Richard C. Shea

Richard C. Shea

Richard Shea is chair of Covington’s Employee Benefits and Executive Compensation practice and is widely regarded as the nation’s leading authority on cash balance, pension equity, and other complex benefit plan designs.  His practice spans the full breadth of activities needed to help his clients resolve novel, sensitive, or intractable issues.  His approach focuses on developing important new legal insights and ideas, and then combining them into effective litigation, legislative, regulatory, and benefit design strategies for his clients.

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What Employers Need to Know About the Fiduciary Conflict Rule

Our colleague Jason Levy recently published an article in The Actuary Magazine on the Department of Labor’s fiduciary conflict rule.  More than six years in the making, this rule represents perhaps the most significant regulation from the DOL during the Obama Administration. The fiduciary conflict rule expands the definition of fiduciary to cover, with certain … Continue Reading

SEC’s New Pay Ratio Disclosure Rule Explained

On August 5, 2015, the Securities and Exchange Commission adopted, by a three-to-two vote, a rule that will require most public companies to disclose, annually, the ratio of the median of the annual total compensation of the company’s employees to the annual total compensation of the company’s principal executive officer. Companies must comply with the … Continue Reading

Will Cybersecurity Best Practices Morph into Cyber Mandates?

The federal government has been encouraging employers to adopt best practices to address both external and internal threats to critical business information and infrastructure. These best practices have included an important human resources element, including policies and programs covering current and former employees. For example, the Obama Administration opened its initiative to combat trade secret … Continue Reading

SEC Order May Prompt Employers to Review Employee Confidentiality Obligations

By Richard Shea and Barbara Hoffman These days, many employment agreements, severance agreements, releases, plan documents, SPDs, and other compensation and benefits arrangements impose confidentiality requirements on employees, both current and former. Yesterday the SEC issued its first order addressing how employee confidentiality obligations can be phrased consistent with the agency’s regulations implementing the Dodd-Frank … Continue Reading

Hybrid Plan Regulations Could Reinvigorate the Defined Benefit Plan System

Treasury and the IRS recently issued long-awaited regulations governing cash balance and other hybrid pension plans.  Final regulations implement the intent of Congress in the Pension Protection Act of 2006 (the “PPA”) to eliminate the so-called “whipsaw calculation” and permit more generous rates of return for employees and retirees.  Proposed regulations issued at the same … Continue Reading

What to Do with Missing Participants: Department of Labor Provides Guidance

When a defined contribution plan terminates, the plan administrator must distribute participants’ accounts as soon as administratively feasible.  However, participants do not always update the plan administrator when their contact information changes, and some participants may not be responsive when the plan administrator requests directions on how to distribute their accounts. On August 14, 2014, … Continue Reading

Reducing Pension Costs By Increasing Defined Benefit Pensions: Kodak’s Innovative Approach

Kodak recently announced that it is increasing the benefits provided under its defined benefit plan.  Kodak will credit an additional 3% of pay each year under its cash balance pension plan instead of making a matching contribution of up to 3% of pay under its 401(k) plan.  In connection with this change, Kodak announced that … Continue Reading

Supreme Court To Resolve Whether Severance Pay for Layoffs Is Subject to FICA Tax

Earlier today, the Supreme Court agreed to review the Sixth Circuit’s decision United States v. Quality Stores.  In that decision, the Sixth Circuit sided with taxpayers and concluded that certain severance payments that qualify as supplemental unemployment benefit payments (or “SUB” payments) for federal income tax purposes are not subject to tax under the Federal … Continue Reading

Plan Documents Should Not Be Rewritten When an SPD Does Not Disclose Wear-Away, Industry Groups Say

In an amicus brief filed last week, the ERISA Industry Committee and Chamber of Commerce of the United States of America stated that a court should not rewrite a plan document, or penalize the administrator who follows the plan document, merely because a summary plan description does not disclose wear-away in pension accruals (although it did summarize … Continue Reading

Permanent Labor Market Shift Signals Job Insecurity and Diminished Wages and Benefits, Economists Warn

Reflecting on the labor market on this Labor Day, we note that many economists are predicting that, unlike prior recessions, employment and wages will not bounce back after the current economic downturn that began in 2008.  Employers will retain significant bargaining power in US and overseas labor markets, likely leading to diminishing job security and … Continue Reading

Celebrating the Arrival of Windsor Guidance: Same-Sex Marriages Will Be Recognized For Federal Tax Purposes Based on Place of Celebration

The IRS issued guidance today defining same-sex marriage for purposes of federal tax rules.  Following the Supreme Court’s decision in United States v. Windsor last June invalidating section 3 of the Defense of Marriage Act (DOMA), federal law no longer limits the definition of marriage to opposite sex spouses.  However, the Windsor decision did not … Continue Reading

Supreme Court’s DOMA Decision Has Significant Implications for Employers and Employee Benefit Plans

Earlier today in United States v. Windsor, the Supreme Court struck down section 3 of the federal Defense of Marriage Act (“DOMA”).  Section 3 of DOMA limits the definition of marriage for purposes of federal law to marriage between individuals of the opposite sex.   The Court held that DOMA deprives same sex couples of due … Continue Reading

2014 Administration Proposal Would Eliminate ESOP Dividend Deduction

The Obama Administration’s 2014 budget includes a proposal to eliminate the deduction for dividends paid on employer stock held by an employee stock ownership plan (“ESOP”).  The proposal would be effective for dividends paid after the date the budget is enacted.  Under the proposal, the deduction would continue to be available to corporations with annual receipts … Continue Reading

5 Privacy and Data Security Measures That Can Protect Your Company Against Trade Secret Theft by Employees

As we have previously discussed, companies face a growing threat that trade secrets and other critical business information will be taken by employees and other insiders.  Protecting business critical information is not simple.  Companies need a holistic approach that implicates multiple areas of the law, including data security, privacy, intellectual property, white collar crime, employment, … Continue Reading

Why Is a Benefits Lawyer Talking about Trade Secret Theft?

At a recent forum in New York, a team of Covington & Burling LLP lawyers addressed the growing concern among companies that their most valuable assets might just walk out the front door on a thumb drive in an employee’s pocket or otherwise be taken by company insiders.  Although much of the discussion in this … Continue Reading

White House Launches Initiative to Combat Trade Secret Theft

Earlier this afternoon, the White House announced a major initiative to combat the increasing threat to U.S. companies from the theft of trade secrets.  The initiative addresses both external threats as well as internal threats from employees and other insiders, including the threat that a company’s most valuable intellectual property might simply walk out the … Continue Reading

Investors, Speculators, Market Makers, and Arbitrageurs

We recently came across this wonderful explanation of the key actors in the financial markets:  investors, speculators, market makers, and arbitrageurs.  The guts of the explanation appears in minutes 5-20 of the video, and is part of a presentation by Yaron Minsky, head of technology and programming at Jane Street Capital.  Whether you are involved with … Continue Reading

Severance Pay for Layoffs Not Subject to FICA Tax, Sixth Circuit Rules

Today the United States Court of Appeals for the Sixth Circuit sided with taxpayers in affirming the decision of a district court that certain severance payments that qualify as supplemental unemployment compensation benefit payments (or “SUB” payments) for federal income tax purposes are not subject to tax under the Federal Insurance Contribution Act (FICA).  United … Continue Reading
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