The U.S. Securities and Exchange Commission has cleared the way for Apple shareholders to vote on a proposal requiring its board to review its use of non-disclosure agreements and other concealment clauses.
In the proposal, activist investor Nia Impact Capital said Apple’s concealment clauses do not exclude “[its] workers’ rights to speak openly about harassment, discrimination, and other unlawful acts.” It proposed that the company’s board prepare a public report assessing the potential risks to Apple of having concealment clauses without such exclusion clauses.
Apple asked the SEC for a “no-action” letter saying it would not recommend enforcement action if the company did not put the proposal before shareholders at its next annual general meeting in 2022.
But according to Reuters, the commission has denied Apple’s request, finding that it had not already “substantially implemented” the underlying concerns and essential objectives of the proposal.
“The SEC’s response to Apple could bode poorly for other companies,” Ars Technica said, noting that the regulator last month changed its policies to make it harder for companies to obtain no-action letters under Exchange Rule 14a-8, which requires companies to include shareholder proposals in proxy statements.
Apple told the SEC in October that it had met the “substantial implementation” test, in part because there is no provision in its standard separation agreement that “would prohibit former employees from discussing harassment, discrimination, or other unlawful acts in the workplace with anyone.”
However, former Apple software engineer Cher Scarlett filed a whistleblower complaint with the SEC a week later alleging the company had made “false statements or misleading statements” in its response to Nia’s proposal.
She attached a copy of the settlement agreement Apple offered her that included a “statement [that] I was allowed to say about my leaving the company being a personal decision, rather than fleeing a hostile work environment after attempting to exercise my rights and help others organize” under federal labor laws.
Nia Impact Capital has told the SEC it has “received information, confidentially provided, that Apple has sought to use concealment clauses in the context of discrimination, harassment, and other workplace labor violation claims.”