Companies could get sued for 'waste' if they let good employees quit, just like if they let a multi-million dollar factory rot.
March 26, 2026
Original Paper
The Hidden Breach: A Legal and Economic Prosecution of Human Capital Waste
SSRN · 6344538
The Takeaway
The paper argues that modern corporate law has a 'blind spot' regarding human capital. It proposes that since institutional knowledge is a material asset, failing to provide living wages or safe conditions should be legally treated as the systematic destruction of company property, making directors personally liable.
From the abstract
<p>This paper identifies a critical "blind spot" in current corporate governance: the failure to treat human capital depreciation as a breach of fiduciary duty. While directors are legally obligated to maintain physical assets and prevent waste, modern corporate law largely ignores the systematic deterioration of human assets caused by inadequate healthcare, unsustainable wages, and hazardous working conditions.</p> <p>Drawing on the personal foundations of industrial manufacturing and the regul