The Securities and Exchange Commission (SEC) released proposed rules on March 2, 2011, in connection with provisions of the Dodd-Frank Act that prohibit "covered financial institutions" from providing incentive-based compensation that encourages inappropriate risks, by providing either excessive compensation or incentives that could lead to material financial loss to the institution.

The focus of this 2011 Littler Report is to provide employers with information to prepare and plan for regulations recently passed and those currently making their way through the agency rulemaking process. Part One of this Littler Report will set the stage and define the challenge employers will face in the coming years as the Obama Administration enters the second half of its term.

Section 162(m) of the Internal Revenue Code (the "Code") generally limits the deductibility of compensation paid by a publicly traded corporation to its top executive officers (the "covered employees") to $1 million annually (the "Million Dollar Cap"). However, this limit will not apply to certain amounts that qualify as "performance-based compensation." Compensation attributable to stock options, stock appreciation rights ("SARs") and restricted stock grants may qualify as performance-based compensation if they meet certain requirements.

By now, most lawyers advising international companies on compensation packages for expatriates that include deferred compensation are familiar with section 409A of the United States Internal Revenue Code ("US tax code" or "Code").

The Virginia Supreme Court has spoken again on the calculation of damages in a complex employment contract case. In Online Resources Corp. v. Lawlor, No. 120208 (Va. Jan. 10, 2013), the court addressed the expert qualifications required for the valuation of equity following the termination of the chairman and chief executive officer (CEO) ("executive") of a publicly-traded company, as well as the applicability of Delaware Corporations Law to related change in control (CIC) provisions. 

Background

On August 29, 2014, the Texas Supreme Court in Exxon Mobil Corp. v.

The Securities and Exchange Commission (SEC) has adopted a final rule requiring publicly traded corporations to disclose, to the SEC and shareholders, the ratio of CEO compensation to the "median compensation" of the corporation's employees (except the CEO).

The Internal Revenue Service recently issued proposed regulations under Section 457 of the Internal Revenue Code (the “Code”) that prescribe rules regarding deferred compensation plans sponsored by state and local governments and tax-exempt organizations.  These regulations relate primarily to the taxes imposed (under Code Section 457(f)) on the organization at the time the individual’s right to compensation vests, without regard to actual time of payment. 

A little more than a year ago, I wrote in this space about the "Heightened Standards" issued in 2014 by the Office of the Comptroller of the Currency for certain banks with $50 billion and more in assets.

It is essential for counsel and human resources executives advising banks to become familiar with these in more than a passing way.

Monica Schiaffino contributed an overview of the primary sources of law that govern or affect executive compensation arrangements or employee benefits in Mexico.

Getting the Deal Through

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Update 2: On March 12, 2021, in Mikelsteins v.

Updates: On November 12, 2020, in James Anthony Manastersky v.

Canada saw significant developments in labour and employment law in 2019.  As we embark on a new decade, we will undoubtedly see the landscape in this ever-changing area of law continue to evolve.   Here is our Littler LLP overview of 15 key developments in 2019 with links to more detailed articles and commentary:

Enacted on Friday, March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748, the “CARES Act” or the “Act”) is intended to stimulate the U.S. economy in light of the COVID-19 pandemic. The CARES Act contains a number of provisions relating to employee benefits and executive compensation, which are summarized below.

Retirement Plan Provisions

As many employers are on the way to normalizing their business practices and re-engaging their employees, they should not overlook the many potential pitfalls in the administration of their retirement, health and welfare plans and their executive compensation arrangements. The risks of missteps are high, and include loss of tax-qualification of retirement plans, penalty taxes in connection with the Affordable Care Act’s (ACA) employer mandate rules, other IRS penalties, employee lawsuits and Department of Labor enforcement actions.

(May 27, 2021) – Littler, the world’s largest employment and labor law practice representing management, has once again been recognized by Chambers and Partners in its Chambers USA 2021 guide.

In addition to the firm’s overall Band 2 ranking for labor and employment law, Chambers USA named 68 Littler attorneys as leaders in the field, as well as 47 regional offices, with the Alabama, Georgia, Minnesota, New York, Tennessee and Texas offices earning a Band 1 designation.

The Littler attorneys ranked in the labor and employment practice area include:

In a reassuring decision for employers, the UK High Court has confirmed that an employer’s use of a contractual provision to claw back an employee’s bonus was lawful. The ruling in Steel v Spencer Road LLP provides helpful guidance on the circumstances in which a bonus clawback will not constitute a restraint of trade, though employers should be mindful that not all such provisions will be enforceable.

Laura Jousselin, Raoul Parekh and Stephan Swinkels discuss how European employers are responding to workplace changes, including AI and remote workplace demands from employees.

International Employment Lawyer

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The current administration and multiple members of Congress seek to grant protections to H-2B non-agricultural temporary workers who are employed in the United States to fill temporary labor shortages in the U.S. market. Multiple bills have been introduced in both the Senate and House of Representatives calling for protection against exploitation and abuse, including for employer violations of wage and hour laws and retaliation.

Alexander Thomas MacDonald provides insight into the new regulations under theH-2A visa program. 

The Federalist Society

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The U.S. Department of Labor (DOL) published its new immigration-related fines/penalties, effective January 15, 2024. Immigration-related violations before the DOL involve these visas: H-1B, H-2A, and H-2B. These increases are pursuant to the Federal Civil Penalties Inflation Adjustment Act of 2015. Since that time, penalties have been adjusted yearly based on the rate of inflation.

Below are the offenses, including regulation citations, with the old and new penalties:

The Department of Homeland Security (DHS) has recently announced a streamlined process for foreign workers to request deferred action. Deferred action is a type of prosecutorial discretion to defer removal action (deportation) for a noncitizen for a certain time period.  The new process will apply where these workers are participating in or otherwise involved an investigation or enforcement action by a federal, state, or local labor and employment agency.    

USCIS has officially announced the dates for the fiscal year (FY) 2025 H-1B cap lottery, which will open on Wednesday, March 6, 2024 at noon ET and end on Friday, March 22, 2024, at noon ET. This annual lottery is meant to select new H-1B candidates, who will be eligible to file an H-1B petition and, if approved, begin H-1B employment on October 1, 2024 (the first day of FY 2025).

As required under the Federal Civil Penalties Inflation Adjustment Act of 2015, the Department of Justice (DOJ) announced, through the Federal Register, increases for penalties under the Immigration Reform & Control Act (IRCA), effective February 13, 2024. Interestingly, the Federal Register announcement for DOJ increases also included penalties for sections of IRCA administered by the Department of Homeland Security (DHS), Immigration & Customs Enforcement (ICE).

In February 2024, Poland’s government revealed that it is working on a comprehensive migration strategy for the years 2025-2030, advertised as a “responsible and safe” approach. The Ministry of Interior and Administration plans to spend the first half of 2024 conducting consultations to learn the preferences and expectations on migration and foreigners’ employment from various stakeholders, including the country’s biggest employers and their organizations, as well the trade unions.

The Home Office has updated its guide on right to work (work authorization) checks for employers in the UK.

Changes coming into effect this month include a less flexible approach to late applications to the EU Settlement Scheme (EUSS) for Europeans and their families and a hike in penalties for illegal working.

Right to work changes for EEA citizens

In the Chancellor of the Exchequer’s Autumn Statement, Jeremy Hunt promised that “the government will expand the business Visitor rules to allow businesspeople to engage in a wider range of permitted activities and paid engagements, to take effect from January 2024. The government will also explore further reforms to the business visitor rules during 2024.”

The first of these changes took effect from January 31, 2024. They were not a major reform of the business and other permitted activities that can be carried out on a visit visa, but there are some important changes.

UPDATE: Since publication, we made a clarifying edit concerning the reasons an employee will be able to use paid sick leave under the amended law.

The Washington state legislature and certain localities recently passed several bills affecting employers, some of which have already been signed into law. These measures address non-compete agreements, mandatory employer-sponsored meetings, immigration reporting, paid leave, and the minimum wage. Each new bill or ordinance is discussed below. 

New Law Expands and Clarifies Non-Compete Statute

Introducing the latest UK Immigration Rules Statement of Changes, Legal Immigration Minister Tom Pursglove announced that they will “deliver the biggest ever cut to migration over the course of this year.”

The Statement of Changes HC590 will have serious consequences for employers from April 4, 2024, as well as for British citizens and settled residents bringing partners to live with them in the UK from April 11.

Stephan Swinkels and Michael Lotito discuss the intersection of employment and geopolitics and offer key considerations for the C-suite of global companies. 

Chief Executive

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Foreign workers fill a critical need in the U.S. labor market, particularly in the professional and technological fields such as science, technology, engineering and mathematics (STEM). To fill this need, U.S. employers submit H-1B temporary worker visa status registrations with the United States Citizenship and Immigration Services (USCIS), which is a lottery-based system where registrations are selected from the congressionally allotted quota of 85,000.

The Department of Homeland Security (DHS) announced that the agency will establish a new process to consider, on a case-by-case basis, requests from eligible noncitizen spouses of U.S. citizens for parole-in-place status.  Parole-in-place allows noncitizens who entered the United States without the authorization of an immigration officer to remain in the United States for a certain period.  If paroled, eligible noncitizen spouses will be able to apply for permanent residence without having to leave the United States to be processed for an Immigrant Visa at a U.S.