Large US retailers, including CVS and Target, are facing pressure from shareholders to disclose details about paid sick leave policies for workers — an issue that was rarely seen as a financial risk for companies but has gained attention during the Covid-19 pandemic.
Trillium, a $5.6bn asset management firm, has filed a shareholder proposal aimed at pharmaceutical chain CVS, demanding the company adopt and disclose a requirement that all of its employees receive some paid sick time off. This leave should not expire “or depend upon the existence of a global pandemic,” said Trillium, one of the biggest US fund managers that launches investor campaigns.
Earlier this month, CVS asked the Securities and Exchange Commission for permission to block the proposal. An agency ruling is expected in the weeks ahead. CVS declined to comment.
Kroger, Target and the parent company of TJ Maxx also received paid sick leave shareholder proposals last week. Each petition argues that the lack of clear sick leave policies at these companies poses reputational risks. Permanent paid sick leave could also reduce employee turnover for the companies, the petitions’ sponsors said.
The investor pressure comes as some large retailers have scaled back paid leave benefits that they implemented at the start of the Covid-19 pandemic. Walmart and Amazon, the country’s two largest private employers, both introduced 10 days of paid sick leave for employees who tested positive for Covid-19 in 2020.
But In January, Amazon reportedly reduced its paid leave benefit to 40 hours. Walmart also cut the paid leave it offered store associates from 10 days to five in December after the Centers for Disease Control and Prevention slashed the recommended isolation time for people who have tested positive for the virus. Both companies did not respond to requests for comment.
“It’s ridiculous that because there’s this new, highly infectious variant causing shortages, they want people to spend less time out of work,” said Adrian Valdes, who quit his job as a groomer at a PetSmart store in Savannah, Georgia, this week because of the changing safety protocols. “It just sounds like putting profit over people. They don’t care about the lives that are running their business.”
Seventy-seven per cent of private sector US workers had access to paid sick leave, according to a March 2021 report from the Bureau of Labor Statistics, up from 75 per cent the year before. Only half of part-time workers last year received sick days, and the lowest-paid employees were the least likely to get paid for sick leave, the report found.
In a statement, Target said it follows local and state mandates regarding additional paid sick leave, and that it has offered quarantine as well as confirmed-illness pay.
TJ Maxx said it “compensates associates for time off related to Covid-19” and that it follows laws related to paid sick leave. Kroger did not respond to requests for comment.
Mendy Hughes, a Walmart cashier in Melbourne, Arkansas, said that the shortened Covid leave policy did little to alleviate staff shortages. Often, when one worker returns from sick leave, another goes out a few days later. Some days she said her store has so few workers that only one or two registers are open at a time.
“People are coming to work and I feel like they’re still sick,” says Hughes. “But they don’t really have a choice but to come back to work.”
Several paid sick leave shareholder proposals filed in 2021 failed to win support at the SEC and did not go to investors for a vote. But the SEC has changed its policy for shareholder proposals and will probably make it easier for investor petitions to go to a vote in 2022.
The new paid sick leave proposals “could fare better under the new SEC guidance,” said Sanford Lewis, a lawyer who advises on shareholder proposals. “The pandemic has demonstrated that paid sick leave is a significant issue for workers,” he said. “Investors have good reason to think that this is one of those social issues that equates to employee loyalty and long-term value.”