For many years, business publications and research organizations have put out “best employer” lists, ranking organizations based on their employees’ reported job satisfaction, the quantity and quality of their benefits, learning opportunities, and other selling points of the employee experience. These lists offer employers an opportunity to earn some good press and burnish their employer brand, and can be particularly valuable in helping lesser-known companies get their names out there and compete for talent with their higher-profile peers. These lists are typically opt-in: Employers that have good stories to tell submit their information, the top ten or 20 of them get a brand boost, and the rest don’t need to tell anyone they didn’t make the cut.
With more information about organizations’ talent policies becoming publicly available, these lists have evolved to draw on new sources of information and to focus on issues of increasing importance to employees today, like diversity and inclusion or corporate social responsibility. Glassdoor, for example, puts out an annual list of best places to work based on employee ratings and reviews, while Forbes and the activist investment firm Just Capital have begun publishing a “Just 100” ranking of the most socially responsible publicly-traded companies in the US and Bloomberg’s Gender Equality Index highlights companies that are investing in gender equality. The proliferation of best-of lists, however, has led to diminishing returns in their reputational value: Our research at Gartner has found that only 7 percent of candidates say being on one of these lists was an important factor for them in deciding whether to accept an offer from an employer.
The Lists Organizations Don’t Want to Be On
At the same time as the value of a spot on the nice list is waning, a growing trove of publicly available data has led to the emergence of new lists on which employers didn’t ask to be included. Some of these are extensive indices that identify both the best and the worst, like FertilityIQ’s Family Builder Workplace Index, which ranks employers based on the generosity of their fertility benefits. In some rankings, even the best-scoring companies are not great: Equileap recently published a special report on gender equality in the S&P 100, in which the highest grade was a B+. Furthermore, investors, governments, and media outlets have begun to compile what we might call “naughty lists” of companies that are not living up to expectations in terms of fairness, inclusion, transparency, or social responsibility — and you really don’t want to see your organization’s name on one of those.
These naughty lists tend to focus on gender pay equity, executive compensation, handling of sexual harassment claims, and the experiences of diverse employees. One recent, prominent example was a BuzzFeed report in November that pressed leading US tech companies on whether they required employees to resolve sexual harassment claims in private arbitration and called out those that did have such policies or declined to answer (Ironically, the reporters also discovered that BuzzFeed had a mandatory arbitration policy itself). The publication of this report prompted several companies to announce changes in their policies.
California recently became the first state in the US to enact a law requiring companies based there to include at least some women on their boards of directors. The legislation, signed by Governor Jerry Brown on the last day of September, mandates that all publicly traded companies headquartered California (not just those chartered there) have at least one woman on their boards by the end of 2019. For companies with at least five directors, at least two or three of those seats must be filled by women by 2021, depending on the size of the board. Companies that do not comply will be subject to fines by the state.
California’s mandate has ignited a firestorm of controversy, with business groups like the California Chamber of Commerce saying it violates constitutional principles and effectively requires companies to discriminate against men, while even some advocates of diversity in corporate leadership question whether it will have the kind of impact it is intended to have. The state will likely be sued over the law and may lose, which Brown acknowledged in his letter to the state Senate announcing his signature of the bill. “I don’t minimize the potential flaws that may indeed prove fatal to its ultimate implementation,” he wrote. The constitutional issues at hand concern not only the issue of reverse gender discrimination but also a question of jurisdiction, as the Supreme Court has ruled in the past that a corporation’s internal affairs are governed by the statutes of the state in which it is chartered, not where its headquarters is located.
Nonetheless, even if the law is ultimately defeated in court, it is intended partly as a marker of determination on the part of the California state government to ratchet up pressure on companies there to make more progress on diversity and inclusion, particularly in leadership roles where women and minorities remain heavily underrepresented. Simply bringing visibility to the issue counts as a win for some advocates of gender equality, Vox‘s Emily Stewart reported:
“If nothing else, what this law is doing is increasing the visibility and awareness on the issue itself and the importance, and that is a win in and of itself,” said Serena Fong, the vice president of strategic engagement at Catalyst, a nonprofit focused on promoting women in business.
Over the coming year, Microsoft will implement a policy requiring its suppliers in the US to provide their employees a minimum of 12 weeks paid parental leave, paid at up to $1,000 per week, Dev Stahlkopf, Corporate Vice President and General Counsel at Microsoft, announced in a blog post on Thursday:
This change applies to all parents employed by our suppliers who take time off for the birth or adoption of a child. The new policy applies to suppliers with more than 50 employees and covers supplier employees who perform substantial work for Microsoft. This minimum threshold applies to all of our suppliers across the U.S. and is not intended to supplant a state law that is more generous. Many of our suppliers already offer strong benefits packages to their employees, and suppliers are of course welcome to offer more expansive leave benefits to their employees.
Our new supplier parental leave requirement is informed by important work on paid parental leave done in states, including Washington. In 2017, Washington state passed family leave legislation, including paid parental leave. This new law will take effect in 2020. As we looked at this legislation, however, we realized that while it will benefit the employees of our suppliers in Washington state, it will leave thousands of valued contributors outside of Washington behind. So, we made a decision to apply Washington’s parental leave requirement more broadly, and not to wait until 2020 to begin implementation.
Like other major US tech companies, Microsoft relies on an undisclosed number of workers employed by third-party contractors; this so-called “shadow workforce” of contract laborers, who typically do not enjoy the same generous benefit packages as those directly employed by these companies, has been the subject of growing scrutiny and recent labor disputes, as GeekWire’s Nat Levy points out. Microsoft has faced controversy over its contingent workforce in the past, most notably in a high-profile lawsuit by “permatemps” in the 1990s. The company began putting standards on labor conditions at its US suppliers in 2015, when it began requiring that those with 50 or more employees grant a minimum of 15 days of annual paid time off to eligible employees.
Microsoft’s latest move intersection of several broad trends shaping the benefits space in the US today.
A Texas state appeals court last week temporarily blocked a local ordinance in the capital city of Austin requiring employers to provide paid sick leave from going into effect, the Texas Tribune reported:
[T]he measure quickly drew opposition from local and state leaders, including a lawsuit filed in April by the right-leaning Texas Public Policy Foundation claiming that the city measure violates the Texas Minimum Wage Act. … The ordinance had been set to take effect Oct. 1.
“Without this stay, Austin business owners would be forced to incur significant costs implementing the requirements of the ordinance while its legality was in serious doubt,” said Robert Henneke, general counsel and litigation director for TPPF’s Center for the American Future. Texas Attorney General Ken Paxton, who has lent support to the lawsuit, also praised the news, saying the issue of minimum wage is “entrusted by the Texas Constitution solely to the Texas Legislature.”
Austin’s ordinance, which the city council passed in a 9–2 vote in February, has also faced opposition from Republicans in the state legislature, who promised at the time to pass legislation at the state level that would preempt it. Other states with conservative legislatures have taken similar measures to stop local governments from enacting liberal labor laws in the past year. Indiana banned cities from implementing “ban-the-box” laws, Missouri passed a preemption law to prevent cities like St. Louis from legislating higher minimum wages, and a Florida court found that a minimum wage increase in Miami Beach was preempted by state law.
New Jersey Governor Phil Murphy signed a bill into law on Wednesday that will require employers throughout the state to allow nearly all employees to accrue paid sick leave, Matt Arco and Brent Johnson report at NJ.com:
The law—which takes effect in six months—will require employers in the state to offer workers one hour of sick leave for every 30 hours they’ve worked. Workers can use up to 40 hours of sick leave a year. Many companies in the state do offer paid sick leave. But about 1.2 million workers — about one-third of New Jersey’s workforce — still don’t have access. …
Under the law (A1827), time off may be used because the employee or a family member are ill, to attend a school conference or meeting, or to recover from domestic violence. The law allows employers to black out certain dates that can’t be taken off and exempts per-diem hospital employees and construction workers under contract.
As reported when the bill first passed the state Assembly in March, employees begin to accrue this time as soon as they start a new job but are not eligible to use it until the 120th calendar day of their employment. Employers with all-purpose paid time off policies are considered compliant with the law as long as their employees’ PTO accrues at a rate equal to or greater than that mandated by the law.
Airlines For America, a coalition of major airlines including American, United, Southwest, Alaska, and JetBlue, has filed a lawsuit in federal court against Massachusetts Attorney General Maura Healey, seeking to either overturn or exempt their industry from the Bay State’s paid sick leave law. The airlines say the law violates the US Constitution by seeing to regulate interstate commerce, a right granted only to the federal government, and has hurt their business specifically by leading to more employee absences, the Boston Globe’s Katie Johnston reports:
Airlines already provide generous paid sick leave, according to the complaint, and closely monitor attendance to maintain safety and appropriate staffing levels and to keep flights running on time. But the Massachusetts law prohibits employers from disciplining workers for sick-leave absences and requires at least a three-day absence before medical documentation is required, which the industry group said hurts airlines’ ability to investigate abuse of sick leave.
The Massachusetts law, which went into effect in 2015, requires that companies with 11 or more employees provide an hour of earned sick time for every 30 hours worked, culminating in up to 40 hours of paid sick time a year. But flight and ground crews often accrue sick leave in ways that can’t be easily converted into hours worked, according to the trade group.
The New York City Council is considering what the New York Times describes as “a raft of legislation” to address sexual harassment and misconduct in the workplace, including a requirement that all businesses with at least 15 employees conduct sexual harassment prevention training:
Much of the legislation, called the Stop Sexual Harassment in New York City Act, is focused on addressing instances of sexual misconduct that may go unreported, particularly within city agencies. Several of the bills create reporting requirements for city contractors or agencies. One bill would create a system for surveying agencies to prompt anonymous disclosure of potential problems to try to prevent harassment.
Private employers would also be required to display a poster with practical examples of sexual harassment, as well as a way to contact city, state or federal authorities with complaints.
If the legislation passes, New York City will become one of only a few jurisdictions where private employers are required to provide this training. California and Connecticut require that organizations with at least 50 employees provide training to supervisors, while Maine requires organizations of at least 15 people to train all employees, plus additional training for supervisors. Some states have sexual harassment training requirements for public sector employees or educators, while others encourage but don’t mandate it for private employers, and still others take the presence of such training into account in judging whether an employer was negligent in a sexual harassment case.