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How do you decide what to pay an employee?
This is a simple and important question with a complex answer. With a volatile labor market, global inflation, and the continued rise of distributed work, it has never been more difficult to answer this question. READ MORE
Ashley, a 28-year-old accountant, is planning to quit her job at a New York insurance company. After seeing a LinkedIn ad for a new role on her team that revealed new recruits will be paid more than her, she hired a career coach to help her change industries.
“It is the biggest slap in the face,” said Ashley, who asked that her last name be withheld. READ MORE
Meta Platforms Inc., which owns Facebook, is expected to reduce bonus payments for some employees and give staff performance reviews more frequently.
The company's employees who receive a rating of "met most expectations" in their year-end reviews in 2023 will be given a smaller percentage of bonus and restricted stock award due in March 2024, according to the Wall Street Journal. READ MORE
In August last year—12 years after the Dodd-Frank mandate— the SEC finally adopted a new rule that requires disclosure of information reflecting the relationship between executive compensation actually paid by a company and the company’s financial performance: the pay-versus-performance rules. READ MORE
President Joe Biden’s call for legislation that would allow regulators to claw back executive bonuses and stock sale proceeds in the lead up to the Silicon Valley Bank collapse has found a receptive audience on Capitol Hill.
Democrats and Republicans are unlikely to come together to tighten bank regulations following the collapse of SVB of Santa Clara, Calif., and Signature Bank of New York City, but members of both parties say they’re open to legislation that would punish executives for their role in the bank failures. READ MORE
For most of the country, the March 15th S Corp filing deadline has passed. However, for the storm-ravaged states of California, Alabama, and Georgia, the Internal Revenue Service (IRS) has extended the date to file various federal individual and business returns and make tax payments to October 16th, 2023. The October 16th deadline also applies to 2023 estimated tax payments, typically due on April 18th, June 15th, and September 15th. It also applies to the quarterly payroll and excise tax returns, usually due on January 31st, April 30th, and July 31st.
If you don’t live in one of those states and missed the deadline to claim the S Corp election, you can still file IRS Form 2553. However, your S Corp status will not begin until the following calendar year. READ MORE
Pay rose at historically fast rates for low-wage workers in the U.S. between 2019 and 2022, even after adjusting for inflation, according to an analysis from the Economic Policy Institute released Thursday morning.
What happened: The tight labor market and disruptions from the pandemic gave folks at the lowest end of the pay scale unprecedented amounts of leverage over employers. READ MORE
Paid time off (PTO) is not considered part of an employee's salary, so it can be docked without jeopardizing the employee's exempt status, the 3rd U.S. Circuit Court of Appeals recently ruled. In a March 15 opinion, the court held that PTO is a fringe benefit with monetary value, not a component of salary under federal law.
"Even though the employer prevailed in this case, one key lesson is that employers must carefully analyze any plan that would result in taking money away from exempt employees to ensure that the exemption is not lost," said Steven Suflas, an attorney with Holland & Hart in Salt Lake City. READ MORE
Salary transparency laws are seen as a way to give job seekers the insight they need to make informed career decisions. While eight states already have laws in place and 15 states are considering it, do organizations really have employees' best interests in mind?
Job search site Adzuna ranked which states boasted the most job postings with salary ranges of $50,000 or more, and found that five states with salary transparency laws made it to the top 15, namely California, Washington, Maryland, Colorado and New York. Granted, only New York City's salary transparency law is in full effect — the state-wide law doesn't go into effect until September 17. READ MORE
“Honesty is the best policy.”
This is a phrase many people have used or lived by. It’s often used as a guiding principle, so it’s hard to accept when that energy is not reciprocated, regardless of the space.
One of the spaces where this concept is most covert is job seeking. Those interested in jumping into the often tumultuous space of job hunting come to the table with a list of requirements that’s best for them. READ MORE
The Dodd-Frank Act of 2010 added Section 10D to the Exchange Act, which requires the SEC to direct national securities exchanges[1] to prohibit the listing of issuers that do not develop and implement a policy for the recoupment of compensation as specified in Section 10D. On Oct. 26, 2022, the SEC announced that it adopted a final rule (the Release) implementing Section 10D that will impact more than 5,300 exchange-listed companies. This rule requires listed companies to implement, disclose and enforce a compensation recovery policy to claw back or otherwise recover excess incentive-based compensation that executive officers received based on financial reporting measures that are later restated. Thereafter, national securities exchanges were obligated to submit by Feb. 27 proposed listing standards that require listed companies to adopt, disclose and enforce a “compensation recovery policy.” READ MORE
Section 409A of the Internal Revenue Code of 1986, as amended (409A), was enacted into law in 2004 to impose statutory requirements on “nonqualified deferred compensation plans, programs or arrangements” (collectively referred to herein as a “plan” or “plans”). In general, 409A requires all nonqualified deferred compensation plans to specify in writing, upon the inception of the plan, the “time” and “form” of payment and, except in limited circumstances, prohibits the acceleration or subsequent deferrals after a “plan” has been established. A violation of these requirements results in all vested (whether or not paid) amounts becoming immediately taxable as compensation income, subject to all applicable income and payroll tax withholding and an additional 20% penalty tax on the compensation income. READ MORE
The current banking crisis sparked by the recent implosion of Silicon Valley Bank (SVB) has several interrelated causes. To wit, inadequate bank equity capital, misguided capital structure of SVB’s client companies (high-tech high-growth ventures) and misaligned bank executive compensation. Additionally, the risk from duration mismatch between SVB’s assets and liabilities was a major cause of its implosion. READ MORE
CEO pay is an important metric for many investors. However, reported compensation often has been a snapshot in time that may not always reflect the complete pay package – until now.
The Securities and Exchange Commission last August enacted a rule requiring disclosure of “compensation actually paid” for executives, accounting for changes in stock award values as prices fluctuate. The rule already has shown that the true value of some pay packages can differ from traditionally reported total compensation, sometimes by tens of millions of dollars. READ MORE
The U.S. Department of Justice (DOJ) on March 3, 2023, unveiled a new pilot program and announced several important updates to its Evaluation of Corporate Compliance Programs (ECCP) regarding corporate compensation incentives and clawbacks. These updates build on and clarify Deputy Attorney General (DAG) Lisa Monaco’s policy announcements from September 2022 regarding corporate criminal enforcement.
This most recent guidance provides valuable insight into the DOJ’s expectations regarding compliance-conscious compensation. However, implementing this guidance will require navigating complex issues of labor and employment law, both domestic and foreign, and will produce potentially significant shifts in corporate culture around compensation. READ MORE
Executive compensation, or what is effectively realizable pay, swings from as much as $1 billion to negative $644 million, proxies from early filers show. READ MORE
The Fair Labor Standards Act of 1938 (“FLSA”) created the right to a minimum wage and overtime pay. The FLSA also provides exemptions to overtime pay requirements for certain employees. Under the “bona fide executive” exemption, “highly compensated employees” are exempt from overtime if performing at least one qualifying job duty. However, on February 22, 2023, the United States Supreme Court, in its 6-3 decision in Helix Energy Solution Group, Inc. v. Hewitt, clarified that highly compensated employees paid on a “day-rate” do not qualify for this exemption because a day-rate does not satisfy the salary basis test. READ MORE
On August 25, 2022, the Securities and Exchange Commission (SEC) adopted final rules implementing the pay versus performance disclosure required by Section 935(a) of Dodd-Frank, effective for executive compensation disclosures for fiscal years ending on or after December 16, 2022 (PVP Disclosure Rules). READ MORE
When there is uncertainty, business leaders will adjust to the new reality. Upon entering this new phase, Meta CEO Mark Zuckerberg called for a “year of efficiency.” In addition to the 11,000 layoffs in November, Zuckerberg announced that 10,000 more people would be let go. Executives at other companies will follow Zuckerberg’s lead. They’ll tell their board of directors that the organization must enact fiscally responsible measures to get through a potentially turbulent time and likely recession. READ MORE
On March 3, 2023, AAG Polite announced the launch of the Division’s Pilot Program on Compensation Incentives and Clawbacks.
The Pilot Program comes less than six months after Deputy Attorney General (“DAG”) Lisa Monaco’s September 2022 announcement of changes strengthening DOJ’s corporate enforcement policy. As noted in our prior client alert on those policies, DOJ has stated that it wants to “empower” companies to “do the right thing” by rewarding companies that invest in compliance and that identify and voluntarily disclose misconduct in a timely manner. READ MORE