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Employee Benefits Blog

Insights on Employee Benefits and Executive Compensation

Join McDermott Partners at a Webinar on TOP IRS and DOL Audit Issues for Retirement Plans

Posted in Employment, Labor, Retirement Plans

Tuesday, February 10, 2015
12:30 – 1:30 pm EST

Please join McDermott Will & Emery for a complimentary webinar discussing key issues retirement plan sponsors should take into account when establishing and maintaining internal controls based on the compliance requirements Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) agents review when they conduct retirement plan audits.

Specific topics will include the following:

  • The most significant issues IRS agents focus on during audits, including definitions of compensation, employee eligibility requirements and properly updated plan documents
  • The most significant issues DOL agents focus on during audits, including target date funds and revenue sharing fees, and avoidance of late payroll deposits and missed employee communications
  • Steps employers can take in order to improve their internal controls for compliance with IRS and DOL requirements

McDermott Speakers
Nancy S. Gerrie, Partner, McDermott Will & Emery
Jeffrey M. Holdvogt, Partner, McDermott Will & Emery

To register, please click here.

 

Changes to IRS Form for Qualified Adoption Expenses

Posted in Employment

The Internal Revenue Service (IRS) has released the 2014 version of Form 8839 (Qualified Adoption Expenses), as well as updated instructions.  Taxpayers use Form 8839 to claim the adoption credit, an exclusion for employer-provided adoption benefits, or both.  Changes to the 2014 form and instructions include the following:

  • The maximum adoption credit and exclusion amounts have been adjusted to reflect their 2014 values ($13,190 per eligible child).
  • The instructions regarding adoption of children with special needs have been revised.
  • The adoption credit carry-forward worksheet in the instructions for line 16, which identifies unused credits that taxpayers may carry forward to 2015, has been modified to reflect that there are now three years (2012–2014) for which a taxpayer might have carry-forward amounts.

The Directed Trustee in the Post-Dudenhoeffer World

Posted in Employee Stock Option Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

Court cases challenging the actions of Employee Retirement Income Security Act fiduciaries have continued unabated since the scandal of Enron in 2002.  Since then, a large number of cases are in the “stock drop” area, which encompasses cases relating to employer securities investments when the stock price drops severely.  The litigation has focused on whether a presumption of prudence exists that protects fiduciaries holding employer securities investments on behalf of a retirement plan.  In June 2014, the U.S. Supreme Court ruled in the case of Fifth Third Bancorp v. Dudenhoeffer that ERISA doesn’t provide a presumption of prudence to protect fiduciaries of plans investing in employer securities.  Now that the Dudenhoeffer decision resolves the presumption issue, it is reasonable to expect that ERISA cases may return to focus on the fiduciary duties of a directed license.

 Read the full article.

Reevaluating Paid Time Off and New Challenges

Posted in Employment, Labor

Cost containment evaluation and strategies relating to overall management of human capital costs remain a continual struggle for many organizations.  Labor costs, far and away, continue to be the largest cost for many organizations.  Consequently, this has resulted in an organizational focus on ways to create efficiencies within their existing benefits programs.  Interestingly, it appears that paid time off (PTO) is one area where organizations have an opportunity to create efficiencies, as well as mitigate long-term financial risk and compliance risk.

Historically, many organizations provided their employees with separate holidays, vacation days, personal days, and sick time.  Over time, however, many of these organizations have redesigned these programs to incorporate a “total” combined time off (CTO) approach where all of these different categories of personal time are included in one overall pool of days.  A CTO approach simplifies administration of these arrangements and, in general, when compared to the traditional separate days approach, results in organizations overall providing fewer days of total time off.  Changing to a CTO methodology did provide many of these organizations with initial cost savings, but other potential opportunities may exist as well as new challenges that have arisen.

Read the full article.

California Imposes Mandatory Sick Leave Law

Posted in Employment

On September 10, 2014, California’s Healthy Workplaces, Healthy Families Act of 2014 (California’s sick leave law) became law.  The new law requires most employers to allow employees to accrue up to three days of paid sick leave per year based on an accrual of at least one hour of paid sick leave for every 30 hours worked.  California’s sick leave law does provide for various accrual caps, in deference to employers that already have a paid time off (PTO) policy meeting certain standards, as well as various other exceptions.  Employees may use the paid sick leave to care for themselves or other family members.  Notably, the new law imposes notice, posting and record-retention obligations with which employers must now comply.

Read the full article.

UK Employment Alert: Holiday Pay – UK Government Introduces Two-Year Limit on Claims for Back Pay

Posted in Employment

The UK Government has introduced legislation to help employers deal with the fallout of recent decisions indicating that pay for statutory holiday should include, and should always have included, overtime and other job-related allowances, as we reported on previously here and here.

Read the full article.

The Immigration Accountability Executive Actions: Ramifications for Business

Posted in Employment

President Obama’s plan for executive action on immigration includes items of interest to businesses, professionals, investors and other highly skilled workers. The plan aims to grow the U.S. economy and create jobs for U.S. workers, while allowing U.S. businesses to more readily hire and retain foreign employees.

Read the full article.

Seventh Circuit: Plaintiffs Lacked Standing to Challenge Tax Exemption for Ministerial Rental Allowances

Posted in Employment

An appellate court recently issued a favorable ruling for religious employers in a closely watched case relating to the ability of religious employers to provide tax-fee housing allowances to ministers. The court overturned a district court decision declaring unconstitutional Internal Revenue Code Section 107(2), which excludes from gross income a rental allowance paid to a “minister of the gospel” as part of his or her compensation, because the plaintiffs-appellees lacked standing to challenge the provision’s constitutionality. Religious institutions offering such allowances should continue to monitor developments in this area and consider alternative compensation strategies.

Read the full article.

Are No Hiring and No Poaching Agreements Enforceable in Germany?

Posted in Employment

No poaching agreements between leading companies in the IT sector have recently caused a substantial scandal in Silicon Valley, California, resulting in tech industry businesses settling a major lawsuit by paying a reported US$324 million.  Such agreements can be found all over the world; but are they enforceable in Germany?

Read the full article.