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Review of Section 409A Proposed Regulations

On June 22, 2016, the Internal Revenue Service (IRS) issued proposed changes to the regulations under the Internal Revenue Code (Code) §409A. The Code intends to clarify or modify a wide range of very restrictive rules pertaining to “nonqualified” deferred compensation plans as well as other types of compensation arrangements that may defer compensation. The proposed changes are designed to benefit taxpayers, with a few intending to close potential loopholes.

The following PowerPoint highlights key points from the proposed regulations and what employers and employees should know and can expect moving forward.

View the PowerPoint slides here.




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OSHA and MSHA Increase Penalties for Workplace Safety Violations

On July 1, 2016, Occupational Safety and Health Administration (OSHA) increased the maximum penalties under the Occupational Safety and Health Act by about 78 percent to account for inflation. Acting under authority conferred by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, 701 (part of the Bipartisan Budget Act of 2015), OSHA published an interim final rule that will on August 1, 2016, increase penalties for OSHA violations as follows:

Other-than-serious violations: From $7,000 to $12,471
Serious violations: From $7,000 to $12,471
Repeated violations: From $70,000 to $124,709
Willful violations
minimum: From $5,000 to $8,908
maximum: From $70,000 to $124,709
Failure to abate: From $7,000 per day to $12,471 per day

Penalties under the Federal Mine Safety and Health Act of 1977 were also changed to account for inflation, as follows:

The maximum penalty for most violations will now be $68,300.
The minimum penalty for unwarrantable failure violations under Section 104(d)(1) of the Mine Act will now be $2,277.
The minimum penalty for unwarrantable failure violations under Section 104(d)(2) of the Mine Act will now be $4,553.
The minimum and maximum penalties for failure to provide timely notification under Section 103(j) of the Mine Act will now be $5,692 and $68,300, respectively.
The maximum penalty for failure to abate will now be $7,399 per day.
The maximum penalty for flagrant violations will now be $250,433.

Questions about these changes should be directed to Art Sapper at +1 202 756 8246.




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Same-Sex Marriage Is Legal in All 50 States: So What Now?

Now that same-sex marriage is legal in all 50 states, most benefits plans will treat same-sex spouses the same as opposite-sex spouses. But several tricky issues remain. For example, what if an employer with religious beliefs wants to continue to exclude same-sex spouses from receiving benefits under its retirement plans? Or its medical and dental plans? Are employers that deny coverage vulnerable to sexual orientation and/or sex discrimination lawsuits under state and local law or to federal Title VII lawsuits? What has the EEOC said about this issue? In addition, should employers consider dropping benefits for unmarried partners? Is the answer different if the employer’s plans cover both same-sex and unmarried opposite-sex partners?

The following presentation highlights some of these considerations.

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Brexit Update: UK Employment Law Implications

Don’t panic. The United Kingdom will continue to be an EU Member State until procedures are completed for exiting the European Union, which is likely to be at least two years. Until a withdrawal agreement is reached, EU laws and treaties will still apply, including the right for EU nationals to work in the United Kingdom. This means that all current EU-derived employment laws should remain in place for at least two years.

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German Statutory Minimum Wage May Include Vacation and Christmas Bonuses

On May 25, 2016, the German Federal Labor Court confirmed a decision of the State Labor Court Berlin-Brandenburg (reference number: 5 AZR 135/16) regarding the statutory minimum wage in Germany.  The German Federal Labor court confirmed that, under certain conditions, vacation and Christmas bonuses may also be considered when determining if an employer pays his employees the statutory minimum wage in Germany.  This was the first time that the German Federal Labor Court had considered this issue.  (more…)




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IRS Provides New 409A Guidance: New Proposed Regulations Provide Additional Clarity, Warn of Abusive Practices and Present Planning Opportunities

On June 21, 2016 the IRS issued proposed regulations to modify and clarify existing regulations under Section 409A of the Internal Revenue Code. Many of these changes resulted from practitioner comments and the IRS’ experience with Section 409A after issuing the final regulations. Overall, most of the proposed changes are favorable, and may provide some planning opportunities.

Read the full article. 




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New Policies and Practices for Hiring Expatriates in China

With more and more expatriates working in China, and some even applying for long-term residence permits, complicated applications procedures have been deemed an impediment to attracting more talented expatriates. In later 2015, for the purpose of facilitating the establishment of the “technology innovation center,” Shanghai issued several local policies encouraging more senior level expatriates to work in Shanghai. In March 2016, a similar set of local policies were issued in Beijing after those policies were successfully implemented in Shanghai. The following provides a brief overview of the new policies and practices for expatriates working in China.

Easier Procedures for Senior Level Expatriates to Apply for Working Permits

Generally, an expatriate must meet the following requirements to successfully acquire a working permit in China: (1) be between at 18 and 60 years old (60 years old is the general retirement age in China); (2) have working experience (in practice, at least two years of full time working experience is required); (3) have no criminal record; and (4) have received a job offer from a Chinese entity.

According to new local policies, if an expatriate is a “senior level expatriate,” the expatriate may apply for a work permit in China even if the expatriate is older than 60 years of age. Moreover, he or she may be issued a special “R visa” instead of a normal “Z visa” for working in China. Finally, the corresponding procedures for applying for a long-term residence permit in China will also be simplified for expatriates falling in this category.

As for the definition of “senior level expatriate,” the two policies provide several examples: (1) one who has received famous international awards or received national level awards from China; (2) a famous professor or scholar; (3) an individual who holds a senior level management position in headquarters of foreign-invested companies.

In addition, the “working experience” requirement has changed. Previously, newly graduated foreign students had no chance of acquiring a work permit in China. According to these two policies, those foreign students who received master’s degrees or above in China can now apply for a work permit in designated areas, such as the free trade zone of Shanghai and Zhong Guan Cun, a technology hub in Beijing that is known as the “China’s Silicon Valley”.

No Work Permit Is Required for Short-Term Work in China

Under the new policies, another change is that an expatriate may not be required to apply for a working permit in China if the total working period is within three months and the short-term work is in the following areas: (1) visiting a Chinese partner to complete certain technical, scientific research, management or guidance work; (2) conducting training in a sports agency in China; (3) shooting films and fashion shows; (4) engaging in foreign-related commercial performance; and (5) other circumstances identified by the department of human resources and social security.

Previously, an expatriate would go through “4-step” procedures for working in China legally: (1) (the employer) applies for a [...]

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EEOC Model Wellness Program Notice

Today, the EEOC issued its model notice to be used in conjunction with wellness programs that ask disability related inquiries or require medical examinations. The notice requirement applies prospectively to employer wellness programs as of the first day of the plan year that begins on or after January 1, 2017, for the health plan used to determine the level of incentive permitted under the regulations. An employer’s HIPAA notice of privacy practices may suffice to satisfy the ADA notice requirements if it contains the ADA-required information. However, given the timing requirements for distribution of the HIPAA notice and the fact that the EEOC rules apply to wellness programs outside of the group health plan, a separate ADA notice may be required.

Questions and Answers: Sample Notice for Employees Regarding Employer Wellness Programs

Sample Notice for Employer-Sponsored Wellness Programs




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EEOC Releases Final Wellness Program Regulations Related to the Genetic Information Nondiscrimination Act and the Americans with Disabilities Act

The US Equal Employment Opportunity Commission (EEOC) recently released final wellness plan regulations providing guidance on how employer wellness programs may comply with Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA). The EEOC made it very clear that compliance with the HIPAA nondiscrimination rules does not necessarily mean that an employer is in compliance with the final wellness program rules under the ADA or GINA.

Read the full article.




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