Justin Danhof on Workers’ Right to Freely Engage in Political and Civic Activities

Justin Danhof is the General Counsel for the National Center for Public Policy Research

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, D.C. – 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 assure its workforce that their 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.

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