Accountable Capitalism Act

With the Reward Work Act, the Accountable Capitalism Act is the second recent proposal to give employees the ability to elect representatives on a company board of directors. The United States is in a minority of countries in the Organisation for Economic Co-operation and Development that gives no representation of the workforce in corporate governance.[2]

For years, Senator Warren endorsed the slogan "corporations are not people," in opposition to the Citizens United Supreme Court ruling. The Accountable Capitalism Act further distinguishes rights of individuals from those of corporations. Political commentator Matthew Yglesias wrote that "Warren's plan starts from the premise that corporations that claim the legal rights of personhood should be legally required to accept the moral obligations of personhood."[3]

Section 3 of the Act would establish an "Office of United States Corporations", with a director appointed by the President on consent of the Senate, at the Department of Commerce to grant charters to large federal corporations, and monitor compliance with the Act's requirements. Section 4 requires corporations with over $1 billion in tax receipts to obtain a federal charter.

Section 5(b)(2) requires US corporations to have the purpose of "creating a general public benefit", while section 5(c) requires that directors have a duty to consider the interests of shareholders, employees (including of subsidiaries and suppliers), customers, the community, environment, and the long-term. The section also recasts the limits of the business judgment rule, and its enforcement.

Section 6(a) requires the Securities and Exchange Commission in consultation with the National Labor Relations Board to issue rules on fair director elections. Section 6(b) requires that no less than 2/5 of the directors shall be elected by employees after one year from the introduction of the rules.

Section 8 requires that any political spending (or "electioneering communication" under the Federal Election Campaign Act of 1971 §304(f)(3)) by a federal corporation over $10,000 has approval of both 75% of shareholders and directors before the spending is made.

The Accountable Capitalism Act was endorsed on August 15, 2018, by a group of mostly progressive lawyers and economists, including Robert C. Hockett and William Lazonick.[4]

In response to similar proposals in the Reward Work Act in April 2018, a Civis poll found people in the "lean Democrat" category voted 75% in favor of placing employees on boards of directors, and just 9% opposed. Around 43% of the "lean Republican" category supported the concept, while 31% opposed, and the pure Republican category saw 4% more opposed than in favor.[5]

The New York Times columnist David Leonhardt called the proposal "the most intriguing policy idea to come out of the early 2020 campaign".[6] Meanwhile, National Review contributor, Samuel Hammond, was highly critical of the bill: "Yet the fact remains that the Accountable Capitalism Act is in many ways the most radical proposal advanced by a mainstream Democratic lawmaker to date...unlike universal health care or increased spending on the poor, Warren’s proposal is to fundamentally upend the way the most productive companies in the American economy work from the top down." [7]

• Codetermination
• United States corporate law
• United States labor law
• Social ownership#Social ownership of equity

• Ewan McGaughey (2019). "Democracy in America at Work: The History of Labor's Vote in Corporate Governance". 42 Seattle University Law Review.

• One-page explainer of the bill. warren.senate.gov
• Accountable Capitalism Act text on warren.senate.gov
• S. 3348, text of Bill on Congress.gov