Section 162(m) Final Regulations Clarify Grandfathering Rules to Compensation Payable under Account Balance and Nonaccount Balance Nonqualified Plans

Pubic companies that sponsor nonqualified deferred compensation plans with grandfathered benefits will want to be aware of helpful payment guidance in the Internal Revenue Code Section 162(m) final regulations. The final regulations, which were published in the Federal Register on December 30, 2020, implement amendments made to Section 162(m) by the Tax Cuts and Jobs Act (TCJA). The regulations adopt the Section 162(m) proposed regulations issued on December 20, 2019, with certain modifications. READ MORE

How the Low Minimum Wage Helps Rich Companies

The country’s very low minimum wage comes at a high cost. And for taxpayers, it adds up to more than $100 billion a year.

That number comes from a new analysis of safety-net usage by Ken Jacobs, Ian Eve Perry, and Jenifer MacGillvary of UC Berkeley’s Labor Center. It identifies working families with at least one member who would get a raise if the federal minimum wage were lifted to $15 an hour, and finds that the government spends about $107 billion a year on Medicaid, the Children’s Health Insurance Program (CHIP), cash welfare, food stamps, and the earned-income tax credit for those families. READ MORE

Well Done? EEOC's New Proposed Rules Would Limit Employer Wellness Programs to De Minimis Incentives—with Significant Exceptions

On 7 January 2021, the U.S. Equal Employment Opportunity Commission (EEOC) proposed two new rules designed to clarify the scope of incentives that employers may offer employees as part of a wellness program without violating the Americans with Disabilities Act (ADA) or Genetic Information Nondiscrimination Act (GINA). READ MORE

Final Regulations on Exempt Organization Excess Compensation Excise Tax

On Monday, January 11, Treasury and the IRS released final regulations under section 4960. Section 4960, enacted as part of the Tax Cuts and Jobs Act (TCJA), imposes an excise tax on remuneration in excess of $1 million and any excess parachute payment paid by an applicable tax-exempt organization (ATEO) to any covered employee. The excise tax and the final regulations can affect not only ATEOs, but also certain entities that are treated as related to those organizations. READ MORE

Covid has made performance evaluations simpler, more empathetic

Count performance evaluations among workplace practices changed by the Covid-19 pandemic, and some of those modifications are expected to stick around.

With millions still working remotely, Gartner polls from 2020 found most organizations are tweaking evaluations rather than canceling them entirely amid the pandemic, The Wall Street Journal reports. Many business leaders are approaching performance reviews with more empathy and flexibility, even as more than half of executives said employee performance was a top concern in 2020. READ MORE

Top Wage and Hour Updates From 2020

As employers adapt to the impacts of COVID-19, wage and hour compliance continues to present unique challenges. To help employers navigate these uncertain times, government enforcement agencies and legislatures have continued to issue new laws, opinion letters, and guidance all employers should understand and act upon. As summarized below, 2020 presented several significant developments regarding wage and hour obligations that all employers should recognize and appreciate as we begin the New Year. READ MORE

Season’s Greetings for Annual Incentives

The business year has ended, but managers everywhere are turning their thoughts to receiving one last Christmas present. The calculators are out and every eligible soul from marketing to manufacturing to sales, IT, HR and the executive suite is trying to figure what their annual incentive check will look like. For some, it's still the gift-receiving season. READ MORE

The Critical Role Compensation Plays in Moving Leadership Forward

The pace of change happening in the world around us signifies that past success is not necessarily indicative of future success. The critical skills needed to lead a company a decade ago are simply no longer sufficient in today’s environment. As a result, boards need to redefine leadership — even among their own ranks — to ensure that reward systems can attract and retain the best talent. READ MORE

IRS Issues Final Regulations Regarding Certain Employee Remuneration in Excess of $1 Million Under Section 162(m) of the Code

Section 162(m) of the Internal Revenue Code of 1986 (as amended, the “Code”) imposes a $1 million deductibility limit on compensation paid by “publicly held corporations” to “covered employees.” As reported in our previous client alert published on January 8, 2018, in December 2017, the Tax Cuts and Jobs Act (the “TCJA”) made numerous changes to the Code Section 162(m) deduction limitation, including repealing key exceptions for commissions and qualified performance-based compensation, expanding the definition of “covered employee” and extending the applicability of Code Section 162(m) to certain corporations, even if the stock is not publicly traded. READ MORE

What can HR, employers expect from a Biden administration agenda?

Biden has proposed to increase marginal tax rates, Social Security taxes and capital gains taxes, which could all gain traction. The focus for executive compensation may also pivot to the regulatory front, specifically to a Democratic-led Securities and Exchange Commission. The WTW authors note that, while the pandemic will likely get top priority, expect recent changes to regulations passed along partisan lines to be revisited during a Biden administration. These could include easing the recently imposed restrictions on proxy advisors, proxy access and shareholder proposals, which could increase shareholder influence over corporate operations. READ MORE