Editor’s Note: The following post by Katrina Veldkamp, Associate in the Los Angeles office, appears in the latest issue of the California HR Newsletter. To sign-up to receive the California HR Newsletter click here.
The Impact of 409A on Severance Payments
The Issue: An employment agreement conditions severance payments to an executive on her signing a release. Can this create a tax problem for the executive under the non-qualified deferred compensation rules of the Internal Revenue Code?
The Solution: Yes, unless the provisions of the employment agreement are properly drafted and the parties comply with the terms of the agreement.
Analysis: Code Section 409A (409A) governs the terms and operation of “non-qualified deferred compensation plans” and imposes restrictions on the reasons for and timing of deferred payments. Neither the employee nor the employer may accelerate or defer the receipt of deferred compensation (with some exceptions not applicable here).
Failure … Read More »
Editor’s Note: The following post by Kate Gold, Partner in the Los Angeles office, appears in the latest issue of the California HR Newsletter. To sign-up to receive the California HR Newsletter click here.
Forum Selection Clauses and Non-Compete Agreements
The Issue: You are a California employer with out-of-state headquarters, and your executive works and lives in California. Your employment agreement has a one-year post-termination non-compete. Can you enforce it?
The Solution: In general, no, but the answer may depend on whether you have a valid forum selection and choice of law clause that provides for resolution in a state that permits reasonable post-termination non-competes.
Analysis: In general, California employers cannot enforce post-termination non-competes and a party cannot circumvent California restrictions on non-competition with a choice of law provision designating a more non-compete friendly jurisdiction. However, the Supreme Court’s recent decision in Atlantic Marine Construction Co.,
Inc. v. U.S. … Read More »
By: William R. Horwitz
As cleanup from the Nor’easter that pummeled the East Coast last week continues, and the prospect of more snow looms, we hope that you and your families, as well as your businesses and employees, are safe and warm and that the lights are on. As this has been one of the more problematic winters in recent memory, we wanted to remind employers of some of their obligations before, during and after a storm.
Unless your agreements or policies provide otherwise, you are generally not required to pay non-exempt employees when they are not working. Therefore, if your business is closed and your employees do not report to work, you are not obligated to pay non-exempt employees. However, make sure that these employees are not checking work e-mails, communicating with supervisors about work-related issues or otherwise working from … Read More »
Drinker Biddle partnered with The CFO Alliance to collect survey responses from a broad sample of more than 500 senior financial executives across the United States in order to provide insights into the strategic planning and financial outlook of these executives.
Please join Labor & Employment Group co-chairs Cheryl Orr and Tom Barton, along with several of their partners from across the firm, for a one-hour webinar presentation on the results of The CFO Sentiment Study followed by a live Q&A. Participation and feedback is appreciated, as we will be creating a series of live and online events, discussions, and other materials centered on the top issues and opportunities for business leaders.
Date: Thursday, February 20, 2014
Time: 1:30 p.m. Eastern
• Human Capital
• Economic & Political Outlook
• Financing & Budgeting
• Government Regulation