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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.

Last night (Wednesday, March 18, 2020) the President signed the Families First Coronavirus Response Act after it passed the Senate in the afternoon by a vote of 90-8.  The Act requires all private health plans to cover COVID-19 diagnostic testing—coverage that most insured and large self-insured health plans already are providing.  The Act also requires employers with fewer than 500 employees to provide up to ten weeks of paid FMLA leave and two weeks of paid sick leave to employees affected by COVID-19.  For small employers subject to these new leave mandates, the Act provides tax credits to help offset the cost of the mandates.  This means that the tax credits are not available to employers with 500 or more employees, even if they provide paid leave equal to or in excess of that required of smaller employers under the Act.  It is noteworthy that the Senate voted down amendments that would have expanded the bill’s paid FMLA leave or replaced the bill’s paid leave with state unemployment benefits.

Continue Reading Impact of New Coronavirus Mandatory Leave and Testing Legislation Largely Limited to Smaller Employers

On Wednesday, April 18th, the SEC introduced a much-anticipated package of proposed rules and formal guidance concerning the standards of conduct for financial professionals. The more than 1,000-page proposal, which emerged eight years after Congress required the agency to conduct a study on the topic, addresses whether investment advisers and broker-dealers should have identical or

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 exceptions, all investment advice provided to a retirement plan (like a 401(k) plan, defined benefit pension plan, or an IRA), or to a participant or beneficiary in any of those retirement plans.  The rule imposes fiduciary status on a broad category of professionals, including many broker-dealers who previously had taken the position that they were not investment advice fiduciaries based on a DOL regulation that had been in place since 1975.

In contrast to the sweeping changes it imposes on investment advice professionals, the fiduciary conflict rule will have a far more modest effect on employers.  The rule is not intended to confer fiduciary status on sponsors of retirement plans.  Likewise, there had been concern under the proposed version of the rule that human resources and other employees who interact with participants might be considered fiduciaries when they discuss retirement plan investments with their co-workers.  However, the final version of the rule provides that, absent unusual circumstances, such employees would not be covered.

Nevertheless, the fiduciary conflict rule has important implications for employers that sponsor retirement plans.


Continue Reading What Employers Need to Know About the Fiduciary Conflict Rule

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

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 theft with a report that listed human resources policies as one of four areas in which employers need to adopt best practices. Similarly, the Framework for Improving Critical Infrastructure Cybersecurity developed by the National Institute of Standards and Technology and the recently published Best Practices for Victim Response and Reporting of Cyber Incidents developed by the U.S. Department of Justice include multiple recommendations regarding human resources policies needed to manage cybersecurity risks. As we have noted before, employees can be among the best protectors of employers’ critical information, or its worst threat.


Continue Reading Will Cybersecurity Best Practices Morph into Cyber Mandates?

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 whistleblower provisions. Companies may want to review the SEC order and the wording of their existing employee confidentiality obligations to determine whether changes might be helpful or required.


Continue Reading SEC Order May Prompt Employers to Review Employee Confidentiality Obligations

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

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, the DOL published guidance describing the plan administrator’s fiduciary obligations in such a situation.  The guidance focuses on two questions.  First, what steps must a plan administrator take to try to locate a missing participant?  Second, if a plan administrator fails to locate a participant after taking any required search steps, what must the plan administrator do with the balance of the participant’s account?  The DOL guidance does not directly address analogous situations under defined benefit plans or health and welfare plans, but is likely to have relevance to them as well.
Continue Reading What to Do with Missing Participants: Department of Labor Provides Guidance