Washington D.C. Employment Law Update : Washington D.C. Employment Lawyer & Attorney : Littler Mendelson Law Firm : Virginia, Tyson's Corner

Senator Dick Durbin (D-IL) and Representative John Conyers (D-MI) have introduced legislation that would strengthen the ability of employees to recover wages and benefits and restrict the awarding of bonuses in the event of their employer’s bankruptcy. According to a press release, the Protecting Employees and Retirees in Business Bankruptcies Act (S. 3033, H.R. 4677) would, among other things, “ensure that back pay awarded through [the Worker Adjustment and Retraining Notification (WARN) Act] damages would be given priority in the bankruptcy claims process.” Specifically, as stated in the release, the bill would do the following:

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While many firms in the financial industry are expected to announce potentially record-setting bonuses this month, members of Congress and the President have unveiled initiatives to curb and/or generate revenue from this sector. On Tuesday, Rep. Peter Welch (D-Vt.) introduced the Wall Street Bonus Tax Act (H.R. 4426), a measure that would levy a 50 percent tax on large bonuses paid to employees of firms that have received financial assistance through the Troubled Asset Relief Program (TARP). This tax would apply to all bonus compensation – both cash and stock awards – exceeding $50,000, and would be used to fund a new direct lending program administered by the Small Business Administration (SBA). According to a press release, this bill mirrors similar measures already taken in Great Britain and France to tax excessive bonuses.

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Last week, Rep. Lloyd Doggett (D-Tex.) introduced a bill that aims to close tax loopholes that enable companies to provide highly compensated employees with generous retirement benefits at the expense of lower- and middle-income workers. The Retirement Fairness Act of 2009 (H.R. 4126) adds two sections to the Internal Revenue Code (IRC) to modify the rules relating to the nondiscrimination requirements in qualified pension plans and to include part-time employees in determining the minimum coverage requirements for these plans. The net effect of these changes would be to limit the use of Qualified Supplemental Executive Retirement Plans (Q-SERPs), which permit certain highly paid executives from paying themselves additional retirement benefits funded through their workers’ pension plans.

This bill has been referred to the House Committee on Ways and Means.

Photo credit:  Kameleon007

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The Senate Finance Committee, after two weeks of much-publicized markup, has released its final version of healthcare reform legislation. Introduced by Sen. Max Baucus (D-Mont.) on September 16, America’s Healthy Future Act (pdf) has been considered the most conservative of the healthcare overhaul bills, as it contains neither a public health insurance option nor an employer mandate requiring the provision of health benefits. The bill does, however, impose on employers certain obligations. Specifically, the latest version of the bill would require the following:

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The House of Representatives has voted 237 to 185 to approve the Corporate and Financial Institution Compensation Fairness Act of 2009 (H.R. 3269), a measure that would give shareholders of public companies an advisory vote on executive compensation. Earlier this week, the House Committee on Financial Services voted 40-28 to advance this “Say-on-Pay” legislation.

In addition to providing shareholders with a nonbinding approval vote over executive compensation and golden parachutes, this bill would direct federal agencies to establish regulations requiring certain financial institutions to disclose the structure of their incentive-based compensation arrangements to determine whether such arrangements encourage inappropriate risk. This bill would also prohibit covered financial institutions from rewarding their executives and corporate officers with compensation structures that encourage risky behavior. Moreover, if enacted into law, this legislation would require the members of public company compensation committees to be independent, and would establish authority for such committees to use independent consultants and counsel. While it took only ten days from the date of introduction for this bill to clear the House, it will face a more difficult path in the Senate, where many have voiced concern that the measure would allow the government to unnecessarily intrude on private business operations.

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A bill that would provide shareholders of public companies with an advisory vote on executive compensation and golden parachutes and that has additional special provisions regarding incentive compensation and risk management applicable to certain financial institutions has been given the green light to move to the House floor. The House Committee on Financial Services voted 40-28 on Tuesday to advance the Corporate and Financial Institution Compensation Fairness Act of 2009 (H.R. 3269).  In addition to providing shareholders of public companies with the ability to vote their approval of such executive compensation packages, this legislation requires members of public company compensation committees to be independent, and establishes an ability for the compensation committee to engage the services of independent consultants and counsel. Separately, in sections affecting financial institutions, this bill would require reporting of incentive compensation and its relationship to risk management and would authorize regulators of such institutions to prohibit compensation structures that encourage inappropriate risks. 

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