Workforce Strategy is Now a Governance Function: Counsel at the Crossroads of Employee and Investor Activism

In an article for the New York Law Journal, labor and employment partner Erika Collins and associate Noemi Aguirre discuss how employee and investor activism are pulling companies in different directions. As a result, workforce decisions such as return-to-office mandates, reductions in force, and algorithmic performance tools can now implicate labor, securities, fiduciary, and data privacy law all at once.

The authors explain that employee activism is backed by legal protections, including Section 7 of the National Labor Relations Act, state pay transparency laws, and whistleblower protections. Investors, meanwhile, are increasingly scrutinizing human capital disclosures and workforce strategy, which creates securities disclosure risk. These pressures collide in areas such as reductions in force, diversity, equity, and inclusion programming, and the use of artificial intelligence, and multinational companies must also account for European consultation and reporting requirements.

To manage these risks, the authors recommend that companies assess their legal obligations early, document their reasoning, assign board-level oversight of human capital, and coordinate employee and investor communications so the company tells one consistent story to every audience.