September 22, 2019

Should Workers Be Fired for Legal Political Activity Outside of Work?

Leading Free Market Group Asks Dozens of Major American Companies to Protect Workers’ Right to Freely Engage in Political and Civic Activities

National Center for Public Policy Research’s Employee Conscience Protection Project Warns: Millions of Americans Potentially Subject to Workplace Discipline for Private Political Actions and Beliefs

In Response, Credit Card Leader Visa Takes Steps to Protect Its Workforce From Political Discrimination While Wholesale Giant Costco Resists Employee Protections

Washington, DC – Revealing the first results of nine months of behind-the-scenes corporate activism to protect American workers from political discrimination in the workplace, on back-to-back days last week the National Center for Public Policy Research spoke at the shareholder meetings of Visa Inc. and Costco Wholesale Corporation, praising the former for amending its corporate documents to protect its employees from potential workplace discrimination over political actions and beliefs while criticizing the latter for refusing to do the same.

Visa and Costco’s divergent actions came as the result of shareholder resolutions the National Center’s Free Enterprise Project submitted to each company late last year.

“Visa very quickly realized the merits in our proposal and changed its corporate policies to ensure its workforce that its private political actions would have no bearing on their employment with the company. It is a tribute to superb management that realizes hiring and retaining the best workers involves protecting those workers’ First Amendment rights,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “Unfortunately, Costco, which employs more than 195,000 people worldwide, does not share those same values.”

Costco went so far as to petition the U.S. Securities and Exchange Commission for the right to omit the National Center’s shareholder proposal from its proxy statement.

At Visa’s shareholder meeting last Wednesday in Foster City, California, Danhof stated, “When we asked Visa if it would consider protecting its employees’ private political and civic activities, the company did not hesitate to amend its corporate policies to do just that. Many major American corporations have resisted such a protection, but Visa employees should feel proud to work at a company whose leadership realizes the importance of employee freedoms.”

Conversely, at the annual meeting of Costco shareholders that took place in Bellevue, Washington last Thursday, Danhof asked, in part, “America was founded on the ideal of a representative government that derives its power from the consent of the governed. In a nation with anemic civic activity participation and low voter turnout, it is disappointing that one of the country’s largest retailers would fight to maintain the ability to terminate its employees for private political activity. My question is this: why did Costco’s leadership fight to maintain “managerial discretion” over the private political and civic activities of the company’s employees?”

In his question, Danhof also quoted directly from the arguments that Costco made in front of the S.E.C. as to why it should have been permitted to exclude the National Center’s shareholder resolution. Specifically, Danhof noted, “Costco fought to exclude our proposal in front of the Securities and Exchange Commission. Costco’s legal team argued that ‘[t]he company must have the ability to exercise managerial discretion over its workforce with respect to these issues” and that the “considerations that arise under these policies… are most appropriately handled by management, not by shareholders as a group.'”

To read the full legal exchanges between the National Center and Costco regarding exclusion of the shareholder proposal, click here and here.

“The company’s answer to my question at the shareholder meeting was almost as disappointing as the extreme lengths that it took in order to deprive Costco’s shareholders of the ability to vote on our proposal,” said Danhof. “Costco Chairman Jeffrey H. Brotman became indignant when I asked my question. He told me that ‘we’ (which I took to mean the company’s leaders) would protect Costco’s workers and that the company’s employees were free to do whatever they want on their own time. He said that Costco fought our proposal to protect the company employees from people like me. Then he backtracked and said, not exactly people like me but rather the company fought our proposal to protect the company from outsiders. From that I understood Brotman to mean that management should have ultimate control of Costco’s workforce and that the shareholders were the outsiders. That is backwards thinking.”

“Costco’s shareholders – who are the true owners of the company – should have been given the right to vote on whether the company will act as a partisan purity shop in which the staff must follow the dictates of management in their private political thoughts and endeavors,” said Danhof. “Brotman’s assertions that management should control these personal aspects and would protect its workers are vapid. The company employs more than 195,000 individuals. The chairman of the board and the CEO can’t possibly oversee and ‘protect’ each individual employee from this type of discrimination. But guess what could? The policy that we urged in our shareholder proposal, that’s what.”

“If I were a Costco employee, I would be very concerned that my management team, which is directed by some well-known extreme liberal partisans, refused to add policy protections for private political activities. Conservative employees should especially be concerned,” added Danhof.

For the better part of a year, the National Center has been asking corporations to implement policy protections shielding workers from adverse employment action for engaging in private political and civic pursuits. Through its Employee Conscience Projection Project, the National Center has helped protect hundreds of thousands of workers from potential workplace discipline or termination.

The genesis for the Employee Conscience Protection Project occurred in April 2014 when the CEO of Mozilla, Brendan Eich, was forced out of his job simply because he had donated to a 2008 California referendum that defined marriage as between one man and one woman. Unfortunately, Mr. Eich is not uniquely situated. Only about half of American workers live in a jurisdiction that provides statutory protection against employer retaliation for engaging in First Amendment activities. And some of these laws are weaker than others. Furthermore, many corporations do not offer this protection as a condition of employment.

“In researching workplace protections, one company that stood out was Coca-Cola,” said Danhof. “The soft drink giant’s Code of Business Conduct explicitly makes clear to its employees that ‘[y]our job will not be affected by your personal political views or your choice in political contributions.’ This simple measure speaks volumes in light of the fact that many American corporations refuse to offer this type of policy.”

Often using Coca-Cola’s policy as a model, last spring and into the summer, the National Center’s Free Enterprise Project spoke directly with over a dozen CEOs about adding this commonsense employment protection. In addition to protecting employees from retribution for their outside-of-work legal political actions, National Center staffers suggested that corporations also protect civic and public policy engagement. Aside from Google, where CEO Eric Schmidt was steadfast in his assurance that Google employees would receive this full protection, no other company explicitly vowed to enact these measures.

To confront this void, the National Center submitted shareholder proposals to more than two dozen corporations for inclusion in their respective 2015 proxy statements. Some companies, such as Visa, realized the wisdom of these protections and agreed to adopt the proposal. Others, such as Costco, spent significant time and company resources petitioning the U.S. Securities and Exchange Commission for the right to omit our proposal from their proxy statements.

In the coming weeks and months, the National Center will reveal which companies protect their employees from political discrimination and which companies fought to retain the right to discipline its workforce for private First Amendment activities. Stay tuned.

The National Center’s Free Enterprise Project is the nation’s preeminent free-market corporate activist group. In 2014, Free Enterprise Project representatives participated in 52 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers rights and many other important public policy issues.

The Visa and Costco meetings mark the first and second shareholder meetings for the National Center in 2015.

The National Center for Public Policy Research, founded in 1982, is a non- partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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Visa, Inc. Leaders Balk at Request to Support Free and Open Internet

Leading Free Market Organization Questions Visa About Reports Credit Card Giant is Supporting Obama Plans for Increased Federal Regulation of the Internet

National Center for Public Policy Research Warns: Obama Administration Efforts to Reclassify Broadband Bad for Innovation, Consumers and Competition

Foster City, CA – “At today’s annual meeting of Visa Inc. shareholders in Foster City, California, in response to a question from the National Center for Public Policy Research, Visa CEO Charles Scharf refused to take sides in the net neutrality debate.

The question came amid media reports that Visa Inc. has urged the Federal Communications Commission to go along with President Barack Obama’s plan to reclassify broadband providers. This would give the federal government greater control over Internet pricing, service terms and much more.

“Net neutrality rules are a solution in search of a problem,” said National Center Free Enterprise Project Director Justin Danhof, Esq. “In its simplest terms, President Obama and the FCC would transform the Internet from the largest information service mankind has ever developed into a price-regulated utility. This would hamper innovation, decrease private sector investment, increase business costs, increase consumer prices and decrease consumer choice.”

“Visa CEO Charles Scharf and another Visa executive made it very clear to me that Visa does not have a public position on the net neutrality debate. Scharf insinuated that the company wanted as many people to be able to connect to the Internet through as many devices as possible. If that’s the case, the company should publicly denounce President Obama’s net neutrality goals and support the free and open Internet philosophy that has guided U.S. Internet policy since the Clinton Administration,” said Danhof

At today’s shareholder meeting, Danhof asked Scharf, in part:

“In November, Bloomberg Businessweek reported Visa ‘has been quietly pushing the Federal Communications Commission for strict broadband rules’ and ‘urged FCC commissioners to reclassify broadband service under Title II.’ We share the same concerns about net neutrality as Texas Senator Ted Cruz (R) who recently wrote that ‘[i]t would put the government in charge of determining Internet pricing, terms of service and what types of products and services can be delivered, leading to fewer choices, fewer opportunities and higher prices.’

As the FCC continues to debate the issue, where does Visa currently stand regarding net neutrality and why?”

Audio of the exchange is available at: http://youtu.be/SGmswDYblYA

“After Scharf repeated that the company did not have a public position on the issue, I gave him the opportunity to repudiate the Bloomberg Businessweek report. I specifically asked if the report was incorrect,” added Danhof. “He demurred and insisted he was unaware of the report.”

“Scharf’s noncommittal response is very discouraging,” said Danhof. “Credit card companies such as Visa have benefited greatly from Internet freedoms and expansions that have grown exponentially over the past two decades. The ease of e-commerce has drastically reduced transaction costs and has been a boon for Visa. Under President Obama’s vision, innovation and start-ups will be hindered by a costly regulatory regime. It is sad to see a company that profited from a free and open Internet now supporting rules that may close the door to future competition.”

Today’s meeting come less than one month before the FCC commissioners are expected to vote on new net neutrality rules. That vote is expected to take place on February 26. While the FCC welcomes comments on its net neutrality proposal, it has yet to make the specific language of the proposal public. Some congressional conservatives have requested that FCC Chairman Tom Wheeler allow the public to see the proposed rules in advance of the February 26th vote.

“Congressional conservatives calling for openness from the Obama Administration should not hold their breath,” suggested Danhof. “President Obama has run perhaps the least transparent Administration in modern times and isn’t likely to change now.”

Reports indicate the FCC’s proposal will likely be in line with President Obama’s plan to reclassify broadband service under Title II of the 1934 Telecommunications Act. This change would upend years of agency findings and court decisions that have viewed broadband as an information service and instead regulate Internet providers as a telecommunication entities under arcane laws written during FDR’s first term as president.

According to FCC Commissioner Ajit Pai, any such “[r]eclassification opens the door to actual access charges – tariffed charges that Internet service providers could impose on edge providers, content delivery networks, and transit operators without their consent. Indeed, one Title II option on the table would guarantee new Internet tolls by giving broadband ISPs no option other than access charges to recover their regulated costs. Not only that, but reclassification means a broadband price hike for every consumer in America—not exactly a move that will encourage broadband adoption.”

“The future of the Internet as we know it is in the hands of five unelected officials who are sitting behind their desks at the FCC – and two of those officials have made strong public statements against further regulation of the Internet,” warned Danhof. “Those regulators who seek to fix the supposed problem with Internet access and innovations should ask themselves one question: when has government regulation been the prelude to a thriving private sector industry? Companies such as Visa should not lobby to hamper the tremendous progress that America has seen over the past 20 years when it comes to Internet speed, content and availability.”

The National Center’s Free Enterprise Project is the nation’s preeminent free-market corporate activist group. In 2014, Free Enterprise Project representatives participated in 52 shareholder meetings advancing free-market ideals in the areas of health care, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers rights and many other important public policy issues. Today’s Visa meeting marks the first shareholder meeting of 2015 for the National Center.

The National Center for Public Policy Research, founded in 1982, is a non- partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations, and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.

Contributions are tax-deductible and greatly appreciated.

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