Lavanga Wijekoon and Aki Tanaka explore the significant impact of the European Union’s expected Corporate Sustainability Due Diligence Directive (CSDDD) on global corporate responsibility, with a specific focus on its implications for Japanese companies.

Institute for Security and Development Policy

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Zev Eigen comments on the value of data in making decisions on compensation.

HR Dive

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On August 8, 2023, the Governor of Puerto Rico signed into law Act No. 85-2023, effective immediately. The statute amends Puerto Rico’s Workers’ Compensation Act by further incentivizing safe workplaces.

Stephen T. Melnick discusses the Massachusetts Department of Industrial Accidents (DIA)’s revised workers’ compensation notice for employees, which Massachusetts employers will start using Sept. 16, 2024.

SHRM

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Jasper Hoffstedde and Eric van Dam of Littler’s Amsterdam office discuss non-compete clauses in Dutch employment agreements. A non-compete clause may be agreed upon in writing in indefinite-term employment agreements with a person of age (18+). For fixed-term employment agreements, additional conditions apply. Such conditions are strict, which more often than not lead to invalidity or voidability of the clause.

Employers that rely on non-compete agreements to protect their trade secrets and other legitimate business interests got some welcome news on August 20.

Ole Kristian Olsby and Nina Elisabeth Thjømøe explain Norway’s new Anti-discrimination Tribunal.

International Law Office (ILO)

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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.

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.

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.

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. 

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

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.

On October 11, 2021, Texas Governor Greg Abbott issued Executive Order GA-40, which states that no entity in Texas can “compel” any individual, including any employee or consumer, to receive a COVID-19 vaccination who objects “for any reason of personal conscience, based on a religious belief, or for medical reasons, including prior recovery from COVID-19.”  The order also establishes a maximum criminal penalty of $1,000 but expressly exclude

On August 18, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued a revised version of its Directive 2022-01 - Advancing Pay Equity Through Compensation Analysis, which was originally issued on March 15, 2022.

Readers will recall that in August 2022, OFCCP published a notice in the Federal Register advising employers that it was the subject of a Freedom of Information Act (FOIA) request seeking EEO-1 data from all federal contractors, including first-tier subcontractors, for the period 2016-2020.

Alexander MacDonald says most of the rules, regulations, decisions and doctrines employment lawyers deal with each day are first developed by agencies.

Bloomberg

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Kathryn Siegel, Rachel Satinsky and Dru Selden assess the current landscape of restrictive covenants and the trend of federal agencies and states toward limiting noncompete provisions.

Law360

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Shawn Matthew Clark discusses the basics of noncompetes and what employers need to consider regarding noncompetes, as well as why the FTC wants to ban them and how recent SCOTUS decisions may affect the FTC’s rule.

New York County Lawyers Association

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Melissa McDonagh said employers should continue to be thoughtful with their approach to noncompete agreements, ensuring compliance with existing state laws and monitoring the status of the FTC noncompete rule as it winds its way through the appellate process.

WorldatWork

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Melissa McDonagh said employers should continue to be thoughtful with their approach to noncompete agreements, ensuring compliance with existing state laws and monitoring the status of the FTC noncompete rule as it winds its way through the appellate process.

McKnights Senior Living

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The United States is not the only country currently debating reform to the law on non-competes. Notably, the UK Government has announced legislation that would limit the duration of non-competes to a period of three months after the termination of employment.

The United States is not the only country currently debating a reform to the law on non-competes. Notably, the UK Government has announced legislation that would limit the duration of non-competes to a period of 3 months after termination of employment.

James A. Paretti Jr. and Melissa McDonagh offer insights into the implications of the court’s rejection of the Federal Trade Commission’s (FTC) proposed nationwide ban on noncompete agreements.

Thomson Reuters

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