The Latest in Pay Transparency and Equal Pay Regulations

The history of regulations related to pay equity is nothing new. Equal pay regulations can be traced back to 1938, when the Fair Labor Standards Act (FLSA) was enacted. In 1945 Congress introduced the Women’s Equal Pay Act and, in 1963, the Equal Pay Act. There have been updates to these laws and new laws introduced along the way.

More recently, states and local municipalities began tackling the issue head-on through new legislation to push employers to provide equal pay for all workers. 42 states and many more local governments have passed or proposed new legislation focused on pay equity and transparency. READ MORE

Bosses who want their workers to be more productive are better off sharing their salary than forcing them back to office

Bosses worried about productivity are trying to get their workers back in the office. But they might be better off spilling how much they make instead.

When managers make their salary information public, it spurs employees to work harder, finds a new working paper for the National Bureau of Economic Research (NBER), written by Harvard Business School professor Zoë Cullen. She found that a sample of 2,060 workers at a large commercial bank worked harder after learning that their managers are better paid than they’d previously thought. READ MORE

Pay Versus Performance Disclosure – Findings from the Early S&P 500 Filers

When the SEC finalized its proposed rule for Pay Versus Performance (PvP) disclosure in August 2022, the preparation for the 2023 proxy season suddenly became a fire drill. Management teams and their advisors were trying to get their arms around a new definition of pay called “Compensation Actually Paid” and the necessary calculations for the new disclosure. In addition to the calculations, there were questions around what this new disclosure would look like based on the SEC’s rules and, being the first of its kind, what other companies were doing. Our report provides insights into how companies with early filing dates approached this first year of the PvP disclosure requirement. READ MORE

For An Empathetic People Strategy, Start With Compensation

Compensation is the single most important component of the employee-employer relationship, and as such, should be the bedrock of an organization’s people strategy. Despite its central importance, it is common for even well-intentioned companies to let building a robust compensation program take a backseat to other initiatives. Doing so is dangerous. It weakens a company’s ability to attract and retain talent, especially diverse talent, and it hurts employees and the people who depend on them. As we head into a year of looming economic uncertainty, HR leaders intent on building effective and inclusive people strategies should begin with compensation first. READ MORE

Apple lawsuit claims company fails to pay overtime compensation at correct rate

Apple violated the law by allegedly failing to include the value of vested restricted stock unit compensation in its non-exempt employees regular rates of pay to calculate overtime pay, a new class action lawsuit alleges. 

Plaintiff Francis Costa claims Apple has a policy of awarding restricted stock units to its non-exempt employees, but not incorporating them into their regular rate of pay when they calculate their overtime pay. READ MORE

Senators introduce bill to claw back executive compensation after SVB's and Signature Bank's collapses

A bipartisan group of senators introduced legislation to give regulators the authority to claw back executive compensation and bonuses from failed banks following the collapses of Silicon Valley Bank and Signature Bank this month.

Democrats Elizabeth Warren of Massachusetts and Catherine Cortez Masto of Nevada and Republicans Josh Hawley of Missouri and Mike Braun of Indiana are proposing a bill dubbed the Failed Bank Executives Clawback Act, which would mandate that federal regulators return to a bank all or part of the compensation its executives had received in the five years leading up to a bank’s failure. READ MORE

Lawmakers open to Biden’s call to claw back SVB executive pay

President Joe Biden’s call for legislation that would allow regulators to claw back executive bonuses and stock sale proceeds in the lead up to the Silicon Valley Bank collapse has found a receptive audience on Capitol Hill. 

Democrats and Republicans are unlikely to come together to tighten bank regulations following the collapse of SVB of Santa Clara, Calif., and Signature Bank of New York City, but members of both parties say they’re open to legislation that would punish executives for their role in the bank failures.  READ MORE

S Corps and Reasonable Compensation

For most of the country, the March 15th S Corp filing deadline has passed. However, for the storm-ravaged states of California, Alabama, and Georgia, the Internal Revenue Service (IRS) has extended the date to file various federal individual and business returns and make tax payments to October 16th, 2023. The October 16th deadline also applies to 2023 estimated tax payments, typically due on April 18th, June 15th, and September 15th. It also applies to the quarterly payroll and excise tax returns, usually due on January 31st, April 30th, and July 31st.

If you don’t live in one of those states and missed the deadline to claim the S Corp election, you can still file IRS Form 2553. However, your S Corp status will not begin until the following calendar year. READ MORE

Paid Time Off Remains Distinct from Salary, Court Says

Paid time off (PTO) is not considered part of an employee's salary, so it can be docked without jeopardizing the employee's exempt status, the 3rd U.S. Circuit Court of Appeals recently ruled. In a March 15 opinion, the court held that PTO is a fringe benefit with monetary value, not a component of salary under federal law.

"Even though the employer prevailed in this case, one key lesson is that employers must carefully analyze any plan that would result in taking money away from exempt employees to ensure that the exemption is not lost," said Steven Suflas, an attorney with Holland & Hart in Salt Lake City. READ MORE

15 states with the least salary transparency

Salary transparency laws are seen as a way to give job seekers the insight they need to make informed career decisions. While eight states already have laws in place and 15 states are considering it, do organizations really have employees' best interests in mind?  

Job search site Adzuna ranked which states boasted the most job postings with salary ranges of $50,000 or more, and found that five states with salary transparency laws made it to the top 15, namely California, Washington, Maryland, Colorado and New York. Granted, only New York City's salary transparency law is in full effect — the state-wide law doesn't go into effect until September 17.  READ MORE

How Employees And Employers Benefit By Listing Salaries In Job Descriptions

“Honesty is the best policy.”

This is a phrase many people have used or lived by. It’s often used as a guiding principle, so it’s hard to accept when that energy is not reciprocated, regardless of the space.

One of the spaces where this concept is most covert is job seeking. Those interested in jumping into the often tumultuous space of job hunting come to the table with a list of requirements that’s best for them. READ MORE

Nasdaq and NYSE Propose Rules Regarding Recovery of Incentive-Based Executive Compensation Awarded in Error

The Dodd-Frank Act of 2010 added Section 10D to the Exchange Act, which requires the SEC to direct national securities exchanges[1] to prohibit the listing of issuers that do not develop and implement a policy for the recoupment of compensation as specified in Section 10D. On Oct. 26, 2022, the SEC announced that it adopted a final rule (the Release) implementing Section 10D that will impact more than 5,300 exchange-listed companies. This rule requires listed companies to implement, disclose and enforce a compensation recovery policy to claw back or otherwise recover excess incentive-based compensation that executive officers received based on financial reporting measures that are later restated. Thereafter, national securities exchanges were obligated to submit by Feb. 27 proposed listing standards that require listed companies to adopt, disclose and enforce a “compensation recovery policy.” READ MORE

409A Issues in Executive Compensation Contracts and Employment Agreements

Section 409A of the Internal Revenue Code of 1986, as amended (409A), was enacted into law in 2004 to impose statutory requirements on “nonqualified deferred compensation plans, programs or arrangements” (collectively referred to herein as a “plan” or “plans”). In general, 409A requires all nonqualified deferred compensation plans to specify in writing, upon the inception of the plan, the “time” and “form” of payment and, except in limited circumstances, prohibits the acceleration or subsequent deferrals after a “plan” has been established. A violation of these requirements results in all vested (whether or not paid) amounts becoming immediately taxable as compensation income, subject to all applicable income and payroll tax withholding and an additional 20% penalty tax on the compensation income. READ MORE

Inadequate capital and unrestricted executive compensation took down SVB

The current banking crisis sparked by the recent implosion of Silicon Valley Bank (SVB) has several interrelated causes. To wit, inadequate bank equity capital, misguided capital structure of SVB’s client companies (high-tech high-growth ventures) and misaligned bank executive compensation.  Additionally, the risk from duration mismatch between SVB’s assets and liabilities was a major cause of its implosion. READ MORE