New York state is throwing its $260 billion retirement fund at ‘long-standing failures of oversight’ at Tesla, Wells Fargo, and Chipotle
An investment fund wants a reckoning at three major companies after a litany of serious fraud, sexual harassment and racial discrimination allegations against them in recent years.
The New York State pension fund, with $260 billion in assets, has hit Chipotle, Tesla, and Wells Fargo with shareholder proposals that would require them to disclose how much money the companies have spent settling disputes and the total number of pending harassment or discrimination complaints they’re trying to resolve through arbitration or litigation. The trio have all been involved in lawsuits, investigations, or been the subject of reporting about unsavory workplace practices. The New York fund says investors are ultimately footing the bill for poor management.
“We selected these companies because of long-standing failures of oversight of the workforce by management and the board,” said Mark Johnson, press secretary for New York state comptroller Thomas DiNapoli in a statement to Fortune. “Civil rights violations within the workplace can result in substantial costs to companies, including fines and penalties, legal costs, costs related to absenteeism, reduced productivity, challenges recruiting, and distraction of leadership.”
The supporting statements in the proposals list the issues that led the fund to file the proposals. At Tesla, the carmaker has been involved in “numerous serious allegations of racial or sexual harassment and discrimination,” according to the fund statement. They include an Equal Employment Opportunity Commission lawsuit for racial harassment and retaliation that alleged Black employees faced open hostility at a manufacturing facility in California. The EEOC said Black workers “regularly encountered graffiti, including variations of the N-word, swastikas, threats, and nooses, on desks and other equipment, in bathroom stalls, within elevators, and even on new vehicles rolling off the production line.” Tesla last month settled a racial discrimination lawsuit with a former elevator operator for $3.2 million and a proposed class action lawsuit is pending.
At Wells Fargo, the most recent controversy at the bank involved a news report that the company had conducted sham interviews of diverse candidates for positions that had already been filled, said the New York retirement fund. It added that the Southern District of New York was reported to be investigating possible federal law violations because of the fake interviews. The company also paid $3 billion in 2020 to resolve criminal and civil investigations with various regulators that alleged its employees opened millions of fake accounts without customers’ consent that allowed it to rack up fees it wasn’t entitled to.
Burrito chain Chipotle settled an EEOC suit in 2023 and paid $400,000 to three former employees—one of whom was a teenager—to resolve a sexual harassment lawsuit in which the workers said a service manager subjected them to sexual touching and requests for sex. The EEOC said the manager isolated the three by trapping them in Chipotle’s walk-in refrigerator.
Chipotle and Tesla haven’t filed proxies for 2024 yet in which it will list its shareholder proposals and the boards’ recommendations for how the companies wants investors to vote. Wells Fargo, in its proxy, urged investors to vote against the proposal. According to the board, New York submitted the same proposal to the company last year and a majority of investors supported it. Since then, the company has published a racial equity assessment and it is making “substantive changes to our policies and practices.” It eliminated confidentiality and non-disparagement provisions from severance agreements for non-supervisory employees in 2023 and plans to update its harassment and discrimination policies in 2024, among other changes that the board said would be responsive to the shareholder proposal.
Wells Fargo noted that it engaged with representatives from the New York fund “on several occasions.”
In a statement to Fortune, the comptroller’s press secretary said, “We have not had constructive engagement with the companies.” Regarding Wells Fargo, the press secretary said the fund brought the proposal again “because we won majority support and nothing happened.”
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