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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

The Outsourcing Accountability Act of 2019, which was introduced in July and would effectively require some public companies to report their outsourcing of jobs, passed the US House of Peoples Representatives on October 18.

The bill includes an amendment to the Securities Exchange Act of 1934 to “require the disclosure of the total number of domestic and foreign employees of certain public companies.” Specifically, the amendment would require public companies that are subject to the new requirements to include in their annual reports the number of employees domiciled in the United States and abroad, broken down by jurisdiction (e.g. states, countries, etc.), and a comparison to the corresponding figures in the company’s prior annual report calculated as a percentage change. The companies’ annual reports would therefore indicate outsourcing efforts of the company through these reported figures.

Notably, the version of the legislation that passed the House included an explicit exception from the reporting requirements for any “emerging growth company,” which in this context generally includes newly public companies with annual gross revenues less than $1 billion during their most recently completed fiscal period.

While the bill will now move on to the Senate, it currently appears unlikely to overcome the opposition from many of the companies that would be affected and pass on to the US president’s desk. We will keep you apprised of any meaningful developments regarding the proposed legislation.