What are some of the challenges and opportunities of hybrid work arrangements? In this Lexology GTDT Market Intelligence article, McDermott Partner Carole Spink offers insight about tracking remote work, navigating local rules, and protecting confidential and propriety information.
What effects did the COVID-19 pandemic have on employers and employment litigation in 2021? In these slides, McDermott Partners Andrew Liazos and Ashley Altschuler summarize some of the key developments in hiring, executive compensation, remote work and more.
Public companies would have a harder time evading a stricter limit on deductions for compensation paid to top executives under an IRS proposal. The proposed regulations (REG-122180-18) implement a 2017 tax law provision that expanded the scope of tax code Section 162(m), which prevents public companies from getting a tax deduction for executive compensation exceeding $1 million. The rules target a workaround under which corporations could potentially skirt the limit by paying certain top executives part of their compensation through a partnership.
McDermott’s Andrew C. Liazos contributes to a Bloomberg Law article that takes a look at how the IRS is working to curb the workaround of the limit on executive pay tax break.
Originally published on Bloomberg Law, December 2019
This month, Assembly Bill 5 (A.B. 5) was signed into California law. A.B. 5 codifies the “ABC Test”—used to determine if a worker is an independent contractor—which is broader, harsher and more inclusive than the common law test with which most businesses are familiar.
A.B. 5 appears to be the death knell of convenience for retaining contractors in the Golden State, as well as the advent of a new wave of wage and hour litigation.
In today’s high-stakes environment, in-house counsel and HR professionals are often on the frontlines, responding to headlines that threaten business and reputational objectives.
Join McDermott Will & Emery’s Employment and Employee Benefits practice groups at a half-day forum in our Chicago office on Oct. 10. This forward-looking program is designed to drive conversation around emerging trends to help employers craft their own narrative, instead of being held captive by it.
Executives are no longer reluctant to lawyer up. News reports on executive/employer contretemps at Papa John’s, Barnes & Noble, Uber and other companies have drawn press attention in the past year; countless other executive/employer disputes have flown below radar.
Underlying these controversies is the executive’s employment agreement, typically the most high-stakes and closely negotiated employment agreements to which companies will contract. Yet, these agreements often contain less clarity and less certainty than either executives or their employers need. Indeed, there appear to be three areas where these contracts could and should be upgraded. Let’s look at each.
Originally published by Law360, February 2019.
Those were the days: when family-owned businesses paid only passing attention to the business value of providing tax-efficient—and incentivizing—benefit plans and compensation options. Tomorrow, Employee Benefits partner Todd Solomon and Private Client partner Bobbi Bierhals join host Judith Wethall during our Fridays with Benefits webinar series to discuss benefit plans and compensation strategies for modern family-owned companies and family offices.
Join our lively 45-minute discussion, where we’ll discuss the following points:
Friday, June 7, 2019
10:00 – 10:45 am PST
11:00 – 11:45 am MST
12:00 – 12:45 pm CST
1:00 – 1:45 pm EST
On February 26, 2014, U.S. House of Representatives Committee on Ways and Means Chairman Dave Camp (R-MI) released the proposed Tax Reform Act of 2014 (the Camp Proposal), which would simplify the Internal Revenue Code and reduce corporate and individual tax rates. However, to remain revenue neutral, the Camp Proposal would eliminate many important tax incentives and would change the landscape of executive compensation.
Changes to Nonqualified Deferred Compensation
Most significantly, the Camp Proposal would add a new Internal Revenue Code Section 409B under which nonqualified deferred compensation earned after 2014 would be taxed upon the elimination of a substantial risk of forfeiture (typically, upon vesting). Further, under the Camp Proposal, amounts earned before 2015 would generally be includible in income as of the later of: (1) 2022 or (2) the year in which the amounts are no longer subject to a substantial risk of forfeiture. If these provisions are enacted, there would no longer be any tax-advantaged reason to use non-qualified deferred compensation plans and, as a result, there would be an incentive to discontinue them unless they are funded.
Changes to Internal Revenue Code Section 162(m)
Section 162(m) currently limits to $1 million the deduction that public companies may take on the compensation paid to the chief executive officer and the next three highest paid officers. In addition:
The Camp Proposal would expand the application of Section 162(m) to:
The Camp Proposal’s Section 162(m) provisions remove significant tax incentives to provide compensation in certain types of ways, in particular, to meet the definition of performance-based compensation. While the early consensus appears to be the proposal will not affect the movement toward pay-for-performance for other purposes (e.g., for shareholder “say on pay” votes, etc.), it likely will affect the vehicles and approaches used to implement pay-for-performance. For example, companies may no longer feel compelled to set performance metrics during the first 90 days of a performance period as many companies now do in order to qualify for the existing performance-based exception to Section 162(m).
The Camp Proposal, in its current form, is highly unlikely to be enacted this year. However, these executive compensation provisions (or similar provisions) are attractive revenue raisers that could be used to pay for [...]
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