Employee Benefits Blog : Employee Benefits & Executive Compensation Lawyers & Attorneys: McDermott Will & Emery Law Firm

by Amy M. Gordon, Susan M. Nash and Jamie A. Weyeneth. 

The Internal Revenue Service recently issued requests for comments in advance of issuing proposed regulations on health care reform reporting and minimum value requirements.

To read the full article, click here. 

• Print
• Share Link

by Maureen O'Brien and Karen Simonsen. 

In October 2010, the U.S. Department of Labor (DOL) issued final regulations requiring plan administrators to disclose certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in 401(k) plans and other participant-directed individual account plans.  In February 2012, the DOL issued final regulations under section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA) requiring certain covered service providers to furnish specified information to plan administrators so that they may comply with their disclosure obligations in the participant-level disclosure regulations. On May 7, 2012, the DOL published additional guidance addressing frequently asked questions concerning the participant disclosure regulations and the service provider disclosure regulations.

The new guidance consists of 38 questions and answers addressing, among other topics, revenue sharing disclosures, brokerage window disclosures, designated investment alternatives, transition rules, and form and content of investment-related information.  Plan administrators should review the new guidance now to determine if any changes to participant disclosures are required prior to the initial/annual disclosure deadline of August 30, 2012. 

A detailed analysis of the new guidance from McDermott is forthcoming in the near future.  For now, click here to link to the new guidance.  To listen to McDermott’s webinar on participant fee disclosure and service provider disclosures, click here. 

• Print
• Share Link

by Heather Egan Sussman, Stephen D. Erf and Sabrina Dunlap

On April 25, 2012, the U.S. Equal Employment Opportunity Commission (EEOC) issued new guidance for employers on using arrest and conviction records when making employment decisions.  The guidance, which is available here, passed by a 4-1 vote of EEOC commissioners, and consolidates and supersedes the EEOC’s prior policies on this topic.
 
The agency decided to re-evaluate its policy on the use of criminal background checks in employment decisions after the U.S. Court of Appeals for the Third Circuit suggested to the EEOC in a 2007 case that the agency provide analysis and updated research on the use of background checks in employment.  Since 2007 the EEOC has examined social science and criminological research, as well as court decisions and state and federal laws, to assess the effect of the use of criminal records and background checks in employment decisions.  Of particular concern to the EEOC are the arrest and incarceration rates for certain minority groups, and the potential that the use of criminal records and background checks in employment decisions could have a disparate impact on people in those groups.

While the new guidance does not change the EEOC’s fundamental position on applying principles of Title VII of the Civil Rights Act (the federal law prohibiting employment discrimination based on race, color, religion, sex, national origin, etc.) to an employer’s use of criminal records in the workplace, it does offer more in-depth analysis of disparate treatment and disparate impact, and provides employers with clearer rules on the proper use of criminal records and background checks.  In particular, the guidance explains in detail how employers can establish a defense to claims of disparate impact by showing that employment decisions based on criminal records or background checks are job-related and consistent with business necessity.
 
In addition to the guidance, the EEOC issued a Q&A, available here.  (Note that certain states have further restrictions regarding how such information is gathered and used.)  Please stay tuned for a more detailed discussion of the guidance and its implications for employers.

• Print
• Share Link

by Andrew C. Liazos

Well, for emerging growth companies, at least. The new law also exempts such firms — which are planning an IPO and have less than $1 billion in revenue — from holding a “say-on-pay” vote.

Please click here to read the full article.

• Print
• Share Link

by Amy Gordon, Susan Nash, Megan Mardy and Patrick Ryan.

The U.S. Department of Treasury recently issued proposed regulations regarding fees imposed on certain types of  health plans to fund the Patient-Centered Outcomes Research Trust Fund.

To read the full article, please click here.

• Print
• Share Link

by Sébastien Le Coeur, Jilali Maazouz and Todd A. Solomon. 

Multinational companies with employees in France should be aware that terminated employees subject to a non-compete restriction must be compensated during the non-compete period after termination of employment.  Given this legal requirement, non-compete and severance agreements for employees in France must provide for financial compensation after employment termination during any non-compete period.  If compensation is not provided during the non-compete period, the non-compete agreement is null and void, and the terminated employee is free to work for competitors.  In the event an employer becomes aware that a former employee is breaching his or her non-compete agreement, the employer should still pay the financial consideration until it has strong written evidence of the breach.  If the employee stops receiving financial consideration, the former employee could argue that the employer is breaching the severance or non-compete agreement and that the non-compete provision thus is no longer binding.  Alternatively, non-compete agreements in France should provide that the employer can waive the non-compete restriction within a certain number of days following the employee's termination of employment.  This type of provision allows an employer to voluntarily choose to waive non-compete restrictions and avoid paying the former employee further financial consideration following employment termination.

In light of these requirements, multinational companies should make sure local management in France establish non-compete and severance agreements with French employees that allow a waiver of non-compete provisions within the prescribed time periods or that provide adequate financial consideration for any non-compete agreement provisions they want to enforce.
 

• Print
• Share Link

by Paul Melot de Beauregard and Todd Solomon

As large companies increase their global presence, their workers are becoming increasingly mobile between jurisdictions.  Such companies need to be aware of a number of international benefits issues that can have an impact on companies and their mobile employees.

To read the full article, please click here. 

• Print
• Share Link

by Michael T. Graham, Maureen O'Brien and Ashley McCarthy.   

A recent federal district court decision defeats a long-standing assumption that a foreign corporate parent would not be subject to personal jurisdiction for a suit seeking payment of pension liabilities merely by acquiring a U.S. subsidiary.

To read the full article, click here. 

• Print
• Share Link

by Michael T. Graham, Joseph S. Adams and Patrick D. Ryan. 

The PBGC announced that it may lessen ERISA Section 4062(e) enforcement for employers in strong or moderately strong financial condition.  However, the PBGC will continue to enforce its prior Proposed Rule on ERISA Section 4062(e) liability.

To read the full article, click here. 

• Print
• Share Link

Wednesday, April 25, 2012
8:00  - 9:00 am CDT

UBS Tower
One North Wacker Drive
2nd Floor, Michigan II Ballroom
Chicago, IL 60606

To register, please click here. 

The U.S. Department of Labor (DOL) has now issued final regulations on service provider fee disclosures and participant fee disclosures under the Employee Retirement Income Security Act (ERISA) for self-directed retirement account plans.  This means service providers must provide initial fee disclosures to plan sponsors by July 1, 2012, and plan sponsors must provide initial fee disclosures to participants by August 30, 2012.  Join us and learn:

• What plan sponsors should expect to receive from service providers
• Practical tips to legally comply with the new participant fee disclosures
• Practical tips on selecting investment and employer stock benchmarks
• Rules and restrictions on electronic delivery of participant fee disclosures

Speakers
Maureen O’Brien – Partner, McDermott Will & Emery
Donald Stone – Managing Partner, Plan Sponsor Advisors
Lori Lenard – Director and Senior Counsel, Discover

This event is presented by the Worldwide Employee Benefits Network.

• Print
• Share Link

by May Lu

As a result of discussions around China’s pending Draft Salary Regulation, collective salary negotiation has once again become a hot topic.

There have been several well-known, recent cases relating to collective salary negotiation.  In 2010 one Japanese-invested car company raised its Chinese employees’ salaries by 35 percent after experiencing a strike that lasted more than two weeks and interrupted almost all of its manufacturing in China.  In 2011 it was reported that French supermarket Carrefour had not raised employees’ salaries for 12 consecutive years.  This drew considerable attention from the local government in Shanghai and Carrefour was forced to raise wages by 8 percent after a Government-led collective negotiation with the employees.

In addition, trade unions at different levels have been very active in urging employers to sign collectively bargained contracts that include salary increase as the main content.  Furthermore, additional rules relating to the collective negotiation process have been issued to provide guidelines regarding collective negotiation for enterprises that do not have trade unions.  The future for collective salary negotiation looks bright, but is that really the case?

To read the full article, click here. 

• Print
• Share Link

by Ira B.  Mirsky, Karen A. Simonsen, Todd A. Solomon and Adrienne Walker Porter

The Foreign Account Tax Compliance Act (FATCA) requires certain U.S. taxpayers holding foreign financial assets, including an interest under a foreign pension or deferred compensation plan and foreign equity awards, to report those interests beginning with this tax filing season.  Taxpayers who fail to meet their obligation to file Form 8938 are subject to significant penalties.

To read the full article, click here. 

• Print
• Share Link

by Nancy S. Gerrie and Jeffrey M. Holdvogt

The Puerto Rico Treasury Department recently issued guidance (Circular Letter No. 12-02) allowing certain retirement plans qualified under the Puerto Rico Internal Revenue Code, including dual-qualified plans that are also qualified under the U.S. Internal Revenue Code, to file a copy of Form 5500 or Form 5500-SF as the plan’s annual Puerto Rico return in lieu of filing Puerto Rico Form 480.7(OE).  The new procedures, effective beginning with the annual filing for the 2011 tax year, will allow retirement plans sponsors with employees in Puerto Rico to satisfy their annual Puerto Rico filing requirement with Form 5500.

The Puerto Rico Internal Revenue Code generally requires employers that maintain a retirement plan qualified in Puerto Rico to file, on an annual basis, Form 480.7(OE), Information Return of Income Tax-Exempt Organizations.  However, for tax years beginning on and after January 1, 2011, employers that maintain plans that are subject to the provisions of Title I of the Employee Retirement Income Security Act (ERISA), and that have previously submitted an application to the Puerto Rico Treasury Department for a determination that the plan is qualified under the Puerto Rico Internal Revenue Code, may comply with the annual Puerto Rico filing requirement by filing a copy of the corresponding Form 5500 or Form 5500-SF as the plan’s annual return in lieu of filing Puerto Rico Form 480.7(OE).

Plan sponsors that elect to file Form 5500 to satisfy the Puerto Rico annual return requirement must still complete the part of Form 480.7(OE) containing the biographical data of the plan on the first page of Form 480.7(OE) and attach a copy of Form 5500 as the annual filing.  Either Form 5500 or Form 480.7(OE) must be filed by July 31 following the calendar year close or the last day of the seventh month following the fiscal year close of the trust (if Form 480.7(OE) is filed) or the plan year (if Form 5500 is filed), unless a request is filed for an automatic extension to October 15 following the close of the year for a calendar plan year.  Plan sponsors that request an extension of time to file the Form 5500 with the U.S. Department of Labor still must request an extension of time for the Puerto Rico filing separately by filing Model SC 2644 prior to the filing deadline of the Form 480.7(OE).  The Puerto Rico Internal Revenue Code imposes a penalty of $500 per form for failure to timely file the annual report.

• Print
• Share Link

by Andrew C. Liazos

Public Company Accounting Oversight Board (PCAOB) proposals would have auditors reading the employment and compensation contracts of corporate leaders and, possibly, forcing changes to comp programs due to unacceptable risks of material restatement.

To read the full article, click here.

• Print
• Share Link