One month from today, on May 25, 2018, the European Union (EU) General Data Protection Regulation (GDPR) will go into effect. In light of this, we have been recommending companies review their data privacy policies and practices in the context of equity plan participation and update their share plan documents. In the final month, we want to highlight these items again and encourage you to make sure your company’s equity programs are ready for the GDPR.
On April 9, 2018, the Ninth Circuit issued its decision in Rizo v. Yovino and affirmed that prior salary, alone or in combination with other factors, cannot justify a wage differential between male and female employees. Judge Stephen Reinhardt, who died unexpectedly in late March, authored the ruling. Known as the “Liberal Lion” of the federal judiciary in California, Judge Reinhardt also overturned bans on same-sex marriage and physician-assisted suicide and declared prison overcrowding unconstitutional.
Jordan Kirkness and Susan MacMillan in our Toronto office report that the government of Ontario announced yesterday that it will introduce new legislation to require certain employers to track and publish their compensation information.
The proposed legislation is part of the province’s initiative to advance women’s economic status and create more equitable workplaces (the initiative…
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law bringing significant changes to US tax law. One provision of the Act may further incentivize individuals to work as independent contractors instead of as traditional employees.
The new provision allows for independent contractors, and for service providers structured as a partnership or other flow-through entities, the potential to deduct up to 20% of their revenue from their taxable income. And while some companies might view the opportunity to re-classify individuals from employees to independent contractors as a “win–win” scenario, it could create substantial legal exposure for employers.
As we embark on a new year, take note of the minimum wage in each state and comply with any increases that begin in 2018.
Unless otherwise indicated, the following minimum wage increases are effective January 1, 2018:
[As reported by our Baker McKenzie Compensation colleagues]
As of December 20, 2017, both the House of Representatives and the Senate have voted to approve the final version of the Tax Cuts and Jobs Act, in substantially the form released by the Conference Committee on December 15th. The bill is expected to be presented to the President for signature before Christmas, making US tax reform a reality for 2018.
What’s In? From a Compensation & Benefits perspective, among other things, the approved bill includes:
- Significant changes to Code Section 162(m);
- A new tax deferral regime for options and RSUs granted by private companies;
- Elimination of exclusion for fewer than expected employer-provided fringe benefits; and
- Increased disallowance of compensation-related deductions under Code Section 274.
What’s Out? Fortunately, the final bill does not include a Senate proposal to require the use of a first-in-first-out (FIFO) methodology when calculating capital gains on sale of shares, nor does it add back any of the changes to non-qualified deferred compensation that were proposed in the initial House version of the bill. Also, most of the changes proposed to qualified retirement plans have been eliminated.
Watch Doug’s 6-minute video outlining the threat of withdrawal liability
and the steps employers can take to mitigate this risk.
Last week, we discussed 5 executive agreement provisions to consider now to help avoid future risk. This week, we are back with our second installment.
As with the previous 5 provisions, companies should pay close attention when drafting the following executive agreement terms so as to best position itself in the event of future disputes.
6. Trade Secret – Last year, the Defend Trade Secrets Act was passed and created a federal cause of action for misappropriation of trade secrets. However, to recover exemplary damages and/or attorneys’ fees under the Act, companies must provide explicit notice to employees that identifies the Act’s immunity provisions for certain types of trade secret disclosure, such as when a trade secret is disclosed through the reporting of a violation of law to federal, state, or local government officials. To maximize their recovery potential, companies should include the relevant notice in their executive agreements.
7. Tax Code § 409A – The Internal Revenue Code includes significant tax penalties for certain deferred compensation arrangements. Under IRC Section 409A, there could be penalties if an executive agreement allows for payments to be made to the executive more than 2.5 months after the tax year in which the executive acquires a legal right to the compensation. This could apply to contract provisions regarding bonuses, severance payments, equity payments, change in control, terminations, and other compensation and benefits provisions. Given the intricacies surrounding these rules and exceptions, companies should engage in a specific review of all executive agreements for compliance to avoid these risks. For more information and updates on 409A in light of recent US tax reform, visit The Compensation Connection.
The Tax Cuts and Jobs Act proposes sweeping changes to the taxation of executive compensation and employee benefits. It aims to be effective as of January 1, 2018 – which means limited time to react.
This week our friends over at the Compensation Connection published a helpful alert regarding the proposed tax reform bill.
On October 12, 2017, California Governor Jerry Brown signed a landmark new law barring California employers — and their agents — from inquiring about applicants’ previous salaries and benefits.
The law goes into effect on Jan. 1, 2018.
Here are 3 steps to take now to prepare:
- Remove all salary questions from hiring forms (including