Can The Political Concerns Of Corporate Officers Be Of Any Concern Of The Corporation?

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Suppose a corporation’s Chief Executive Officer becomes involved in a particularly abhorent (but legal) political movement.  Suppose further that the Board of Directors is concerned that the corporation’s stockholders, customers and employees will sell their shares, take their business elsewhere, or quit should they discover what the CEO does in her spare time.  What can/should the Board do, if anything?

If the CEO is employed in California one thing that the Board should do is consult with labor and employment counsel about the following two provisions of the California Labor Code:

Section 1101

No employer shall make, adopt, or enforce any rule, regulation, or policy:

(a) Forbidding or preventing employees from engaging or participating in politics or from becoming candidates for public office.

(b) Controlling or directing, or tending to control or direct the political activities or affiliations of employees.

Section 1102

No employer shall coerce or influence or attempt to coerce or influence his employees through or by means of threat of discharge or loss of employment to adopt or follow or refrain from adopting or following any particular course or line of political action or political activity.

As explained by the California Supreme Court, these two sections “serve to protect ‘the fundamental right of employees in general to engage in political activity without interference by employers.’” Gay Law Students Ass’n v. Pac. Tel. & Tel. Co., 24 Cal. 3d 458, 488 (Cal. 1979) quoting Fort v. Civil Service Commission  61 Cal.2d 331, 335 (1964).

 

Topics:  Board of Directors, CEOs, Political Expression

Published In: Business Organization Updates, General Business Updates, Elections & Politics Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

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