Inside Compensation

Developments in Employee Benefits & Executive Compensation

Following two years of anticipation, after a similar but more aggressive rule was proposed by President Obama’s administration and then squashed by federal courts in Texas, the Department of Labor (DOL) has issued the long-awaited Notice of Proposed Rulemaking that, if enacted, would expand access to overtime pay for certain employees under the Fair Labor Standards Act (FLSA).  DOL estimates that this change could expand overtime eligibility for over one million American workers, about 3.7…
Over three decades ago, in Loral Corp. v. Moyes, a California Court of Appeal held that employee non-solicitation agreements, which bar former employees from soliciting the employer’s existing employees, could be enforceable.  In 2008, the California Supreme Court in Edwards v. Arthur Andersen LLP held that non-competition agreements are unlawful restraints on trade and void under California Business & Professions Code section 16600 (with limited statutory exceptions), but left open whether employee non-solicitation provisions amounted…
The most recent decision in the ongoing Sun Capital saga provides no relief from pension withdrawal liability for private equity funds.  The federal district court for the District of Massachusetts recently reaffirmed its 2016 ruling that two private equity funds were responsible for the unfunded pension liabilities of a bankrupt portfolio company.  Consequently, private equity funds should continue to carefully evaluate investments in companies with pension liabilities.…
Ten months ago the California Supreme Court rendered its unanimous decision in Dynamex Operations West, Inc. v. Superior Court, a case that articulated a new standard for classifying employees and independent contractors.  Given the importance of this decision, we provided analysis on this case when it was first decided.  However, once issued, this new Dynamex standard did not settle the issue of employee classification in California once and for all.  Rather, as we anticipated in…
On November 14, 2018, the Department of the Treasury and the Internal Revenue Service issued proposed regulations updating the 401(k) plan regulations for hardship distributions from section 401(k) plans.  In particular, these proposed amendments reflect statutory changes including recent changes made by the Bipartisan Budget Act of 2018.  Plan sponsors of 401(k) plans have been awaiting guidance as they make plan design choices for 2019.  While the proposed regulations do not explicitly say that plan…
On October 1, 2018, the Massachusetts Noncompetition Agreement Act (the “Act”) came into effect, creating several new requirements for noncompetition agreements between employers and service providers based in Massachusetts. The new law does not impact agreements entered into before October 1; however, going forward, employers should evaluate when to seek a noncompetition agreement from a service provider and should update any form agreements to comply with the Act’s requirements. In this post, we highlight five…
On October 29, 2018, the Departments of the Treasury, Health and Human Services, and Labor jointly issued proposed regulations providing employer plan sponsors greater flexibility in integrating health reimbursement accounts (HRAs) with other health insurance coverage.  The proposed regulations would take effect for plan years beginning on or after January 1, 2020, and would make the changes described below.  The deadline for submitting comments on the proposed regulations is December 28, 2018.…
(This article was originally published in Law360 and has been modified for this blog.) Employers commonly offer a wide array of employee benefit plans and programs.  In addition to traditional staples, many employers today offer an employee assistance program, dependent care, accident insurance and even pet insurance.  In an increasingly competitive labor market, offering a full spectrum of employee benefits is an important way to maintain a competitive advantage.  While the type of programs offered…
As part of the Tax Cuts and Jobs Act of 2017, Congress enacted new § 4960 of the Internal Revenue Code.  Section 4960 imposes an excise tax on certain executive compensation paid by tax-exempt organizations – similar to the $1 million limit on deductions for compensation paid to highly paid executives in for-profit companies under § 162(m) of the Code and to the golden parachute rules of § 280G of the Code.  The new provision…
On the last day of August, the Trump administration signed an executive order proposing a number of changes which the administration says is intended to strengthen retirement security in America, specifically, by expanding access to multiple employer plans and reducing the costs and burdens associated with employee plan notices.  However, tucked away at the end of this executive order is a proposal that, when implemented, could have a significant impact on plan participants — the…