Employee benefits planning and administration has become a challenge on many fronts, but the advantages of a well-structured program justify confronting this challenge. Employees profit from the retirement, health, and other benefits that are offered. Employers attract, retain, and motivate valued employees by creating vital incentives. A properly designed program also offers tax benefits to both employers and employees.
At HSE, we have a nationally recognized Employee Benefits and Executive Compensation Practice Group. Our attorneys work with employers on a wide and varied range of employee benefit and executive compensation plans. We assist with some of the largest and most sophisticated employee benefit programs in the country. In the complex and ever-evolving world of employee benefits, our group provides invaluable advice and services. On a daily basis, our attorneys interact with clients on complex benefits issues including plan design, legal compliance, document drafting, legislative and regulatory changes, litigation issues, fiduciary protection, and plan investments, including private equity investments.
We also work collaboratively with the firm’s attorneys in the Tax, Litigation, and Labor and Employment Litigation practices to provide clients with the highest quality service, including keeping them abreast of the latest trends in the employee benefits area.
- Corporations (ranging from Fortune 100 to closely-held companies)
- Multi-employer Plans
- Tax-Exempt organizations
- Academic Institutions
Design, Implementation and Compliance of Retirement Plans
To be competitive in the marketplace, an employer needs a well-designed benefits program that is both cost efficient and an effective tool in recruiting and retaining the best workforce. Attorneys in the Employee Benefits and Executive Compensation Practice Group analyze the needs of the employer and provide counsel on plan design and operation. The goal is to deliver attractive, cost-effective benefits that employees can appreciate and understand. Following the design discussions, we assist employers in implementing the appropriate benefit plans, including preparation of all necessary plan documents. We also provide ongoing counsel regarding legal and operational issues, including compliance with the fiduciary duties imposed by ERISA. In addition, we represent employers in benefit-related matters before the Internal Revenue Service, U.S. Department of Labor, and Pension Benefit Guaranty Corporation.
Design, Implementation and Compliance of Health and Welfare Benefit Programs
Health and welfare benefit arrangements have dramatically increased in importance to both employers and employees. We assist our clients in the design and implementation of these valuable benefits to help employers and employees address escalating costs and increasing regulation. We provide ongoing counsel regarding health and welfare benefit arrangements, including compliance with ERISA, COBRA, Medicare, and HIPAA.
Guidance Related to Corporate Transactions
Evaluation of the financial impact of retirement and health and welfare plans is crucial in corporate mergers, acquisitions, and dispositions. These plans can be a significant asset or liability that must be taken into consideration when structuring a deal. We provide essential guidance regarding the benefit aspects of corporate transactions and negotiate the related terms of the underlying agreements. We also provide advice regarding the assimilation, implementation, or termination of the acquired benefit programs.
Benefits integration is often an overlooked aspect of corporate mergers and acquisitions. Failure to implement proper planning at the earliest stages of a transaction can lead to substantial headaches in the future. HSE’s employee benefits and executive compensation team has extensive experience in benefits integration prior to and following large acquisitions. We have the on-the-ground expertise to efficiently identify typical issues, administrative considerations and traps for the unwary.
Our team is often involved in the benefits aspects of a transaction even if the transaction is being handled by another law firm. We regularly work with other law firms in this capacity and can provide seamless support at all stages of the matter from reviewing acquisition documents to designing and implementing post-acquisition benefits and executive compensation arrangements. With respect to the integration process, our team implements a robust process with project plans, regular team meetings with the clients and vendors, and appropriate timelines to ensure a positive integration process. We are experienced in working with plan vendors to make sure that plans are integrated efficiently and correctly. We are familiar with the issues that can arise when working with vendors on integration projects and can ensure that everything is resolved practically and effectively. We also have project managers on staff who are available to oversee the implementation of the project and work directly with clients to ensure an orderly process.
Employee Benefits Litigation
Working with the firm’s Litigation Practice Group, we represent clients in litigation involving employee benefit matters. Our representation includes fiduciary liability claims, benefit disputes, disputes involving plan service providers, and Internal Revenue Service and U.S. Department of Labor controversies.
Executive Benefits Planning
Executives and professionals often need legal assistance in planning the form, timing, and tax impact of benefit payments. Working independently or with tax advisors, attorneys in the Employee Benefits and Executive Compensation Practice Group analyze the impact of minimum distribution rules, federal and state taxes, and rollover opportunities in order to assist individual clients in maximizing their benefits.
We understand the diverse and complex legal and business issues presented by executive employment agreements, including compensation arrangements, fringe benefits, severance pay, change-in-control protection, confidentiality and non-competition restrictions, and current industry practices. We assist employers in the design and drafting of executive employment agreements and related arrangements.
Our practice has substantial experience related to the design, implementation and operation of equity-based compensation arrangements, including stock options, stock appreciation rights, restricted stock, restricted stock units, employee stock purchase plans, phantom stock, and performance units, taking into account a myriad of tax, accounting, and securities law considerations.
Performance-based compensation plans can be an important incentive to attracting and retaining executives who have multiple employment options. Our practice can help companies structure a plan that is in compliance with federal regulations and that will provide appropriate tax benefits to both parties.
Nonqualified Deferred Compensation Arrangements
We are highly skilled in designing and implementing nonqualified deferred compensation arrangements, including plans such as top-hat, excess benefit, make-up/mirror, phantom stock, and those related to tax exempt employers. We assist employers in the selection, design and implementation of appropriate funding vehicles, including rabbi trusts, secular trusts, and other forms of security, and ensure that all plans are in compliance with Section 409A of the Internal Revenue Code.
We are involved in all aspects of the negotiation, design, and implementation of severance provisions, including change-in-control protection, golden handcuffs, confidentiality and non-competition.
Our practice has substantial experience related to the design, implementation, and operation of fringe-benefit arrangements, including housing assistance, relocation benefits, meals and lodging, employer-provided automobiles, qualified transportation fringe benefits, expense reimbursements, working-condition fringe benefits and no-additional-cost fringe benefits.
Change-in-control protection not only protects a company’s executives, it also benefits the company by allowing the executives to evaluate potential business combination opportunities in an unbiased manner, without being distracted or dissuaded by the potential impact on them individually. However, such protection raises a series of complex tax, corporate governance and SEC disclosure considerations. We understand the issues presented by change-in-control protection agreements and assist employers in the design and drafting of arrangements which achieve a desired balance of the corporation’s and the executive’s concerns.
Split-Dollar Life Insurance Arrangements
Creating an arrangement that mutually benefits, from a value and tax perspective, both the employer and employee is an important consideration in the realm of executive compensation. When appropriate under the situation, our attorneys guide clients in selecting the most appropriate split-dollar life insurance plan. The most common options include endorsement, assignment, equity, and reverse split-dollar.
Director Compensation Arrangements
We are regularly called on to design and implement the compensation arrangements of non-employee directors and consultants, including share-equivalent unit arrangements and performance-based compensation.
Compensation Committee Advice
The compensation committee of a public company must consider increasing legal considerations, including the fiduciary duties of its members, taxation, SEC disclosure, Sarbanes-Oxley, exchange listing rules, institutional shareholder policies, employee relations, and public image. We provide ongoing advice regarding executive compensation arrangements, including tax, corporate governance, and reporting issues.
We have substantial experience in the payroll withholding and reporting requirements applicable to executive compensation, including Form W-2 reporting, Form 1099 reporting, federal and state income tax withholding, and FICA taxation and withholding.
Compensating executives of tax-exempt organizations requires special attention to additional considerations, including Section 457 of the Internal Revenue Code. We work with attorneys in the firm’s Not-for-Profit Practice Area to help tax-exempt entities evaluate, design, and implement plans and arrangements that are sensitive to all of the unique legal considerations associated with tax-exempt organizations.