New York State Comptroller Thomas P. DiNapoli issued a series of workforce management and fair labor policies for private equity firms and their portfolio companies that account for $38 billion of the Albany-based New York State Common Retirement Fund's $259.9 billion in assets.
DiNapoli is the sole trustee for the pension fund.
“Our Responsible Workforce Management Policy will ensure our private equity investment managers understand our position clearly,” DiNapoli said in an April 23 release outlining guidelines that cover “fair compensation,” the right for workers to join a union, job protection and health and safety.
When asked about penalties for non-compliance, Matthew Sweeney, a spokesman for DiNapoli, wrote in an email: “If the fund has significant concerns, it could impact its decision about a new investment.”
DiNapoli’s comments accompanied a three-page policy statement for private equity firms and their portfolio companies. The policy excludes funds of funds, secondary funds, and “funds that don’t have a strategy of independently making investment,” the policy statement said.
“We expect them to support fair treatment of workers throughout their portfolio companies,” DiNapoli said. “A diverse, reasonably compensated, and well-trained workforce can deliver higher quality products and services, which in turn can provide a competitive advantage for companies and their investors.”
The pension fund will send a copy of the statement to “all potential PE managers,” explaining the pension fund’s due diligence process that will include “review and consideration of the workforce management policies and practices of PE managers,” the policy statement said.
The pension fund’s staff will evaluate the private equity firms’ practices and provide recommendations “focusing on the risks and standards relevant to the investment under consideration” by the pension fund, it added. “That analysis will be considered with other investment factors in the investment decision-making process.”
The workforce management policy contains 12 broad principles to be followed by private equity managers within 90 days of their receiving the information. Among the principles:
- Invest in training, safe workplaces, fair compensation and reasonable health and retirement benefits.
- Adopt a position of neutrality and commit to noninterference in the event there is an attempt by a labor organization to organize workers at a portfolio company.
- Support the payment of industry standard wages for all portfolio company employees and contracted workers as defined by federal and state prevailing wage regulations and local living wage ordinances.
- Adopt policies that provide for reasonable work hours and reliable work schedules for portfolio company workers.
- Make occupational safety and health a top priority.
- Reject the use of nondisclosure and forced arbitration provisions in employment contracts.
“Workforce management policies and practices at general partners and portfolio companies will be considered as part of investment reviews,” Sweeney wrote. “As with all of the fund's limited partner relationships, it's the private equity firm as general partner that is responsible for management of portfolio companies.”
The private equity workforce policy “has been under consideration for about a year, with six months of active planning,” Sweeney wrote. “The fund’s engagement on workforce management goes back well over a decade.”
