This article was originally posted on Kelley Drye’s Labor Days Blog.

IRC §162(m) limits a publicly held corporation’s ability to take a tax deduction for compensation paid to covered employees in excess of $1 million. As mentioned in our January 2018 Client Advisory, the Tax Cuts and Jobs Act (“Act”) repealed the exception to §162(m) for qualified performance-based compensation and expanded the applicability of §162(m) by broadening the definitions of covered employee and publicly held corporation. These changes generally apply to tax years beginning on or after January 1, 2018, but certain payments are exempt under a transition rule. The IRS recently issued Notice 2018-68 (“Notice”) to provide guidance on the identification of covered employees and the operation of the transition rule. This Client Advisory highlights some of the guidance provided.

Covered Executives
For purposes of determining covered employees for any tax year, the Act provides that any executive (i) who is the principal executive officer (“PEO”) or principal financial officer (“PFO”) of the publicly held corporation at any time during the taxable year, or an individual acting as such, or (ii) whose total compensation for the taxable year is required to be reported to shareholders under SEC rules by reason of such executive being among the three highest compensated officers for the taxable year (other than the PEO or PFO, or an individual acting in such capacity), is a covered executive. Moreover, any individual who was a covered employee for tax years beginning on or after January 1, 2017, remains a covered employee for subsequent tax years.

The Notice provides that an executive does not have to serve as an executive officer at the end of the taxable year to be a covered employee, and that an executive whose compensation is not required to be disclosed under SEC rules may nevertheless be a covered employee – e.g., where an employer delists its securities and does not have to file a proxy statement for the year in question or where an employer is subject to the scaled disclosure rules for smaller reporting companies or emerging growth companies. The Notice also provides that, for tax years beginning before January 1, 2018, covered employees are determined under pre-Act provisions.

To read the full advisory on the Kelley Drye website, click here.

On October 7th, the Associated Builders and Contractors sued OSHA in the Eastern District of Texas over the Agency’s Fair Pay and Safe Workplaces rules.  These rules require federal contractors to disclose health and safety violations in their bids for government contracts.  The agencies soliciting these proposals from the contractors are expected to award contracts based on the health and safety compliance information provided by the contractors.  No one is particularly bothered by the prospect that egregious actors would lose out on federal contracts.  The issue is that OSHA is requiring contractors to disclose “violations” before the companies have had the opportunity to defend themselves against those charges.  Basing contracting decisions on mere allegations prior to their adjudication does not seem like informed decision-making, and it certainly does not sound like adherence to basic tenets of due process.  We’ll see if the Eastern District of Texas agrees.  

 

 

This post was written band originally posted on Kelley Drye’s Labor Days blog

Following up on a post from last week on the issue of mandatory flu vaccine policies, the EEOC seems to be on a march to challenge any employer – particularly hospitals – that denies an employee a requested exemption from a mandatory flu shot for religious reasons.Last week the EEOC sued Saint Vincent Health Center, a Pennsylvania hospital, claiming that the hospital had unlawfully fired six employees who were denied an exemption from the hospital’s mandatory flu vaccine policy.  According to the complaint, the hospital allotted 14 other employees exemptions from the vaccine based on health reasons, but denied the requests of the employees for religious-based exemptions because they “did not provide proof of religious doctrine.” The health center says they have a vaccination policy that allows employees to apply for exemptions to receiving the vaccine based on health concerns or religious beliefs.The EEOC alleges that from October 2013 to January 2014 six employees requested religious exemptions from Saint Vincent Health Center’s flu vaccination requirement based on sincerely held religious beliefs, and that the health center denied their requests. When the employees continued to refuse the vaccine based on their religious beliefs, the health center fired them.Saint Vincent officials said in a statement that the hospital’s “mandatory flu vaccination policy allows employees to apply for an exemption to the policy based upon religious beliefs or health concerns. Requests for exemption are always given careful and appropriate consideration. We respectfully disagree with the (commission’s) position and characterization of how the employee claims outlined in this lawsuit were handled by the hospital.”

Continue Reading EEOC Continues its “Fight” Against Mandatory Flu Vaccines