The Fourth Circuit recently ruled that a general contractor was the joint employer of employees of its subcontractor for purposes of the Fair Labor Standards Act. Salinas v. Commercial Interiors, Inc. has broad implications for the wage and overtime responsibilities of employers located within the Fourth Circuit, which has jurisdiction over appeals from federal courts located in Maryland, Virginia, North Carolina, South Carolina, and West Virginia.
The New York State Department of Labor has adopted regulations clarifying employers’ rights and obligations when implementing policies that limit the discussion of wages in the workplace. Under New York Labor Law section 194(4), an employer may not prohibit employees from discussing wages, but may establish “reasonable workplace and workday limitations on the time, place and manner for inquiries about, discussion of, or the disclosure of wages.” The DOL’s new regulations provide guidance on the permissible scope of policies that limit wage discussions as well as the notice employers must provide to employees about such policies.
In April of this year, the Department of Labor issued a suite of rules (i) expanding the class of persons and entities who are fiduciaries for purposes of ERISA and the Internal Revenue Code; (ii) providing two new prohibited transaction exemptions (or PTEs); and (iii) amending a handful of existing PTEs to conform to the new regulatory regime. (For a list of, and links to, the suite of final rules, please see our post of April 11, 2016.) The fiduciary definition, exemptions and amendments, and their respective preambles, occupy in total almost 1,000 pages of the Federal Register. Collectively, these items enact a sea-change in the regulation of investment advice provided to ERISA-covered retirement plans and Individual Retirement Accounts (IRAs). When the Department promulgated these rules, it promised to provide subsequent guidance—including Frequently Asked Questions (FAQs)—in response to questions that would inevitably arise.
Speaking at a trade association meeting in Boston at the end of October, a senior Department of Labor official reported that the Department was hard at work on its first set of FAQs. He said that the FAQs would reinforce some of the rule’s basic concepts that questioners seemed to struggle with and add some gloss to particular aspects of the rule that the Department felt needed additional attention. His predictions proved accurate. In this post we provide a sampling of some of the highlights of the recently issued FAQs. We have chosen three topics that fall under the heading of “basic concepts,” and three topics that elucidate particular aspects of these rules. There is, of course, a measure of editorial discretion at work in our selection to topics. Other practitioners might choose differently based on their particular needs and interests. For anyone who works with or needs to comply with these rules, we recommend reading the FAQs in their entirety.
This post continues our examination of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. Our previous posts discussed the newly expanded definition of “investment advice fiduciary”; the “best interest contract” (or BIC) exemption; and the new class exemption for principal transactions. Collectively, these rules vastly expand the definition of an “investment advice fiduciary” while at the same time providing new prohibited transaction class exemptions intended to preserve many of the commission-based compensation arrangements that would otherwise be imperiled under the new fiduciary standard. In this and the next three posts, we will examine how the Department has amended certain existing Prohibited Transaction Exemptions to come into alignment with its new fiduciary and conflict of interest standards.
This post explains the changes to Prohibited Transaction Exemption (PTE) 84-24 relating to insurance agents and brokers.
Continue Reading The Department of Labor’s 2016 Final Fiduciary and Conflict of Interest Regulations: Amendments to Prohibited Transaction Exemption 84-24 for Transactions Involving Insurance Agents and Brokers (and Others)
On June 10, the Departments of Treasury, Labor, and Health and Human Services (The “Departments”) issued a set of proposed regulations dealing with expatriate health plans, excepted benefits, lifetime and annual limits, and short-term, limited-duration insurance. While the media initially focused on the short-term, limited-duration insurance, the provisions in the proposed regulations addressing hospital and fixed indemnity, disease-specific, and supplemental polices merit attention. These polices generally seek to avoid application of the Affordable Care Act’s (ACA) insurance market reforms and other substantive requirements by qualifying as “excepted benefits.” For manufacturers and sellers of excepted benefit products, the challenge is to create a product that will gain traction in the market—i.e., has the requisite “sizzle”—while at the same time avoiding being treated as a “group health plan” that fails to qualify as “excepted.” The proposed rules, if adopted as final, will make this challenge marginally if not significantly more difficult.
In future posts, we will turn our attention to expatriate health plans, lifetime and annual limits, and short-term, limited-duration insurance. This post examines the provisions of the proposed regulations’ treatment of excepted benefits, with a particular focus on accident, hospital and fixed indemnity, disease-specific, and supplemental products and policies.
This post continues our examination of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. Our prior posts discussed the newly expanded definition of “investment advice fiduciary” and the “best interest contract” (or BIC) exemption. In this post we explain the suite’s second new prohibited transaction class exemption entitled: “Class Exemption for Principal Transactions in Certain Assets between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs”. This exemption generally permits the trading of debt instruments in principal and riskless principal transactions involving Employee Retirement Income Security Act (ERISA)-regulated retirement plans and Individual Retirement Accounts (IRAs).
Please join us on June 21st at 2:00 pm ET as we cover the new white-collar overtime rule. This one-hour webinar will offer employers more than just a summary of the rule. It will also offer unique insights on the rule’s impact, help employers navigate the complex issues that may arise when revisiting their classification decisions, and suggest best practices for making and implementing these decisions, including communicating them to the workforce prior to the December 1st effective date.
If you have any question you would like us to address, please email them to me at firstname.lastname@example.org in advance of the webinar. You can find our previous coverage on the blog on this issue here (and check back regularly for additional updates).
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Mintz Levin is an approved CLE provider. This webinar is accredited in the following states: California (1.0 general credit) and New York (1.0 general credit). Mintz Levin is also recognized by SHRM to offer Professional Development Credits (PDCs) for the SHRM-CPSM or SHRM-SCPSM. This webinar is valid for 1.0 PDC for the SHRM-CPSM or SHRM-SCPSM.
One of the few “wins” for employers under the DOL’s new overtime rule was that employers are now allowed to apply “nondiscretionary incentive payments” to meet up to 10 percent of the new salary threshold. This change could prove very important for employers who pay employees on a commission basis or who use other incentive-based compensation.
But what qualifies as a nondiscretionary incentive payment? What options do employers have in changing their compensation plans to ensure compliance with the new rule? And what could be the unintended consequences of those changes? This post looks at this new rule and attempts to answer some of those questions.
Last month the U.S. Department of Labor published a suite of final regulations governing the fiduciary status of, and prescribing conflict of interest rules that apply to, persons who provide investment advice to ERISA-covered retirement plans and Individual Retirement Accounts (IRAs). (For a list of, and links to, these final regulations, please see our April 11, 2016 post). As we explained previously, the final regulations will have important and far reaching consequences for financial advisors of all stripes (e.g., broker-dealers/registered representatives, Registered Investment Advisors (RIAs), and insurance agents and brokers, among others) who advise retirement plans and IRA investors.
In an earlier post we examined the new and greatly expanded definition of an “investment advice fiduciary,” which is of central importance to the Department’s new regulatory scheme. In this post, we explain the “Best Interest Contract” (or “BIC”) exemption, which allows advisors to receive commission-based compensation that would be barred under the new fiduciary standard, subject to strict new rules intended to protect investors.
With this post, we begin our substantive explanation of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. For the financial services industry, and for the retirement plans and IRAs, there are game-changing rules. This post covers the definition of what constitutes and “investment advice fiduciary.” Future posts will examine the remaining regulations (dealing principally with conflicts of interest) and their impact on stakeholders.