A Job Applicant Is Not An Employee For Compensation Purposes

The Ninth Circuit recently concluded that job applicants are not entitled to compensation for time devoted to pre-employment drug tests because an employment relationship has not yet been formed. The Ninth Circuit held that the “control test” does not apply to job applicants, and that, under California contract law, the applicants had no contract for employment until they passed the pre-hire drug tests. Johnson v. WinCo Foods. READ MORE

Examining the Potential of New Executive Compensation Structures

The core responsibility of designing compensation plans that attract, retain and motivate the right CEO and his/her executive team requires new levels of creativity and flexibility — more customization to each organization’s unique circumstances than ever before. 

We’ve all heard the expression “If it’s not broken, don’t fix it.” But even if something isn’t broken, it may not be functioning optimally. This certainly applies to executive compensation plans, which overall have become relatively stagnant. READ MORE

Washington to Require Salary Ranges in Job Postings Starting 2023

Effective January 1, 2023, Washington employers with at least 15 employees must affirmatively disclose the wage scale or salary range and a general description of all benefits and other compensation being offered when posting job openings, regardless of whether such information is requested by the applicant.

Washington joins the growing number of states requiring employers to include salary ranges and benefits offerings on job postings. READ MORE

Engineering Candidates Most Often Decline Job Offers Due to Low Base Salary

Despite signs of an economic slowdown in tech, high-growth companies are still looking to fill crucial technical roles this year while conserving spend in a volatile market. According to new research from compensation intelligence provider OpenComp, engineering candidates most often decline job offers due to low base salary, which means hiring managers will need best-in-class data to ensure offers are competitive in the market without spending beyond tightened budgets. READ MORE

New York State Passes Bill Requiring Compensation Ranges in Job Postings

On June 1, 2022, the New York State Legislature passed Senate Bill S9427A, which would amend the New York Labor Law (NYLL) by requiring that employers disclose compensation ranges in job, promotion, and transfer advertisements. This bill comes on the heels of New York City’s recent enactment of a similar law. While New York City’s salary disclosure law is set to take effect on November 1, 2022, the statewide law would go into effect 270 days after being signed into law. Eyes are now on Governor Kathy Hochul as we await her action on the bill. READ MORE

SEC Reopens Clawback Comment Period…Again

On June 8, 2022, the US Securities and Exchange Commission (“SEC”) issued a release (“New Reopening Release“), reopening the comment period on the clawback listing standard rules that it proposed in 2015 (“2015 Proposal“). At the same time, the SEC made available a memorandum prepared by the staff of the SEC’s Division of Economic and Risk Analysis (“Staff Memorandum“) that discusses the increase in voluntary adoption of compensation recovery policies by issuers and provides estimates of the number of additional restatements that would trigger a compensation recovery analysis if the rules were extended to include all required restatements made to correct an error in previously issued financial statements, including “little r” restatements. The Staff Memorandum also addresses some potential costs and benefits of the proposed rules. The SEC reopened the comment period to allow interested persons to consider and comment on the analyses and data set forth in the Staff Memorandum. READ MORE

Can salary transparency laws fix the pay gap?

Question: Are you for or against pay or salary transparency laws or anti-secrecy laws?

On the one hand, companies that offer salary transparency might attract more potential candidates. If people know the salary range for a position and still apply, they’re less likely to bail during the interviewing process. And it could close the pay gap between genders and races. READ MORE

Pay gaps between CEOs and employees have widened

The pay gap between CEOs and their workers grew wider last year among companies paying the lowest wages.

The average gap between CEO and median worker pay jumped to 670 to 1, up from 604 to 1 in 2020, according to a new report by the Institute for Policy Studies (IPS), a progressive think tank based in Washington D.C. The report looked at the 300 publicly-held U.S. corporations that had the lowest median wages in 2020. Among the 300 companies, 49 had ratios of CEO-to-worker pay above 1,000 to 1. READ MORE

Executive Stock Options and Systemic Risk

Banks’ role in financial intermediation and the provision of other specialized financial services not only places them at the center of many important global financial markets, but also ties their health to that of other financial institutions, industrial firms, and consumers. The vast reach of banks’ activities was made apparent during the financial crisis of 2007-2009, which also highlighted the acute need for a better understanding of whether, how, and the extent to which banks contribute to systemic risk in the economy (i.e., the risk that many financial institutions fail together). Prior research into the sources of systemic risk largely focuses on the outcomes of banks’ risky activities (e.g., the composition of banks’ financing or the correlation of banks’ asset returns). However, these and other risky activities are ultimately the result of bank managers’ decisions which, we argue, are shaped by their contractual incentives. Following this intuition, we study whether and how bank executives’ compensation contracts lead to the systemic risk of their institutions. READ MORE