Feb 16, 2024

Group Health Plan Fiduciaries May Now be a Target of Lawsuits for Excessive Fees

History of 401(k) Plan Excessive Fee Cases.  Once the Department of Labor’s participant fee disclosure rules for retirement plans became effective in 2012, the plaintiffs’ bar latched onto recordkeeping and investment fees paid by 401(k) plans, and the number of lawsuits claiming excessive fees exploded. In the early cases, participants filed lawsuits against the plans’ recordkeepers claiming that they overcharged the plans.  However, as courts consistently ruled that the recordkeepers were not fiduciaries and had no duty to charge low or even reasonable fees, the focus of these lawsuits pivoted to the plan fiduciaries. Now, hundreds of fee cases are… Read more

Jan 30, 2024

Two New Laws Expand California’s Non-Compete Prohibition and Require Employers to Provide Notice to Current and Former Employees

California flag flying in front of capitol building.

California State Senate Bill 699 (“SB 699”) and California State Assembly Bill 1076 (“AB 1076”) enhance California’s well-known prohibition against non-compete agreements or restrictive covenants. Both bills, which took effect on January 1, 2024, add additional requirements and penalties to the existing statutory framework. Prior to passage of SB 699 and AB 1076, Business & Professions Code Section 16600 provided that “every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” Historically, courts have interpreted Section 16600 to prohibit post-employment non-compete agreements, as well as post-employment… Read more

Jan 12, 2024

The DOL Publishes Final Rule Regarding Independent Contractor Classification Under the FLSA

On January 10, 2024, the U.S. Department of Labor (DOL) published its Final Rule amending the criteria used to determine whether a worker qualifies as an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The Final Rule is available here. While the Final Rule goes into effect March 11, 2024, legal challenges are expected and may impact when or if the Final Rule takes effect. The Final Rule rescinds the preceding 2021 rule and replaces it with six-factor test focused on the “economic reality” of the relationship between a potential employer and a worker to determine… Read more

Dec 18, 2023

Fourth Quarter 2023: Private Wealth, Trusts & Estates Practice Group of Smith Gambrell & Russell LLP

Upcoming Cuts to Estate and Gift Tax Exemptions, and Importance of Prompt Decisions and Actions: Most estate planning clients of SGR’s Private Wealth Trusts & Estates Practice Group are familiar with the unified estate and gift tax exemption.  That exemption allows a donor or to transfer property during life or at death without paying gift or estate taxes, respectively. The base exemption was raised to $5 million in 2011 and has since been increased for inflation.  (The exemption for the Generation-Skipping Transfer Tax, or “GST Tax,” has tracked that same exemption amount starting in 2011.) The base exemption was doubled… Read more

Dec 1, 2023

Long-Term, Part-Time Employees IRS Proposed Regulations

On November 24, 2023, the IRS released the long-awaited Proposed Regulations addressing the changes made by the SECURE Act and SECURE 2.0 related to long-term, part-time employees (“LTPTs”) in 401(k) plans.  While the IRS uses the name ‘long-term, part-time employees’ in the Proposed Regulations, these rules apply to part-time, seasonal and other types of reduced-hours workers, and could potentially apply to even some full-time employees if a plan uses hours to determine eligibility to participate.  The Proposed Regulations would amend Treasury Regulation 1.401(k)-5 to reflect the LTPT rules and would be applicable for plan years that begin on or after January… Read more

Nov 29, 2023

New York Amends “Prompt Payment Act” to Limit Retainage

Picture of a construction hat behind a gavel.

On November 17, 2023, Governor Kathy Hochul signed Senate Bill 3539, which amended Section 756-a and Section 756-c of the New York General Business Law (commonly known as the Prompt Payment Act), which applies to all private commercial construction projects having a value of $150,000 or more. The bill is intended to ensure timely payments to contractors as well as limit the amount of retainage that can be withheld. As amended, Section 756-a now provides that a contractor can submit its final invoice for payment to the owner upon substantial completion, as that term is defined in the construction contract… Read more

Nov 29, 2023

‘Tis the Season: Annual Party Pooper’s Guide to the Holidays

Notebook and pencil with a list of guidelines

‘Tis the season for celebration. For employers, that may mean hosting an annual holiday party, catering an office luncheon, or distributing end-of-year gifts and bonuses. However, with the holiday season comes potential liability. Office Parties Many companies host a holiday party or special gathering for their employees. Employers hosting holiday parties or other festive events should ensure that it is clear to employees that attendance at said event is voluntary, unless the company intends to pay hourly employees for the time spent at the function. Employers may run afoul of the Fair Labor Standards Act (“FLSA”) or equivalent state law… Read more

Nov 28, 2023

Paid Leave is Coming—Changes on the Horizon for Chicago and Illinois Employers

Speech bubble with the words "Paid Time Off"

Chicago and Illinois employers should revisit their paid leave policies before the New Year. Illinois’ Paid Leave for All Workers Act (“PLFAW Act”), 820 ILCS 192/1 et seq., effective January 1, 2024, applies to nearly all Illinois employers (outside of those covered by the more generous Chicago and Cook County laws), with limited exceptions. Under the PLFAW Act, employees must accrue at least 1 hour of paid sick leave for every 40 hours worked up to a minimum of 40 hours annually, unless the employer allows more leave. Alternatively, employers can frontload the full amount of leave on the first… Read more

Nov 14, 2023

New York Wage Theft Claims: New Developments

Labor Law written on a blank page of a book.

New York Governor Kathy Hochul recently signed legislation (S.B. 5572) that, effective March 13, 2024, will change the salary threshold governing various exemptions under Article 6 of the New York Labor Law (“NYLL”). For reference, Article 6 generally regulates how frequently and the method by which employees must be paid.  Employers who violate provisions of Article 6 regulations have committed “wage theft” and claims for wage theft include unpaid wages, illegal deductions, unpaid wage supplements, minimum wage and overtime pay. Effective March 13, 2024, any employee making less than $1,300 a week (including any employee working in an executive, administrative… Read more