ERISA and Global Benefits

Voluntary Severance Plans: Case on Point
For employers wanting to thin their workforces, voluntary severance plans (VSPs) have the potential to create a win-win dynamic.
Stock Award Web Process Works: Non-compete Enforced
As a general matter, employers “win” when they seek to enforce stock plan terms that have been fairly disclosed -- and accepted -- by award recipients. ADP recently had such a victory, through a 3rd Circuit decision granting a preliminary injunction against two former employees who had joined a competitor in violation of restrictive covenants set forth in their stock awards.
Assessing ERISA Risks from ESOPs – 5th Circuit Clobbers Founder of Closely-Held Company
When the owner of a closely-held company sells stock to an employee stock ownership plan (ESOP), there are numerous valuation, fiduciary, and conflict of interest issues that could explode into ERISA liability. Imagine having ESOP participants recover damages equal to 33% of the amount the ESOP paid for the founder’s shares. The 5th Circuit recently upheld such an award. Its decision provides warning signs for companies with ESOPs and owners who sell shares to ESOPs – and for those performing diligence before they buy or invest in companies that sponsor ESOPs.
If a public company’s 2016 proxy statement will include a proposal for action on a new or amended stock plan, there are several improvements to consider including. Several involve procedures by which to minimize the risk of litigation by award holders. Others involve assuring the ability to make awards that qualify for an exemption from Code Section 162(m)’s limitations. Note that action every five years is usually required, even if a plan has a ten-year term.
Section 409A Corrections to Employment Agreements - Time for an Ounce of Protection in 2015
With surprising frequency, employers encounter 409A problems due to conditions timing severance pay to an employee's execution of a claims release. Other common sources for 409A problems arise from allowing employees to choose between receiving their severance in lump sums or installments, or receiving cash-outs of employer-paid COBRA coverage.
The DOL’s Worker Misclassification Memo, and Benefit Plan Diligence
Much will soon be written about the Worker Misclassification Memo that was issued on July 15th by the Department of Labor’s Wage and Hour Division. There are serious employee benefit implications that employers may face if workers are misclassified either as independent contractors (rather than as employees) or as exempt employees (rather than hourly, who are eligible for overtime and other protections).
Overall, because the hedging and pledging of company stock are widely considered to reflect poor corporate governance practices, the boards of public companies should take thoughtful action in 2015. In so doing, they should carefully analyze and update their insider trading policies.
Ninth Circuit Holds That Beneficiary Designation Forms Are Not Plan Documents
In a recent decision significant both to benefit plan sponsors and administrators, and even more critical to plan participants and their beneficiaries (or would-be beneficiaries), the Ninth Circuit held that beneficiary designation forms were not plan documents under ERISA, where the forms did not provide information to participants about the plan and the plan documents did not incorporate the forms by reference.
Spin-off Playbook: When Corporate Transactions Impact Benefit Plans
Corporate spin-offs present a range of equity compensation, 409A, and employee benefits issues that are often under-appreciated, and lately recognized.
New FSA Carry-over Rule
On Halloween, the IRS issued Notice 2013 -71, which announces a new FSA rule: FSAs can now permit employees to carry over up to $500 in unused benefits from one year to the next. Any carryover will not count toward the annual FSA maximum (currently $2,500). There are a couple of catches, though.
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