Insights

Health care issues remain among American voters’ top concerns heading into the 2024 general election, and former President Trump and Vice President Harris have starkly different approaches and records on the issue. In this client alert, part of our Election 2024 series, we analyze the candidates’ priorities in health care, or at least what we know of them. For all of the concern about health care in the electorate, both candidates have been criticized for not revealing enough detail about their respective plans.

On April 25, 2024, the Department of Labor (“DOL”) published a final rule (the “Final Rule”) regarding when providing investment advice results in the advisor becoming a fiduciary under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the Internal Revenue Code of 1986, as amended (the “Code”).  Under this guidance, an entity is a fiduciary if the provider of that advice to an ERISA plan or Individual Retirement Account:

On Friday, March 10, 2023, regulators shut down Silicon Valley Bank (“SVB”) and seized its deposits, resulting in the second largest U.S. banking failure since the 2008 financial crisis. Specifically, SVB was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (the “FDIC”) was named receiver. Since the FDIC insures deposits of up to $250,000, that amount was immediately available; however, the fact that deposits above and beyond the $250,000 limit were not immediately available alarmed many. After a weekend of chaos as many businesses scrambled for a solution to the illiquid funds, on Sunday, March 12, 2023, in a joint release among the Department of Treasury, Board of Governors of the Federal Reserve System and the FDIC, Treasury Secretary Janet Yellen instructed the FDIC to guarantee SVB customers access to all deposits, including the uninsured funds. The release further stated that New York-based Signature Bank was closed by its chartering authority and that its customers would also receive access to all deposits, including the uninsured funds. While this may have provided relief to many, it is important to keep in mind the lesson and best practices in the event of such a liquidity crunch.

In response to 2021 executive orders issued by President Biden, the Department of Labor has finalized new rules relating to investment duties for employee benefit plan fiduciaries. In light of these new regulations, now is a great opportunity for employers and retirement plan sponsors to review their plans’ investment line-ups, QDIA options, and investment policy statements to determine whether changes to the plans’ investment options or strategy may be appropriate.

On Tuesday, December 8, the Supreme Court upheld Arkansas Act 900 (Act 900), which regulates the rates at which pharmacy benefits managers (PBMs) reimburse pharmacies for prescription drugs. The 8-0 decision (Justice Amy Coney Barrett abstained), marks a boundary on the broad scope of the Employee Retirement Income Security Act (ERISA), which preempts state laws that “relate to” employee benefit plans covered by the federal statute. 29 U.S.C. §1144(a).

The Department of Labor’s final FLSA regulations, which are expected to expand overtime eligibility to millions of workers by more than doubling the minimum salary threshold for the key exemptions, moved closer to implementation in the past week. On March 14, the DOL submitted the rule to the Office of Management and Budget for final review, the final step of the process, which can be expected to be completed within weeks. Therefore, we now anticipate that the final regulations will be issued earlier than the previously targeted July 2016 date. These regulations may be made effective 60 days after final publication, according to the DOL.

On Tuesday December 1, new amendments to the Federal Rules of Civil Procedure went into effect. These amendments are designed to streamline discovery and notably: (i) introduce a new proportionality standard defining the scope of discovery (replacing the former relevance standard); (ii) require greater specificity when objecting to a discovery request; (iii) speed up litigation with shorter timelines; and (iv) establish sanctions for spoliation of electronically stored information.

The California Senate has unanimously passed the state's new Fair Pay Act, following unanimous support for the bill in the California Assembly. Governor Jerry Brown has already promised to sign the bill when it reaches his desk. Once signed, the California Fair Pay Act may become the model for other state legislatures, as the "pay equity" drum beat continues and as attempts to amend the federal Equal Pay Act continue to meet resistance on Capitol Hill.

In an August 3 letter to eight committee and subcommittee chairs, the FAR Council and the Department of Labor indicated that the comment period for the "Fair Pay Safe Workplaces" proposed FAR Rule and related DOL Guidance would be extended to August 26 (from the current date of August 11, 2015). On July 15, as previously discussed here, the chairs of the House committees of jurisdiction sent a letter to Labor Secretary Perez and OFPP Administrator Rung citing procedural and substantive flaws with the rulemaking (explained in more detail on our Government Contracts blog) and requesting that the agencies withdraw it, or, at a minimum, extend the public comment period an additional 90 days.

Shortly after announcing plans to more than double the base salary level required for exempt employees, the U.S. Department of Labor (DOL) is taking aim at what it claims is an increasing trend among U.S. businesses—misclassifying employees as independent contractors. DOL recently issued an Administrative Interpretation (AI) in which it left little doubt about its position, writing that "most workers are employees under the FLSA." The AI does not set forth any new standards, but it takes an aggressive, worker friendly approach to the "economic realities" test that courts use to determine whether particular workers are misclassified as independent contractors.

Employees earning less than $47,892 per year will be automatically eligible for overtime, if the Department of Labor's new Fair Labor Standards Act (FLSA) regulations take effect as expected later this year. The new figure of $921 per week more than doubles the current threshold of $455 per week, and is expected to rise to $970 per week ($50,440 annually) in the first quarter of 2016.

Since the economic downturn in 2008, the legal market has been in a constant state of change. Companies are demanding budget predictability, shared risk and reward, improved efficiency, more transparency, and a new way to define value, and law firms have rushed to respond. Firms cannot rely on the billable hour as they once did. This development has led to the rise of Pricing Departments whose job it is to manage value-based billing arrangements, profitability, and legal project management. Law firms and in-house counsel need to understand each type of alternative fee arrangement, its strengths and weaknesses, how to accurately scope and budget an engagement, and how to manage it once it has begun.

The Supreme Court just reminded employers that acting on perceptions of an individual's protected characteristic is a recipe for trouble. In EEOC v. Abercrombie & Fitch Stores, Inc., the Court held that Title VII does not require an individual to prove an employer knew he or she needed an accommodation to impose liability for religious discrimination. Instead, a protected individual only need show the employer's alleged adverse employment action was motivated in part by the individual's actual or perceived religion or religious practice.

Your company's confidential information may no longer be safe. Federal government agencies, including many that regulate mining companies, are aggressively scrutinizing company confidentiality policies and agreements. This scrutiny is all in the name of preventing corporations from muzzling potential whistleblowers. Although there is no evidence that confidentiality policies and agreements actually stifle whistleblower activity, this new regulatory initiative is having tangible impacts. Mining companies should take steps now to minimize the odds that they will be the next target of the regulators.

In Chief Counsel Advice 201518013 (CCA)1 released on May 1, 2015, the IRS took the position that an executive's retention agreement violated Code section 409A2 and therefore was subject to an additional 20 percent federal income tax—potentially subjecting the bonus to a 59.6 percent marginal federal income tax rate. The executive's employer had realized the error and attempted to correct the retention agreement before the bonus was paid, but the IRS determined that the correction came too late. This CCA underscores the importance of ensuring that bonus plans, employment and retention agreements, and severance agreements comply with section 409A from inception. If correction is necessary, companies should consider all available possibilities for correcting section 409A violations, both within and outside of the IRS formal corrections program. In either event, timing matters.

The Supreme Court today issued important guidance concerning the statutory obligation of the Equal Employment Opportunity Commission (EEOC) to attempt to resolve an employment discrimination claim informally, before proceeding to federal court litigation. In Mach Mining LLC v. EEOC, the Court unanimously reversed a Seventh Circuit decision that held courts could not review the adequacy of the agency's informal pre-suit conciliation efforts. The Court articulated a new test for determining "how much" conciliation effort is required by the EEOC. 

On April 20, the Equal Employment Opportunity Commission (EEOC) published long-awaited proposed regulations and interpretive guidance (Proposed Regulations) regarding employer wellness programs. These Proposed Regulations provide a framework for allowing employers to utilize financial or in-kind incentives to encourage employees to participate in wellness programs without violating Title I of the Americans with Disabilities Act (ADA). 

On March 9, the Supreme Court decided that government agencies may alter prior interpretations of their regulations without engaging in notice-and-comment rulemaking under the Administrative Procedure Act (APA). Perez v. Mortgage Bankers Association involved the U.S. Department of Labor's (DOL) reversal of its previous interpretation of the Fair Labor Standards Act's (FLSA) administrative exemption. Neither the result nor the Court's discussion of the relevant administrative law principles is surprising. Yet the decision is likely to create unwelcome uncertainty for employers. Mortgage Bankers may empower enforcement agencies like the Equal Employment Opportunity Commission (EEOC) and DOL to accelerate interpretive reversals based on policy considerations. In that event, employers may have even less confidence that they operate in a predictable legal environment.

More than three years after issuing its interim final rule, the U.S. Department of Labor (DOL) has released the final version of its rule implementing the whistleblower protections provided by the Sarbanes-Oxley Act (SOX), as amended by the Dodd-Frank Act reforms of 2010. The final rule closely tracks the key provisions of the interim final rule. In particular, the whistleblower-friendly preliminary reinstatement remedy and the provision allowing oral complaints remain largely untouched. However, there are some changes to DOL's procedures that benefit employers facing a SOX complaint.