Benefits & Compensation

Now that the presidential election is over what benefits are in store for President Obama once he leaves office?

November 21st, 2016 by JBWK

Submitted by Richard B. Donaldson Jr. Under the Former Presidents Act passed in 1958, the president receives a taxable lifetime pension equal to the annual rate of pay for the heads of executive branch departments, like cabinet secretaries. The amount is currently $205,700 and is set annually by Congress. In addition, in the first 7 […]

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Employer Violated NLRA By Firing Employee For Discussing Salaries

February 20th, 2013 by JBWK

A Texas engineering firm landed itself in hot water with the National Labor Relations Board after firing an employee for discussing salaries with her co-workers. The Administrative Law Judge’s decision, which the NLRB affirmed, ruled that the employer’s policy prohibiting employees from discussing wages with their co-workers violated employees’ rights to discuss their working conditions […]

A Parting Gift to Remember

February 1st, 2013 by JBWK

When Minnesota grocer Joe Lueken wanted to retire at the end of 2012, he apparently had no trouble finding a succession plan: give away the company to the employees. For free. Leuken, who ran a local grocery store, created an employee stock ownership plan, or ESOP. Typically, employees have to contribute money to an ESOP […]

Payroll Tax Cut Lapses for 2013

January 3rd, 2013 by JBWK

As part of the so-called “fiscal cliff” deal Congress hammered out this week, the 2% payroll-tax cut will lapse. The tax cut, which was only temporary, reduced the employee share of Social Security withholding from 6.2% to 4.2%. Now that it has expired, the employee portion will switch back to 6.2%, meaning employees will take […]

Stalled Legislation May Reappear in 2013

January 3rd, 2013 by JBWK

Given the hectic pace at the end of this Congress’ term, it’s no wonder they left many tasks unresolved, including some pending employment-law legislation. Here are a few things to keep an eye on in 2013 (via Jackson Lewis): The Employment Non-Discrimination Act, which would ban employment discrimination on the basis of sexual orientation The […]

Rounding Time

December 7th, 2012 by JBWK

Employers rounding hourly employees’ time has reared its head recently, leading to many valid questions. Obviously, the most important one is whether the practice is legal. The Department of Labor allows rounding time as long as it “averages out over a period of time.” So employers can round hourly employees’ time to the nearest 15 […]

Falling With Grace

November 13th, 2012 by JBWK

Although not new, severance pay for executives has piqued public interest lately. Critics argue that executives–often leaving under questionable circumstances–receive multi-million dollar payouts on the way out the door. Two recent departures help reaffirm that view. Former Citigroup CEO Vikram Pandit is collecting just over $6.5 million on his way out. After abruptly resigning (or […]

Obama’s Next Four Years (In Employment Law)

November 8th, 2012 by JBWK

With the unsurprising reelection of President Obama, what major shifts in employment law will we see? Here’s one guess, from the Proactive Employer: Paycheck Fairness Act, which puts the burden on employers to explain gender-based pay gaps, will be revitalized Federal contractors’ compensation practices will be scrutinized The government will press for more contractors to […]

Raises Out; Bonuses In

November 7th, 2012 by JBWK

The Washington Post takes an interesting look at how people are being paid. The upshot: fewer raises, more bonuses. A record high 82% of employers report using some form of performance-based compensation this year to reward their employees. That compensation can take the form of equity or cash bonuses based on the company’s specific needs. […]

Same-Sex Marriage Cases Could Impact Employment Laws

October 26th, 2012 by JBWK

The latest ruling in a series of same-sex marriage cases was issued this week from the New-York based Second Circuit Court of Appeals, finding that the federal Defense of Marriage Act is unconstitutional. The act, DOMA, prohibits federal recognition of same-sex marriages. It’s the second federal appeals court to find it unconstitutional. Other courts have […]

Redefining Workweek to Minimize Overtime

October 25th, 2012 by JBWK

A recent case from the Eighth Circuit Court of Appeals held that a company shifting its workweek from a typical Sunday-to-Saturday week to a Tuesday-to-Monday workweek to reduce overtime was okay under the Fair Labor Standards Act. The natural gas drilling company’s employees worked the same Tuesday-to-Monday seven-day shift, but the redefinition eliminated a substantial […]

Citigroup CEO Leaves $33 Million on the Table

October 19th, 2012 by JBWK

After a surprising announcement this week that Citigroup CEO Vikram Pandit was stepping down, talk turned to how much he would take with him. Turns out it may not be all that much. Bloomberg reports that, depending on how he resigned and whether the board gives him something additional, Pandit could have walked away from […]

Reasonable Accommodation for Pregnancy?

October 2nd, 2012 by JBWK

Pregnancy occupies a strange status in employment discrimination law. It’s not a disability subject to the Americans with Disabilities Act, but it’s still illegal to discriminate against a female employee because she’s expecting. The only way to determine discrimination is to compare the treatment of pregnant employees with other employees who have temporary physical conditions […]

Group Healthcare Costs Up, Coverage Down

September 29th, 2012 by JBWK

Two new surveys show the changing role employment-based health insurance may play after the massive federal overhaul of health insurance. One found that group healthcare costs continued to rise; the other found that employer-based coverage is declining. Interestingly, even though employment-based coverage is dropping, the overall percentage of people insured is rising based on increased […]

NFL Refs Back on Field After Pension Fight

September 28th, 2012 by JBWK

After weeks of poor calls on the field, NFL referees are back on the field. The main driver? An agreement on whether refs would continue to participate in pension plans or switch to defined contribution 401(k) plans. Like many employers, the refs will now phase out of the generous pension plans offering fixed income for […]

Does Money Matter?

September 22nd, 2012 by JBWK

An interesting article in the Wall Street Journal highlights not only a technological shift, but also sparks an interesting question: will a raise entice a valued employee to stay? The article examines complex computer models fed with data from former employees. Looking at the collected data, the computer model will look at why employees leave, […]

401(k) Fee Disclosures and Small Business

September 13th, 2012 by JBWK

A recent survey of small businesses (100 employees or less) found that more than two-thirds weren’t prepared to answer employee questions about 401(k) plan fees and more than four out of five were unsure of what to do with the fee-disclosure information they received. The new Department of Labor rules are supposed to make plan […]

Beware of Online “Advisors”

August 30th, 2012 by JBWK

With more and more online tools–such as the DOL’s Wage and Hour “elaw Advisors“–designed to help employers comply with federal employment laws, it’s tempting to rely on them for quick answers. But that may turn costly. The online “advisors” ask simple “yes” or “no” questions to answer, for example, whether certain employees are exempt from […]

When Are Your Employees No Longer Your Employees?

July 14th, 2012 by JBWK

Mitt Romney has been catching flack lately after Securities and Exchange Commission filings showed he remained the “CEO, Chairman, and sole shareholder” of a private equity firm three years after he claimed to have quit. He defended the records by saying he wasn’t involved in the decisionmaking during those three years and retired “retroactively.” His […]

Affordable Care Act Upheld

June 28th, 2012 by JBWK

The U.S. Supreme Court ruled on Thursday that the Patient Protection and Affordable Care Act is constitutional. But it did so in an unexpected way. The majority opinion ruled that the individual mandate was constitutional as a tax, but only four of nine justices ruled that it was valid under the Constitution’s Commerce Clause. The […]

Supreme Court to Release Healthcare Opinion

June 23rd, 2012 by JBWK

Being the final week of the Supreme Court’s term, its remaining opinions will be released this week, including the much-awaited constitutional challenge to the Patient Protection and Affordable Care Act. The ruling will come either Monday or, if the Court schedules additional days, possibly Wednesday or Thursday. If the Court strikes down the entire law, […]

Helpful Reminder on Wage Deductions

June 9th, 2012 by JBWK

At Wage & Hour Insight, a helpful guide on how to recover money from employees without violating the Fair Labor Standards Act. The bottom line for the FLSA is that employees must generally receive free and clear the minimum wage for their hours worked. Obviously, certain deductions like payroll taxes may be made, but others […]

Federal Judge Denies FLSA Settlement

May 17th, 2012 by JBWK

The Fair Labor Standards Act is one the most complex federal employment laws–and no doubt one of the most violated. However, it’s also unique in that any settlement of a FLSA lawsuit must be approved by the court or the Department of Labor. And that’s not as easy as it may seem. An Alexandria federal […]

The IRS Wants Answers

May 11th, 2012 by JBWK

On how to deal with the various PPACA issues it’s required to address within the next two years. The IRS issued requests for comments on several aspects of the PPACA, whose future is uncertain in light of litigation pending before the U.S. Supreme Court. The IRS is continuing to draft regulations and request comments on […]

Citigroup’s Failed “Say on Pay” Vote

April 20th, 2012 by JBWK

In a surprising vote this week, Citigroup’s shareholders rejected CEO Vikram Pandit’s proposed executive compensation package. The nonbinding shareholder vote–which garnered only 46% in favor–is the most notable rejection so far under the Dodd-Frank Act’s shareholder advisory votes on executive compensation. Citigroup’s board approved a pay package that would give Pandit about $15 million in 2012. […]

35 Million Reasons to Monitor 401(k) Plan Fees

April 12th, 2012 by JBWK

Highlighting the seriousness of ERISA’s fiduciary obligations regarding service-provider fees for retirement plans, a federal court has held an employer’s 401(k) plan fiduciaries liable for $35 million. The fiduciaries of manufacturer ABB, Inc.’s 401(k) plans failed to monitor service providers fees, failed to properly deliberate over switching mutual funds, and failed to properly control the […]

Supreme Court Hears PPACA Mandate Oral Argument

March 27th, 2012 by JBWK

The U.S. Supreme Court today held its second of three days of oral argument regarding the Patient Protection and Affordable Care Act, or PPACA. This morning the Court heard arguments on the most visible issue: the constitutionality of the so-called “individual mandate” requiring most Americans to purchase health insurance. Early reports seem to indicate that several […]

Webcast on Fiduciary Responsibilities

March 22nd, 2012 by JBWK

The Department of Labor’s Employee Benefits Security Administration is offering a series of two webcasts on Tuesday, March 27, and Wednesday, March 28, both from 1:00 to 2:30, on the topic of ERISA fiduciary duties. Both are free. Perhaps one of the most sweeping and complicated issues in ERISA, plan sponsors’ fiduciary obligations cover selecting […]

Don’t Forget About the Small Business Health Care Tax Credit

March 15th, 2012 by JBWK

With the considerable news surrounding the implementation of, and challenges to, the Patient Protection and Affordable Care Act (PPACA), the small business tax credit has gotten lost in the shuffle. The IRS has revamped a website aimed at helping small businesses determine whether they’re eligible for the credit and claim it. The credits, which are […]

The Growing Complexity of Executive Compensation

March 9th, 2012 by JBWK

While admittedly lengthier than most filings, Freddie Mac’s 10-K filed with the SEC records the massive compliance toll executive compensation takes in large organizations. Its conservatorship by the FHFA complicates matters greatly, but Freddie Mac nonetheless took 27 full pages to outline its 2011 compensation (starting at page 330) of its most recent 10-K explaining […]

Agencies Issue Guidance on Group Health Summary Disclosures

February 26th, 2012 by JBWK

The DOL, HHS, and Treasury have issued new final guidance and template documents regarding group health plans’ and health plan issuers’ obligations to provide participants a summary of benefits and coverage, a new requirement under the PPACA. The DOL has provided template disclosure documents, available on its website.

Congress Extends Payroll Tax Cut

February 19th, 2012 by JBWK

In the face of its upcoming expiration, Congress passed a bill extending the payroll tax cut until the end of 2012. The bill extends the 2% cut in the Social Security payroll tax withholding on employees, meaning that employees will only have to pay 4.2% instead of the normal 6.2%.

Treasury Department Encourages Lifetime Income Options

February 3rd, 2012 by JBWK

In a push to make sure Americans don’t outlive their retirement savings, the Treasury Department has released several new guidance documents encouraging plan sponsors to offer so-called “lifetime income” options. Under the new guidance, it will be easier for employers to offer employees an option to use part of their 401(k) savings to purchase a […]

DOL Releases Final Rules on Retirement Plan Fee Disclosure

February 3rd, 2012 by JBWK

The Department of Labor has released its final rules on service provider fee disclosure to retirement plan fiduciaries. The new rules require service providers to detail compensation they receive from the plan. The rules aim to help ensure plan sponsors and fiduciaries are paying only “reasonable” fees allowed under ERISA. The service-provider level disclosures coincide […]

American Airlines Proposing to Terminate Pension Plan

February 3rd, 2012 by JBWK

Underscoring just how expensive defined benefit pension plans have become–and explaining the shift to 401(k)-type defined contribution plans–American Airlines’ parent company, AMR, disclosed last week its proposal to terminate its lower-level employee pension plan. Under the proposal, the Pension Benefit Guaranty Corporation would assume all the plan’s liabilities and would pay benefits. AMR claims the termination […]

Don’t Forget About Plan Damages

January 29th, 2012 by JBWK

A federal court in California, while rejecting an employee’s claim for damages, provided a good reminder of what all is at stake in wage discrimination litigation. Obviously, employees can recover back wages, compensatory damages, and, on occasion, things like punitive damages in employment discrimination cases. But employers also face another potentially large issue: retirement plan contributions. […]

Fee Disclosure Rules Result in More Affordable 401(k)s

January 21st, 2012 by JBWK

The USA Today reports that in anticipation of new fee-disclosure rules by 401(k) providers, several plan providers are rolling out new, more cost-effective plans for smaller employers. Smaller employers typically find their fees for 401(k) providers are up to twice as much as large plans. The Department of Labor has introduced new fee-disclosure rules that […]

IRS Issues New Guidance on W-2 Reporting for Health Insurance Costs

January 6th, 2012 by JBWK

As part of the comprehensive healthcare reform package passed in 2010, starting in 2012, employers are required to include on employees’ W-2s the cost of employer-provided healthcare coverage. The reporting was optional for 2011. The IRS has issued extensive guidance on the reporting requirements, including certain items that don’t have to be reported, such as […]

Employment and Healthcare Named Two of 2012’s “Hottest” Areas of Law

December 18th, 2011 by JBWK

In a nod to what many employers already know, employment law and healthcare law have been named by Virginia Lawyer’s Weekly as two of the “hottest” areas of law for 2012. It cited healthcare’s growing regulatory complexity–and overlap with employee benefits and insurance–in addition to the uncertainty over the 2010 healthcare reform law’s future. Labor […]

Payroll Tax Reduction Still Up In the Air

December 17th, 2011 by JBWK

After the Senate passed an extension of the 2% employee payroll tax reduction for the first two months of 2012, the House apparently is set to reject it. The employee share of Social Security tax withholding has been at a reduced 4.2% for 2011, which is down from the typical 6.2%. Under the Senate-passed measure, […]

IRS Ups Standard Mileage Deductions for Business Use

December 10th, 2011 by JBWK

In its first 2012 Notice, the IRS has upped the standard business use deduction rate to 55.5 cents per mile. The new rates become effective January 1, 2012.

IRS Warns Against “Sham” Retirements

December 3rd, 2011 by JBWK

The IRS, in a recently released private letter ruling, held that pension plan participants would not be considered “retired” under an arrangement in which they would “retire” on one day, only to come back to work in the same position a day or week later. The pension plan in the PLR was undergoing required benefit […]

Be Mindful of Who You Pay Out of Your 401(k)

December 2nd, 2011 by JBWK

One plan sponsor learned the hard way: Orthopedic Associates is on the hook for a participant’s $770,000 in benefits that the plan wrongfully distributed to his ex-wife. The Second Circuit Court of Appeals held that the plan must pay the participant all of his accrued benefits, despite the fact it already paid those same benefits […]

IRS To Correct “Minor Errors” in 409A with 457(f) Regulations

December 1st, 2011 by JBWK

BNA reports that IRS officials have acknowledged they will fix some “minor errors” in section 409A regulations (addressing deferred compensation) through its upcoming section 457(f) regulations. 457(f) governs the taxation of nonqualified deferred compensation plans of government and tax-exempt entities. The IRS has repeatedly announced its intention to issue more onerous regulations on 457(f) plans, […]

Another Healthcare Reform Provision Delayed

November 27th, 2011 by JBWK

This time the DOL has pushed back the implementation deadline for the Summary of Benefits and Coverage (“SBC”) that employer-sponsored plans are required to distribute to employees. The SBC is intended to provide a summary of benefits employees receive under their employer-sponsored plan. The DOL issued proposed regulations over the summer, detailing specific disclosure requirements. […]

U.S. Supreme Court to Hear Healthcare Reform Case

November 14th, 2011 by JBWK

The U.S. Supreme Court announced Monday that it will hear several related issues regarding the 2010 Patient Protection and Affordable Care Act (or PPACA). The major issue is the constitutionality of the law’s requirement that every American must purchase health insurance. In addition to addressing that specific question, it will also hear some related arguments […]

IRS Clarifies Taxation of Employer-Provided Cell Phones

October 30th, 2011 by JBWK

Clarifying a somewhat confusing issue, the IRS recently issued guidance on the taxation of employer-provided cell phones. The guidance applies to cell phones provided for “noncompensatory” purposes–that is, the cell phone is not just an added perk to attract or retain employees. The provision of an employer-provided cell phone must, in other words, be business […]

IRS Announces 2012 COLA Increases

October 20th, 2011 by JBWK

The IRS released today the 2012 annual cost-of-living increases for various tax and employee benefit programs. In addition to addressing compensation limits for IRA contributions and pension plans, the IRS increased by $500 the annual elective deferral maximum for 401(k) plans from $16,500 to $17,000 and increased the total annual deferrals across all defined contribution […]

What Is Deferred Compensation and Why Does It Matter?

October 19th, 2011 by JBWK

Nonqualified deferred compensation plans (as opposed to tax-favored “qualified” retirement plans) have become a popular option for employers to attract and retain management employees, often providing the so-called “golden handcuffs” to encourage key employees to stay for a certain number of years or until certain performance targets are reached. But planning for nonqualified deferred compensation […]

DoL Sues Medical Practice for Profit-Sharing Plan Loans

October 9th, 2011 by JBWK

The Department of Labor has alleged, in a lawsuit filed in federal court, that a physician, as the sole owner and CEO of his practice, illegally funneled nearly all of his practice’s profit-sharing plan assets back to the practice to fund its operations. The plan held retirement plan assets for four other employees of the […]