U.S. Supreme Court Ruling in Quality Stores Clarifies That Severance Pay is Taxable—in Most Cases

Posted on March 27th, by Editor in Counseling & Compliance Training. Comments Off on U.S. Supreme Court Ruling in Quality Stores Clarifies That Severance Pay is Taxable—in Most Cases

By: Mark D. Nelson and Alejandra Lara

On Tuesday, March 25, 2014, the U.S. Supreme Court, in an 8-0 decision, ruled in Quality Stores, Inc., et al., 12-1408 that severance payments made to employees who are involuntarily terminated are taxable wages under the Federal Insurance Contributions Act (FICA).  The Court reversed the Sixth Circuit Court of Appeals ruling in favor of Quality Stores, which was seeking a $1 million tax refund based on its argument that severance payments were not covered by FICA and were excluded from taxation based on the Internal Revenue Code.  The Court’s ruling resolved a split between the Sixth Circuit and the Federal Circuit, and ended a legal battle with more than $1 billion at stake in potential tax refunds to employers involved in 11 separate cases with more than 2,400 refund claims.

Quality argued that its severance payments … Read More »


Ten Considerations in Drafting Executive Employment Agreements

Posted on March 24th, by Editor in Audits/Due Diligence, Counseling & Compliance Training, Crisis Management. Comments Off on Ten Considerations in Drafting Executive Employment Agreements

By: David J. Woolf

Perhaps your company has just acquired a new business and wants to put that entity’s employees under a more structured employment arrangement.  Or maybe you are just looking to roll out new executive-level agreements within your own company.  Whatever the motivation and circumstances, here are ten things to think about in drafting employment agreements that often go overlooked: 

Severance – The most common question is the easiest: Are you going to provide severance and, if so, how much?  Other details merit consideration though.  For example, is death or disability a severance trigger?  As part of the package, do you want to provide things like medical benefit continuation, prorated bonus, equity vesting acceleration, extension of the option exercise period, or other benefits?  Whatever you do, the employer will want to make sure that the executive has to execute a release … Read More »


Hiring Employees Who May Be Bound by Post-Employment Restrictive Covenants? Caution, Restrictions May Apply

Posted on March 20th, by Editor in Counseling & Compliance Training, Crisis Management. Comments Off on Hiring Employees Who May Be Bound by Post-Employment Restrictive Covenants? Caution, Restrictions May Apply

By: Daniel H. Aiken

Employers frequently want to hire talented employees who are bound by post-employment restrictive covenants (e.g., non-competes, or customer/employee non-solicitation covenants).  Often, a plain reading of the prospective hire’s agreement raises questions about whether joining your company would violate the agreement.  This requires strategic, and sometimes creative, planning.  Depending on your jurisdiction, deciding to hire an employee despite their post-employment restrictive covenants may involve taking a calculated risk that some parts of the post-employment restrictions are not enforceable, while deciding that there are some aspects your company can live with and that you expect the new employee to follow.  The following provides some basic guidance.

1.  Assess the business impact of the restrictions by determining the precise scope and duties of the prospective job.  Even though the individual may be subject to post-employment restrictive covenants, the job for which … Read More »


Newark, New Jersey Passes Paid Sick Leave Ordinance

Posted on March 17th, by Editor in Fair Pay Act Obligations. Comments Off on Newark, New Jersey Passes Paid Sick Leave Ordinance

By: Jessica A. Burt

States and municipalities across the country are considering, and adopting, legislation requiring employers to provide paid sick leave.  This legislation, generally aimed at assisting workers with low wages who may lack access to paid sick time, has been passed or is currently pending in at least 18 states, including: Alaska, Arizona, California, Florida, Hawaii, Illinois, Iowa, Maryland, Michigan, Minnesota, Nebraska, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina and Washington.

Newark, New Jersey recently followed the trend, and passed its own Paid Sick Leave Ordinance.  Beginning May 29, 2014, all private employers must provide paid sick time to employees who work in the City of Newark for at least 80 hours in a calendar year.  The law is the second in the state of New Jersey, coming just months after Jersey City passed a similar … Read More »


Taylor v. Nabors Drilling and California’s SB 292 Clarify that Sexual Harassment Need Not Be Motivated by Sexual Desire

Posted on March 11th, by Editor in Counseling & Compliance Training, Crisis Management. Comments Off on Taylor v. Nabors Drilling and California’s SB 292 Clarify that Sexual Harassment Need Not Be Motivated by Sexual Desire

By: Saba Shatara

On January 13, 2014, the California Court of Appeal decided in Taylor v. Nabors Drilling USA, L.P., 222 Cal. App. 4th 1228 (2014), that a person may maintain an action for sexual harassment when subjected to verbal attacks on his or her heterosexual identity, regardless of whether the attacks were motivated by sexual desire.  This ruling came soon after the implementation of SB 292, which became effective in California on January 1, 2014.  This bill revised the definition of sexual harassment under California Fair Employment and Housing Act (“FEHA”) to specify that sexually harassing conduct “need not be motivated by sexual desire.”  As a result, to prove harassment “because of sex,” plaintiffs need only show that there was evidence that gender was a substantial factor in the harassment. 

Both Taylor and SB 292 explicitly reject the view adopted … Read More »




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