In Schachter v. Citigroup, Inc.,¹ the California Supreme Court rejected claims that an incentive plan that conditioned the earning of restricted stock based on continued service was unlawful where the employee voluntarily elected to participate in the plan, and the employee quit before the date on which the incentive was earned. The plan was lawful even though the incentive plan was funded from wages that the employee would have otherwise received in cash.

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) (the "Act"), which is intended "to promote the financial stability of the United States by improving accountability and transparency in the financial system" and "to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes." While the Act is directed at the financial system, it incorporates broad executive compensation provisions that apply beyond the financial services industry.

An employer pays its managers an annual salary and in addition provides monthly advances based on an estimate of the incentive bonus the employee appears likely to have earned by the end of the year. However, if the employee's performance declines over time so that the earned bonus ends up being less than the amounts advanced over the course of the year, it seems obvious that the employer should be able to deduct the overpayments from future paychecks.

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") mandates, for publicly traded companies, shareholder advisory votes on compensation packages provided to top executives and on "golden parachute" packages payable in connection with corporate transactions.

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.

As we enter the New Year, Littler's international practice has identified a number of key employment and labor law issues for multinational companies (MNCs).  The past year has brought to the fore some challenging issues likely to grow in importance in 2015, among them the increasing strength of global unions as well as the ever-growing importance of corporate compliance.  While some of these topics are certainly familiar—data privacy and whistleblower protection, for example—the continuing importance and expansion of these issues highlight their increased complexity and correspondingly in

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:

Financial services firms regulated in the UK by both the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have long caused confusion, particularly in international financial services groups, with their complex regulatory pay structures and infamous bonus cap.

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.

Johane Severin discusses the growing practice of “stay-or-pay” contracts, which some argue force workers to pay if they resign ahead of a stipulated date.

International Employment Lawyer

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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:

On January 30, 2024, U.S. Citizenship and Immigration Services (USCIS) announced an increase to its filing fees across the board. The last such increase was in 2016. This change will be effective April 1, 2024. In some cases, increases are minor, but several are substantive.

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.