Companies sponsoring a 401(k) plan to help their employees save for retirement often form an investment committee to help select plan investments without realizing the duties that the committee assumes. To help prevent investment committee members from unintentionally breaching their fiduciary duties, companies periodically review their investment committee compliance and should keep complete records of appointments, policies, and procedures. The following investment committee checklist can be a starting point for this review: Review the underlying plan document to determine who it lists as the “named fiduciary”. Most plan documents provided by third party administrators list the “plan sponsor” as the named fiduciary, which means the board of directors is the governing body responsible for acting as a fiduciary, absent a delegation of such fiduciary responsibility by the board of directors to a committee. If your plan lists the “plan sponsor” as the named fiduciary and you have a committee selecting… Continue Reading
Qualified Transportation Fringe Benefits in the Time of COVID – IRS Provides an Overview on Treatment of Unused Amounts and Changes to Elections
Prior to the pandemic, many employees used qualified transportation fringe benefits, such as receiving mass transit passes or paying for on-site parking on a pre-tax basis, to help defray the costs of getting to the office. As a result of the pandemic, many workers are working from home, with no need to pay for on-site parking or reap the benefit of employer-provided mass transit passes. The pandemic has also caused some employees to change their mode of transportation, with many deciding to forgo the use of mass transit to drive their own vehicles to work. A recent IRS information letter outlined some options available to employees whose use of qualified transportation has changed throughout the course of the pandemic. Under the example in the information letter, an employee was no longer using mass transit, and so, no longer needed to use compensation deductions to pay for mass transit passes. Instead,… Continue Reading
In the recent case of Mebane v. GKN Driveline N. Am., Inc., No. 1:18-CV-00892 (M.D.N.C. Nov. 05, 2020), the federal district court held that a claim brought under the North Carolina Wage and Hour Act (“NCWHA”) is preempted by ERISA. The employee-plaintiffs in this case alleged their employer violated the NCWHA by deducting from their paychecks, without express authorization, a monetary penalty for those employees who participate in the employer’s group health plan and use tobacco products (i.e., a so-called “tobacco surcharge”). The defendant-employer filed a motion to dismiss this claim for unauthorized payroll deductions as being preempted by ERISA. The court agreed and dismissed the employees’ claim, ruling that it was preempted by ERISA. The court’s opinion is available here.
Employee Payroll Tax Holiday or Looming Tax Nightmare: Unanswered Questions on the Payroll Tax Deferral Executive Order
Employee Payroll Tax Holiday or Looming Tax Nightmare: Unanswered Questions on the Payroll Tax Deferral Executive Order.
Most equity-based performance awards for employees that will vest at the end of 2020 were granted well before the COVID-19 pandemic began (in fact, many were granted two years or more before the pandemic), and none of the performance metrics for these awards likely anticipated the havoc the pandemic has caused to the companies’ financial and stock performance. In many cases, the pandemic has rendered these equity-based performance awards worthless to employees because the performance metrics are not even remotely achievable. Yet, employees have been working harder than ever to meet the challenges of the pandemic. Some employers looking for ways to continue to reward and retain employees are eyeing modifications of existing equity-based performance awards to either lower the target and stretch performance goals or to eliminate the performance requirement completely, at least for awards vesting in 2020 (making the awards solely time-based). Before proceeding with any such modifications,… Continue Reading