New Tax Law Affects Executive Compensation

The final tax reform bill signed by President Trump on December 21, 2017 makes substantial changes to executive compensation paid by private and public companies and non-profit organizations.  But it could have been worse.  Significant restrictions on nonqualified deferred compensation plans were removed from the final bill.  This article briefly summarizes the major changes:

Private Companies:  Employee Deferral of Stock Option Gains

The law adds a new Section 83(i) to the Tax Code that, subject to a number of conditions, allows employees to elect to defer the inclusion of income arising from the exercise of stock options and the payment of restricted stock units (RSUs) in stock for up to five years.  Key conditions and requirements include the following:


DOL Announces PAID – the Pros and Cons of the Wage and Hour Self-Audit

Double (liquidated) damages and attorneys’ fees are often the tail that wags the settlement dog in government audits and wage and hour litigation.  Employers now have another strategy for dealing with unintentional wage and hour pay errors – but only on a trial basis.

On March 6, 2018, the United States Department of Labor Wage and Hour Division (WHD) announced a national pilot program for employer self-audit of wage and hour violations under the Fair Labor Standards Act (FLSA). The FLSA is the federal statute that governs payment of minimum wage and overtime pay for nonexempt employees.  The program, aptly named Payroll Audit Independent Determination or “PAID” for short, is intended to facilitate resolution of potential overtime and minimum wage violations under FLSA.  Expected to begin in April 2018, the WHD will implement this pilot program nationwide for approximately six months.


NLRB Rules on Google’s Firing of Outspoken Engineer

A recently released NLRB memo has concluded that Google did not break any labor laws when they fired James Damore.  Damore, a senior software engineer, was fired in August after writing and circulating an internal memo that disclosed Google’s diversity initiatives.  His memo, titled “Google’s Ideological Echo Chamber,” alleged that women are underrepresented in technology because of innate, biological differences such as being prone to anxiety, having lower stress tolerances and looking for more work-life balance.


A New ADA on the Horizon? The House Says Yes.

On February 15, the House in a 225 to 192 vote passed legislation to amend the Americans with Disabilities Act.  The ADA Education and Reform Act (H.R.620) would require plaintiffs hoping to sue businesses in federal court to first deliver written notice to that business, specifically detailing the illegal barrier to access.  The business would then have 60 days to develop a plan to address the complaint and outline improvements to remove the barrier.  Finally, the business will have an additional 60 days to remove the barrier, or in the very least make substantial progress in doing so.  


Sexual Harassment Victims: Why Don’t They Speak Up?

The news is flooded with reports of sexual harassment and victims finally coming forward after decades, for some, of silence.  Why?  Having cut my teeth on sexual harassment laws and regulations since the early 1980s and watched its ups and downs, one dynamic has remained consistent.  Victims do not come forward when the harassment first occurs.  Employers invest in training programs for all employees to educate on what sexual harassment is and what the complaint process is and assure employees that retaliation is forbidden.  It is that last aspect of the program that simply does not ring true for many victims, which ensures that they will not break their silence and sets the employer up for a workplace problem that could have been shut down at its outset.  This blog post addresses how to break employee silence.


Cash Payments Made To Employees In Lieu Of Health Benefits Must Be Factored Into Overtime Pay Under The FLSA

In Flores v. City of San Gabriel, the Ninth Circuit held that cash payments made by the City to its employees in lieu of healthcare benefits must be factored into the base pay that is used to calculate overtime pay (1.5 times base pay).

The City provided a “Flexible Benefits Plan” to its employees, under which it gave employees a designated monetary amount to aid in the purchase of healthcare (vision, dental, and medical) benefits. Employees had the choice to obtain medical benefits through the City or receive cash instead. The cash was added to the employees’ paychecks as a separate line item, and was referred to as “cash in lieu.” Roughly 42-47% of the employees elected to receive cash in lieu of obtaining healthcare benefits through the City, which amounted to $1,000-1,300 per employee per month. The City viewed the cash in lieu payments as a benefit, not compensation.


Massachusetts Pregnant Workers Fairness Act Takes Effect April 1, 2018

Pregnant workers in Massachusetts will soon benefit from broader protection against discrimination under the recently enacted Massachusetts Pregnant Workers Fairness Act (“MPWFA”).  This new law, which applies to all employers with six or more employees, updates and expands upon existing state anti-discrimination statutes and makes it an unlawful practice to discriminate against a pregnant employee or an employee affected by a condition related to pregnancy.  The most notable change is that employers will now be required to provide reasonable accommodations for pregnancy and related conditions, including lactation and the need to express breast milk, unless the employer can prove that doing so would pose an undue hardship on its business.


DOL Adopts “Primary Beneficiary” Test for Interns

The U.S. Department of Labor announced Friday that it was abandoning the six-factor test it had previously used for determining whether interns are employees for purposes of the Fair Labor Standards Act, and that it was now adopting the “primary beneficiary” test favored by several U.S. Courts of Appeals.

As we discussed recently, the Second Circuit in Wang v. The Hearst Corporation, No. 16‐3302 (2d Cir. Dec. 8, 2017), and the Ninth Circuit in Benjamin v. B&H Education, No. 15-17147 (9th Cir. Dec. 19, 2017), had recently rejected the DOL’s six-factor test in favor of the “primary beneficiary” test, which focuses more on the economic realities of the relationship and examines, among other factors, whether the intern or the employer is the primary beneficiary of the relationship.


New Guidance on Interns v. Employees

The test for determining whether unpaid interns at a for-profit employer are employees under the Fair Labor Standards Act, and thus entitled to compensation for services provided, has been the subject of considerable litigation over the past few years. Employers now have recent guidance from two federal appellate courts to use in analyzing their intern programs.

In Glatt v. Fox Searchlight Pictures, Inc., Nos. 13‐4478; 13‐4481 (2d Cir. Jan. 25, 2016), the Second Circuit (which covers district courts in Connecticut, New York and Vermont) explained that, in determining whether an individual is an intern or employee, the salient question is whether the intern or the employer is the “primary beneficiary” of the relationship. The court identified a set of non-exhaustive factors that must be weighed and balanced:


Resolutions for a Harassment Free New Year

Dear Clients, Colleagues and Friends:

The year 2017 marked a seismic shift in the way the nation views sexual harassment. Time Magazine named “the silence breakers” as its Persons of the Year.  The words “me too” went from a simple phrase, to a hashtag, to a movement.  And, a deluge of claims of sexual misconduct and harassment exposed and toppled the giants of Hollywood, the news media, government, and so many other high profile industries.   While some employers may take comfort in the fact that the stories of sexual misconduct and harassment that dominate the news involve the rich, the famous and the powerful, it is extremely naïve to assume that the aftershock-shock effects of the recent torrent of sexual harassment claims will not impact all employers in 2018 — even those smaller employers who operate in mundane industries.

As you reflect on the past year and make plans for a new one, it is a good time for all employers to take a hard look at the measures you take to both provide your employees with a harassment free workplace and insulate your company from liability for workplace harassment claims. Since resolution-making season is upon us, consider making these 5 resolutions to start your 2018 harassment-free.