By Dana Floberg
Advocacy Director, Open MIC
In August 2020, Pinterest employees staged a walkout out to protest racial and gender discrimination at the company — an issue that became a lawsuit and inspired major legislative action. As more employees came forward with their stories, it became clear that this was not a new problem for Pinterest, but had been forcibly kept under wraps with nondisclosure agreements and other concealment clauses.
Concealment clauses include any language in employment contracts that require employees or contractors to keep silent about their experiences in the workplace. While NDAs can be an appropriate tool for protecting competitively-sensitive information, they are often exploited as a means to silence employees who’ve experienced harassment, discrimination, or other unlawful behavior.
This silence prevents accountability, allowing discrimination to fester unchecked until it threatens not just the wellbeing of employees but the very existence of the company. The problem has been rife in the tech sector, affecting many thousands of workers, despite these companies’ commitments to transparency and human rights.
To tackle this issue, Open MIC partnered with a group of organizations including Earthseed, Whistle Stop Capital, and the Minderoo Foundation to form the Transparency in Employment Agreements (TEA) coalition during the 2021-2022 proxy season.
The goal of the coalition was to bring attention to the use of exploitative concealment clauses by tech companies, and the risks they pose to investors and employees.
The TEA coalition first assessed technology companies to compare their current practices. We determined which companies to prioritize for engagement, given company size, number of impacted employees, known concerns with corporate culture and company brand exposure. The coalition also developed materials, tailored to each company, which detailed the reasons why these companies’ use of concealment clauses should be concerning to investors.
We partnered with shareholders to reach out to the companies and, in many cases, file proposals calling on companies such as Alphabet, Amazon, Apple, Etsy, IBM, Meta, Microsoft, Salesforce, and Twitter to prepare public reports assessing the potential risks associated with the use of concealment clauses.
The TEA coalition successfully defended several proposals against attempted no-action filings at the SEC by Amazon and Apple, advocated for the proposals with major proxy advisors, and filed exempt solicitations in support of proposals that made it all the way to the company proxies.
And despite companies advising their shareholders to vote against our proposals, we were victorious. Of the six shareholder proposals that went to proxy, three proposals won a majority vote: Apple (50%), IBM (65%), and Twitter (69%). At Meta, the proposal earned 62% of independent shareholder votes, even though it was not technically approved due to outsized insider voting power.
The proposal at Salesforce was successfully withdrawn after the company agreed to extend the protections in California’s Silenced No More Act to all U.S. employees. Expensify, Twilio, and Microsoft also announced they would suspend use of concealment clauses after engagement with the TEA coalition.
Alphabet and Apple also announced commitments to avoid using concealment clauses in employment agreements in their statements of opposition to the shareholder proposals.
Taken together, these victories ensure that hundreds of thousands of employees will now be able to share their stories and hold bad actors accountable for unlawful workplace behavior.