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CalPERS Plans New Rules for Private Equity Labor Practices Amidst Growing Concerns

(photo: InvestmentNews)

CalPERS is planning new rules to oversee labor practices in private equity-owned firms.

CalPERS to Implement New Rules for Private Equity Labor Practices

California’s $500 billion pension fund, CalPERS is considering new rules to check the labor practices of companies owned by private equity firms. This follows a meeting with President Biden and aims to address issues like underage labor, workplace harassment, and exploitation of undocumented workers. Supported by unions, CalPERS may review labor records before making large investments potentially influencing similar actions across the country.

CalPERS Board member Lisa Middleton raised concerns about labor abuses in companies funded by private equity, including those backed by CalPERS. Last year, they considered adding labor standards to investment decisions. Issues cited included employing undocumented children, hospital understaffing, and harassment in supermarkets. CalPERS cut investment in a Los Angeles hotel operator using underage asylum seekers as strikebreakers and warned of ending the business relationship if conditions don’t improve.

“Labor Peace” agreements, where unions agree not to strike in exchange for fair negotiations, have been successfully used in New York, Los Angeles, and LAX airport, reducing strike risks and ensuring business continuity, making them appealing to pension fund managers, according to the report of The Nation.

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(photo: InvestmentNews)

Lisa Middleton of CalPERS Advocates Stricter Labor Scrutiny in Private Equity

Lisa Middleton of CalPERS is pushing for stricter scrutiny of labor practices in private equity-backed companies following discussions with President Biden and other pension fund managers. CalPERS, a major investor in industries like hospitality and healthcare aims to tackle issues such as underage labor and exploitation. Middleton is exploring the integration of “Labor Peace” agreements into CalPERS’ strategy. These agreements, seen in cities like New York and Los Angeles, aim to prevent strikes by ensuring fair negotiation conditions potentially improving workplace safety and financial outcomes while maintaining ethical investment standards.

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