The rule mandates, for the first time, reporting of human capital by companies subject to SEC reporting requirements. As of now, companies only have to report their number of employees. The new rule will still require reporting the number of employees, but also urges companies to disclose metrics that may be material to understanding the registrant’s business such as number of full-time, part-time, temporary employees, independent contractors and contingent workers.
More importantly, the SEC narrowed in on the three areas of “attraction, development and retention of personnel as non-exclusive examples of subjects that may be material, depending on the nature of the registrant’s business and workforce”.
The rule becomes effective 30 days after publication in the Federal Register. Consequently, public companies will need to start disclosing these material metrics beginning with results released as early as late October this year.