disclosure of salary in job postings. Other states—such as Connecticut, Nevada, and Rhode Island—require employers to disclose salary ranges to candidates during the hiring process, as opposed to in job listings.  end slug


Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.

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Facebook, Disney, and Walmart Earn an ‘F’ on Pay Equity Practices https://compliancechief360.com/facebook-disney-and-walmart-earn-an-f-on-pay-equity-practices/ https://compliancechief360.com/facebook-disney-and-walmart-earn-an-f-on-pay-equity-practices/#respond Wed, 16 Mar 2022 18:10:22 +0000 https://compliancechief360.com/?p=1929 A new report gives some companies a failing grade for racial and gender pay equity and their efforts to disclose and act on such pay disparity. Goldman Sachs, Facebook, Disney, Oracle, and Walmart were among the companies that received an “F” for their public pay equity disclosures and practices. Of 57 companies examined in the Read More

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A new report gives some companies a failing grade for racial and gender pay equity and their efforts to disclose and act on such pay disparity. Goldman Sachs, Facebook, Disney, Oracle, and Walmart were among the companies that received an “F” for their public pay equity disclosures and practices.

Of 57 companies examined in the “Racial and Gender Pay Scorecard” report, released this week by the investment management firm Arjuna Capital and shareholder advocacy firm Proxy Impact, only seven—Pfizer, Mastercard, Bank of New York Mellon, Starbucks, Adobe, American Express, and Citigroup—received an “A,” while twenty-four companies receive a failing grade.

The fifth edition of the Scorecard provides pay equity grades based on quantitative disclosures (versus qualitative assurances) by companies taking concrete steps to close racial and gender pay gaps. Investors have engaged all of the 57 companies in the ranking through the shareholder proposal process and asked them to improve their public pay equity disclosures.

“Women and people of color are almost always deeply underrepresented in higher paying positions,” said Michael Passoff, CEO at Proxy Impact. “Median pay gap data helps shed light on that problem, and studies show that companies that disclose pay gaps are more likely to fix them. We are already seeing more company and shareholder support for racial and gender pay gap reporting and industry leaders are starting to emerge.”

Report Findings

  • A failing grade of F is awarded to slightly less than half (24) of the total group of companies, including Goldman Sachs, Facebook, Disney, Oracle, Walmart, Best Buy, and Biogen, for a failure to disclose quantitative racial and gender pay gaps.
  • Nine companies’ scores fell from last year, including Facebook, Google, Texas Instruments, and HP, for failing to disclose quantitative pay gaps within the last two years. Investors previously engaged and reached agreements with Facebook, Google, and Texas Instruments, yet those commitments have not been upheld through the pandemic. Facebook fell from a C to an F, and Google from a C to a D.
  • Thirteen companies improved their scores year-over-year. McDonald’s managed the largest score increase from an F to a B, as it began disclosing adjusted racial and gender pay gaps.
  • While many companies have felt comfortable disclosing adjusted pay gaps in the past, more and more companies are beginning to disclose unadjusted median racial and gender pay gaps beyond their U.K. data, where it is mandated. The Scorecard found that eleven companies currently disclose, or have committed to disclosing their median U.S. racial and global gender pay gaps in 2022. This includes: Mastercard, Bank of New York Mellon, American Express, Citigroup, Adobe, Starbucks, Pfizer, Microsoft, Target, Home Depot, and Chipotle.
  • Adobe and American Express earned an A grade this year after disclosing unadjusted median racial and gender pay gaps, topping the list due to best-practice disclosures.
  • Nine companies— Microsoft, Nike, Target, Apple, Wells Fargo, McDonald’s, Bank of America, Intel, and Verizon—earned a B grade for their efforts to disclose and act on their racial and gender pay gaps.
  • Over the last seven years, 143 shareholder proposals requesting pay gap disclosures have been filed at more than 80 companies (including the 57 in the Scorecard).

Still a Wide Pay Divide
The Scorecard highlights an increasing number of companies that are setting a new standard for the accountability and transparency needed to close persistent racial and gender pay gaps. Last year, U.S. Black worker’s median earnings represented, on average, 64 percent of white worker’s earnings and women’s earnings represented 83 percent of men’s earnings.

Unfortunately, the COVID-19 pandemic has exacerbated pay inequity, as millions of minorities and women were forced to leave the workforce. One study estimates that women lost nearly 40 years of progress during the beginning months of the pandemic.

“The pandemic has been a one-two punch for women and people of color who disproportionately suffered from the 2020 job losses,” says Natasha Lamb, managing partner at Arjuna Capital. “It’s no surprise that racial and gender pay equity has become a key area of focus for investors, who are demanding more from companies. Just last week, nearly 60 percent of shareholders voted in favor of an investor proposal asking Disney to disclose racial and gender pay gaps, underlining the material importance of pay equity to institutional investors.”

Yet, Pfizer, a company that is all too familiar with the challenges of the pandemic, managed to far outpace its peers and top this year’s Scorecard. The company provides an example of best-practice pay equity reporting as it discloses adjusted and unadjusted pay gaps and a comprehensive methodology of its pay equity analysis. Within the last year, Pfizer managed to narrow its racial and gender pay gaps and began including executive leadership in its pay equity analysis.

Pay Equity Reporting Standards
The Racial & Gender Pay Scorecard assesses companies’ pay equity data against best-practice pay equity reporting standards, which consist of two important elements: (1) unadjusted median pay gaps, assessing how jobs are distributed by race and gender and which groups hold the high-paying jobs, and (2) statistically adjusted gaps, assessing pay between minorities and non-minorities, men and women, performing similar roles. While statistically adjusted gaps provide one piece of the story, median pay gaps are a tougher and more revealing standard. Median pay gaps show, quite literally, how the company assigns value to its employees through the roles they inhabit and the pay they receive.

Actively managing pay equity is a business imperative, the report’s authors assert, as it leads to improved representation, superior stock performance, and higher return on equity. It’s also good for the economy, they say. Citigroup estimates that closing U.S. minority and gender wage gaps 20 years ago could have generated 12 trillion dollars in additional national income and contributed 0.15 percent to U.S. gross domestic product per year. McKinsey projects that closing the racial wealth gap could increase GDP by 4 to 6 percent by 2028, netting the U.S. economy $1.1 trillion to $1.5 trillion.  end slug


Joseph McCafferty is editor & publisher of Compliance Chief 360°

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How Compliance Officers Can Play Role in Diversity Efforts https://compliancechief360.com/how-compliance-officers-can-play-role-in-diversity-efforts/ https://compliancechief360.com/how-compliance-officers-can-play-role-in-diversity-efforts/#respond Sat, 19 Jun 2021 18:40:21 +0000 https://compliancechief360.com/?p=1489 Corporate compliance officers are getting more involved in diversity and inclusion efforts, using their expertise in helping employees adhere to laws and company policies to push for change. Many companies made commitments to promote racial equality last year following the murder of George Floyd while in police custody, including by hiring and promoting Black employees and fostering Read More

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Corporate compliance officers are getting more involved in diversity and inclusion efforts, using their expertise in helping employees adhere to laws and company policies to push for change.

Many companies made commitments to promote racial equality last year following the murder of George Floyd while in police custody, including by hiring and promoting Black employees and fostering a workplace culture where all employees feel welcome.

Compliance officers can help lead the change, said Kellye Gordon, vice president of ethics and compliance and legal operations at apparel and footwear company VF Corp. Their skills in engaging with company leadership, building teams from the ground up, and setting up training and awareness programs can be put to use in the drive to increase diversity and inclusion, Gordon said.

READ MORE

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