Compliance with increasingly complex state and federal laws regulating employee benefits and compensation requires business organizations to seek up-to-the-minute advice from their compensation and benefits counsel. The Firm's Employee Benefits & Executive Compensation practice group handles all aspects of compensation and benefits law, design, consulting and application. The group has the knowledge, depth and experience to guide businesses, governmental entities and tax-exempt organizations through the complicated issues arising in connection with the design, development, implementation, maintenance, defense, and termination of employee compensation and benefit plans and arrangements.
The Troutman Sanders Team
Successful businesses in the developing global arena attract and retain highly qualified and motivated individuals. Employers who achieve these goals recognize the need to go beyond merely delivering the monthly paycheck. Competitive employers utilize a "total compensation" philosophy and now offer their employees a comprehensive package of retirement, health and welfare, compensation, and incentive benefit plans. Through the lawyers in its Employee Benefits & Executive Compensation Practice Group, Troutman Sanders LLP provides legal and consulting advice on a broad range of issues impacting employee benefit plans and compensation, including compensation planning and design; the impact of tax, labor, ERISA, securities and fiduciary laws on employee compensation; benefit arrangements and fund investments; and the defense of individuals and entities in both civil and criminal ERISA matters. Following is a description of the different types of services and assistance provided in this regard.
Tax-qualified Retirement Plan
The most common vehicle used by businesses for attracting and retaining qualified employees at all levels is a tax-qualified retirement plan. The group has extensive experience counseling employers with respect to the design, installation, maintenance and termination of all types of pension, profit sharing, 401(k) and stock bonus plans. The group also represents and advises qualified retirement plan fiduciaries with respect to administration, investment and claims matters.
Examples of recent qualified plan matters handled by the group include:
- Investigation and counseling of clients regarding administrative errors, followed by submissions to the Internal Revenue Service, if appropriate, under its self-correction program.
- Advising named fiduciaries for numerous tax-qualified plans having over $10 billion in assets with respect to all issues related to asset investment.
- Negotiating and drafting administrative services agreements with third party administrators and trustees.
- Designing numerous plan mergers and advising clients on implementation.
- Designing group master plans for banking associations and providing day-to-day counsel on sponsorship of the plans.
- Representation of plan sponsors and trustees of ESOPs during corporate transactions.
- Performance of a comprehensive internal fiduciary audit of plan compliance on behalf of plan administrative committees.
- Representation of large and small companies in IRS and DOL plan audits.
- Day-to-day representation of a sponsor of a 220,000 participant 401(k) plan.
- Day-to-day representation of a sponsor of a $6 billion pension fund.
- Design and implementation of a retirement program for an employee leasing corporation.
- Conversion of traditional pension plans to cash balance plans.
- Designing 401(k) plans that invest in company stock and providing counsel regarding SEC registration and available exemptions.
Health & Welfare Plans
Employers continue to face the difficulties of providing competitive group insurance while simultaneously attempting to control the costs associated with maintaining an optimal work force. The development and implementation by an employer of a cost effective, comprehensive mix of welfare plans, such as group health, life and disability plans, flex plans, cafeteria plans and severance plans is a key ingredient in successfully achieving these fundamental business objectives. The group is experienced in welfare benefit plan design and compliance issues; COBRA and HIPAA (non-discrimination and privacy) compliance issues; flex plans; cafeteria plans and health care cost contain-ment programs; designing and funding retiree health plans; and the legal aspects of FASB accounting procedures for post-retirement benefits.
Following are examples of recent welfare plan issues handled by the group:
- Representation of numerous franchisors regarding multiple employer welfare arrangement (MEWA) issues related to provision of group health benefits to franchisees.
- Providing counsel concerning establishment, maintenance and termination of voluntary employee beneficiary associations (VEBAs).
- Drafting and negotiating administrative services agreements for plan sponsors and third party administrators.
- Performance of compliance audits.
- Day-to-day representation of a number of self-insured medical plans, which includes assistance with HIPAA, COBRA, FMLA, and reporting and disclosure issues.
- Long-term representation of a major accident and health insurance company in connection with tax and ERISA issues involved in product design and distribution.
- Advising clients regarding ERISA and tax aspects of insurance company demutualization.
Executive Compensation
The competitive marketplace for executive talent requires the creative use of an array of compensation programs designed to attract, motivate and retain key personnel. The group offers a broad depth of experience in designing, implementing and maintaining all types of executive compensation and incentive programs, including equity-based or measured plans. Such plans include restricted stock, phantom stock, stock options and stock appreciation rights plans and arrangements, performance-based bonus plans, supplemental retirement and severance plans, non-qualified deferred compensation arrangements, change-in-control arrangements, as well as individual employment and consulting agreements. In addition to compensation design for purposes of tax considerations, the group handles executive compensation issues arising under the Securities Act of 1933 and the Securities Exchange Act of 1934, including SEC disclosure and reporting requirements.
Examples of recent matters handled by the group in this area include:
- Design of complex change-in-control programs for several publicly held clients.
- Advising clients concerning executive eligibility criteria for non-qualified, deferred compensation plans.
- Advising clients about obligations to communicate future benefit arrangements such as severance plans and early retirement programs.
- Design and implementation of tax-qualified 401(k) plan and tandem non-qualified 401(k) wrap plan.
- Design of equity-measured bonus programs for a wholly owned subsidiary of a publicly held company and private, closely held companies.
- Assisting clients with FICA withholding compliance for deferred compensation plans.
- Design and implementation of an incentive stock program for a publicly held company as part of its outside directors' compensation package.
Corporate Reorganizations & Downsizing
Employers faced with an oversized workforce must wrestle with the difficult issues of downsizing or reorganizing. The group has extensive experience in the de-selection process, employee communications, the design and implementation of broad-based severance plans, and the release of potential claims.
Examples of recent matters handled by the group in this area include:
- Establishment of numerous "early out" programs under tax-qualified pension plans.
- Design of numerous voluntary and involuntary severance plans for targeted business units.
- Representation of companies and executives in negotiating benefits and releases in executive terminations.
Public Plans
The group has a substantial practice representing many different types of public entities. The practice covers all issues arising with respect to retirement and welfare plans. In providing these services, the group has developed a unique sensitivity to and perspective of public plan matters.
Recent matters handled by the group include:
- Outside counsel for retirement and welfare plan matters for a state retirement system.
- Defined benefit and defined contribution plan matters for several city governments.
- Retirement and welfare plan matters for city school board.
- Outside counsel for cash match plan for 15 state colleges and universities.
- General counsel for State Optional Retirement Plan for Higher Education which serves as alternative defined benefit plan for faculty members.
- General counsel for state medical school retirement and welfare plans.
ERISA Litigation
Troutman Sanders has experience in successfully defending individuals and entities in civil and criminal ERISA matters, as well as acting as an expert witness in such matters.
Recent litigation matters successfully handled by members of the group include:
- Representation of numerous clients defending claims for benefits, including long-term disability benefits, life insurance benefits and pension benefits.
- Defense of client in suit by stop-loss insurance carrier for wrongful coverage of former employee's COBRA claims under client's self-insured health plan.
- Defense of client in claim by executive for non-payment of alleged non-qualified, deferred compensation benefits.
- Representation of plaintiff in a multi-million dollar interpleader class action lawsuit concerning unallocated assets existing upon plan termination.
- Representation of plan sponsor in a three-year Department of Justice criminal investigation of a 25,000 participant pension plan which resulted in no criminal action being filed against the plan sponsor.
- Participation in trial court decision of ERISA class action affirmed at IUE et al. v. Murata Erie North America, Inc., 46 F.3d 1117 (3rd Cir. 1994).
- Performance of brief writer and oral advocate duties in the asset reversion cases of IUE et al. v. Murata Erie North America, Inc., 980 F.2d 889 (3rd Cir. 1992) and United Steelworkers of America et al. v. Fort Pitt Bridge and its Electric Weld Division, Division of Spang Industries, Inc., et al. (W.D. PA. Civil Action Nos. 88-2548, 90- 1805, 91-1041).
Mergers & Acquisitions
Virtually every corporate merger or acquisition involves numerous employee benefits and compensation issues. The group is routinely involved in all phases of these complex transactions, including the conduct of due diligence, drafting and negotiation of contract terms and conditions, analyzing and planning for the transaction's impact upon the compensation and benefits structures of the surviving entity, and golden parachute analysis. The group also has extensive experience in planning and structuring plan spin-offs, mergers and terminations. In addition, the group works with clients to resolve collectively bargained union retirement and welfare benefit plan issues and to design ongoing, post-transaction compensation and benefits programs.
Mergers and acquisition matters that the group has handled include:
- Representation of numerous clients acquiring assets that included the transfer of employment of union employees and assumption of such employees' collective bargaining agreements.
- Representation of clients selling assets, or a business unit, while retaining the work-force up to or beyond the point of sale.
- Design of complex benefit offset arrangements to integrate buyer and seller's benefits programs.
- Representation of several public companies regarding all pension and welfare benefit aspects of spinning off subsidiaries to their shareholders.
- Negotiating, for several buyers, purchase price adjustments related to assumed benefit liabilities.
- Advising clients with respect to communications about transitioning benefits upon a corporate transaction.
Estate Planning for Retirement Benefits
When it comes to estate planning, one of the largest assets most individuals own is their retirement benefits.Yet, most individuals give little to no thought to the estate tax implications of these benefits. The group regularly reviews and evaluates individual estate plans as they relate to retirement benefits (including IRAs), providing advice regarding beneficiary designations and designing and implementing compensation planning techniques to transfer ownership interests between generations of owners.
Employment Status Counseling
In today's marketplace, workers are no longer simply "employees." Employers now have the choice of hiring an employee, a leased employee, a temporary employee or an independent contractor. The group assists clients with the proper classification of its workers; advises clients on the income tax, FICA and FUTA tax withholding requirements for its workers; and offers assistance and expertise in audits by the Internal Revenue Service and the Department of Labor.
Recent examples of the group's work in this area include:
- Assisting clients in the establishment of policy and procedure for hiring and use of temporary and leased employees.
- Addressing multi-state, federal tax, unemployment and workers' compensation issues with respect to leased and temporary employees.
