Senators Call on SEC to Require Companies to Report Number of Independent Contractors

By Chatrane Birbal posted 02-11-2022 14:44


Claiming it is material to companies’ “business strategy,” Senators Mark Warner (D-VA) and Sherrod Brown (D-OH) sent a letter to SEC Chair Gary Gensler urging the Commission in forthcoming proposed human capital disclosures to require companies to report on how many workers they employ who are not classified as full-time employees, including independent and subcontracted workers.

“We believe that the disclosure of this data is critical to fully capture companies’ human capital management,” the letter stated. The senators claim that investors are looking for consistent, quantifiable, and comparable datasets that articulate a company’s human capital management strategy, such as metrics on turnover, skills and development training, compensation, benefits, workforce demographics and health and safety. Warner and Brown concluded “that picture would be wholly incomplete, however, if companies are not required to disclose information about the number of independent contractors they use on a regular basis and the entire workforce that is material to their business strategy.”

The SEC is expected to publish a new proposed rule requiring prescriptive human capital management disclosures this year. The rule could require public companies to report hard numbers on workforce diversity; part-time versus full-time workers; independent workers, subcontracted workers, and employee turnovers, along with "total cost" of employees. HR Policy Association's Center On Executive Compensation supported the SEC’s 2020 principles-based guidance on human capital metrics and warned against prescriptive “laundry lists" of required or suggested metrics.

Once a proposed rule is published for notice and comment, the Center will once again submit feedback providing our perspective on the risks, costs, and opportunities any new rules may present.