Published on: October 15, 2021
Authors: Chatrane Birbal
Topics: Executive Pay Plan DesignThe House Financial Services Subcommittee on Consumer Protection and Financial Institutions discussed a measure that would impose an annual pay ratio tax, significant reporting requirements, and other labor and employment mandates on companies in the financial services sector.
As currently drafted, the Financial Services Bill of Rights Act would:
- Impose an annual tax on financial institutions with a CEO to median worker pay ratio greater than 100 to 1;
- Require financial institutions to remain neutral amid union organizing efforts; and
- Eliminate forced arbitration in employment agreements.
Each financial institution would be required to file an annual or quarterly report to disclose:
- The total number of employees of the financial institution in the United States and globally, including federal contractors, and
- Any lawsuit involving the financial institution in the previous year related to violations of the FLSA, OSH Act, NLRA, ADA, GINA and the Rehabilitation Act. Reporting will include the names of the parties to the lawsuit, “the factual basis of the lawsuit,” the date the suit was filed, and the amount of possible damages applicable to the lawsuit.
Outlook: Representative Maxine Waters (D-CA), Chair of the House Committee on Financial Services, is expected to formally introduce the bill, which is currently in draft form. In the meantime, HR Policy Association proactively provided feedback to Committee staff, expressing our concerns with the measure's pay ratio, union organizing, and additional disclosure requirements. While we anticipate introduction of this bill, it may only serve as a messaging tactic without being considered for a House floor vote. However, it is important to take note of this proposal as we expect to see more of these types of initiatives in the current Congress and administration.