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Employee Benefits

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There has recently been a great deal of interest in the grant of a profits interest. A profits interest is a beneficial form of incentive for an individual who performs services for a partnership or other pass-through entity, like a limited liability company. Bottom line, a profits interest (also commonly known as a “carried interest”) is a non-capital interest in the profits of a partnership or a membership interest in a limited liability company taxed…

The American Rescue Plan Act of 2021 (the “ARPA”), was signed into law on March 11, 2021, and creates a temporary COBRA premium subsidy for certain qualifying individuals. This COBRA premium subsidy applies to all group health plans subject to the Employee Retirement Income Security Act of 1974. Thus, most employers will be impacted by the new COBRA subsidy. Employers will need to evaluate the impact of the ARPA not only with respect to COBRA…

Many employers will be surprised to learn that the American Rescue Plan Act of 2021 (“ARPA”), which was signed into law on March 11, 2021 and is primarily intended to provide an economic stimulus package of $1.9 trillion, expanded the group of covered employees under section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), to include the five most highly compensated employees in addition to certain of the individuals already included…

In recent years, some companies have started offering their stock-based awards to more of their “rank and file” employees or have made one-time or periodic, broad-based grants in connection with special occasions. In addition, many private emerging growth companies, which tend to make grants to their general employee population, have also started granting RSUs instead of options to their employees as the company gets closer to an initial public offering. If you fall within this…

The Tenth Circuit has affirmed the district court’s dismissal of a plaintiff shareholder’s claim that withholding shares to satisfy taxes on a restricted stock unit (RSU) violated Exchange Act Section 16(b) (see Olagues v. Muncrief, No. 18-5018 (10th Cir. 2019)).  As we outlined last year in a blog on the lower court’s decision, the plaintiff’s claim was based on the non-exempt acquisition of shares by two executives within six months of the date that shares…

Public companies seeking shareholder approval of a new or amended equity plan on or after February 1, 2019 should consider some key updates by Institutional Shareholder Services (“ISS”) to its Equity Compensation Plans FAQs. Although the updates leave ISS’s general equity plan scorecard (“EPSC”) methodology framework intact, there are some noteworthy changes: CIC Vesting Factor. The change in control (CIC) vesting factor has been revised to provide EPSC points based on whether the company discloses the vesting treatment…

On December 7th, the IRS issued Notice 2018-97 to provide initial guidance on the new private company income inclusion deferral regime enacted under Code Section 83(i) as part of the 2017 Tax Cuts and Jobs Act (“Section 83(i)”). Under the deferral regime, eligible employees of eligible privately-held companies may elect to defer payment of federal income taxes due on exercise of stock options or settlement of restricted stock units (“RSUs”) for up to five years…

On September 24, 2018, the IRS issued Notice 2018-71 (Notice) on the temporary employer tax credit introduced by the Tax Cuts and Jobs Act for wages paid to Qualifying Employees while on covered family or medical leave under new Section 45S of the Internal Revenue Code (Code). In brief: Where the requirements of the Notice are met, the new credit may be claimed during tax years 2018 and 2019 for paid family and medical leave…

In a Private Letter Ruling released on August 17, 2018 (PLR 201833012) (“Ruling”), the IRS approved an employer’s proposed amendment to its 401(k) plan (“Plan”), under which it would make an employer non-elective contribution on behalf of an employee conditioned on the employee making student loan repayments (“SLR non-elective contribution”). As described in the Ruling, the proposed student loan repayment benefit program (the “program”), is a voluntary program under which the employee must elect to…

Last week, the IRS issued Notice 2018-68 containing initial guidance on the amendments to section 162(m) made by the Tax Cuts and Jobs Act (“TCJA”), including the transitional relief for written binding contracts. On balance, the guidance is not particularly favorable to taxpayers, as it takes a narrow view of the grandfathering relief for arrangements in effect under prior law, particularly for arrangements with negative discretion, and a broad view of the new group of…