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

by Jeffrey Holdvogt | Jan 29, 2015 | 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

by McDermott Will & Emery | Jan 27, 2015 | 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.

Reevaluating Paid Time Off and New Challenges

by McDermott Will & Emery | Jan 15, 2015 | 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

by McDermott Will & Emery and Michael T. Graham | Jan 14, 2015 | 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

by Katie Clark and Paul McGrath | Dec 31, 2014 | 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

by Joan-Elisse Carpentier | Dec 24, 2014 | 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

by Todd Solomon, Joseph K. Urwitz, Mary K. Samsa and Ralph E. DeJong | Dec 18, 2014 | 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?

by Bettina Holzberger | Dec 17, 2014 | 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.

UK Employment Alert: UPDATE: Unite Will Not Appeal Holiday Pay Ruling

by Katie Clark | Dec 9, 2014 | Employment

Unite, the trade union that backed the majority of the claimants in Bear Scotland v Fulton regarding the calculation of holiday pay, has announced it will not appeal the Employment Appeal Tribunal decision. To read our alert on the decision, please click here.

What Has Happened?

One effect of the EAT’s judgment was to dramatically limit workers’ rights to bring Employment Tribunal claims for historic underpayments of holiday pay. It had been widely expected that Unite would lead an appeal to the Court of Appeal, so the union’s announcement that it won’t will be music to the ears of employers who are concerned about the potentially significant cost of such claims.

The bad news is that Unite’s decision not to appeal is not necessarily the end of the issue. Many cases were stayed pending a decision in Bear Scotland, and it is likely that these cases will now proceed and a new test case may well work its way up to the Court of Appeal.

What Does This Mean For Employers?

The EAT’s judgment is highly unlikely to be overturned within the next 12 months. In the meantime, employers can stand firm on requests made or claims brought for significant back pay that are outside outside the parameters set by the EAT.

By way of reminder, the EAT decided that a Tribunal can only deal with a claim for an unlawful deductions from wages if it is brought within three months of: i) the date of underpayment; or ii) if there has been a series of deductions, within three months of the last deduction in the series (unless the Tribunal decides that the deadline should be extended because it wasn’t reasonably practicable for the claim to have been brought in time).

As it is only the four weeks (20 days for a full-time worker) mandatory holiday required to be given to workers by the European Working Time Directive that must include overtime, etc., an underpayment claim relating to more than one period of holiday may only be considered by a Tribunal if periods of mandatory holiday have been taken within three months of each other. The EAT said that it made sense for mandatory holiday to be treated as having been taken first in the holiday year. This means that any additional holiday taken towards the end of the year will tend to break up the periods of mandatory holiday and so disrupt a workers’ ability to claim for them.

View From McDermott: A New Type of ERISA-Based Hold-Up—The Rise of Out-of-Network Provider Suits Against Self-Funded Health Care Plans

by McDermott Will & Emery | Dec 3, 2014 | Benefit Controversies, Employment, Retirement Plans

Over the past decade, there has been a significant increase in the number of physicians who have dropped out of Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) networks and attempted to negotiate their own financial reimbursement with insurance companies and self-funded health care plans related to medical treatment provided to participants whose plan are governed by the Employee Retirement Income Security Act of 1974, as amended (ERISA).

These moves have led to a corresponding increase in the number of health care benefit suits brought by out-of-network physicians and treatment centers seeking to gain through litigation that which they could not get through direct negotiations with insurers and plan administrators—higher reimbursement amounts for health care treatment from ERISA-governed medical plans.

Read the full article.

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