Deals and People May 21, 2019

Janet Dhillon Sworn in as EEOC Chair

As Chair, Dhillon will continue to ensure policies are enforced to enable older individuals to work as long as they want and to prevent age discriminatory retirement programs and policies.

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Janet Dhillon was sworn in today as the chair of the U.S. Equal Employment Opportunity Commission (EEOC) by Acting Chair Victoria A. Lipnic.

She will serve as the 16th Chair of the EEOC. Dhillon was first nominated by President Donald J. Trump on June 29, 2017, and confirmed on May 8, 2019. Her term will end on July 1, 2022.

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The EEOC may be mainly thought of as an enforcer against gender, racial and national origin bias in workplace hiring and firing, but it also takes actions that affect retirement plans and individuals who want to continue working into retirement.

A Gallup poll found 74% of employees plan to work past their retirement age, and the EEOC has cracked down not only on employers that show age bias in hiring, but also on retirement policies that discriminate against older workers and discriminatory early retirement incentive plans. In 2017, coinciding with the 50th anniversary of the Age Discrimination in Employment Act (ADEA), the EEOC held a hearing to discuss what is working and what is not. As witnesses pointed out, some employees want to keep working either for engagement reasons or financial reasons, and some want to retire from their current jobs to pursue ‘encore’ careers. All witnesses noted that age discrimination in employment is still ongoing.

As chair, Dhillon will continue to ensure policies are enforced to enable older individuals to work as long as they want and to prevent age discriminatory retirement programs and policies.

Dhillon practiced law in the private sector for more than 25 years. Prior to joining the EEOC, Dhillon served as executive vice president, general counsel and corporate secretary of Burlington Stores, Inc. Previously, she served as executive vice president, general counsel and corporate secretary of JC Penney Company, Inc., and before that, as senior vice president, general counsel and chief compliance officer of US Airways Group, Inc.

Dhillon began her legal career at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where she practiced for 13 years. She is a graduate of Occidental College, magna cum laude, and the UCLA School of Law, where she ranked first in her class.

Dhillon joins Commissioners Lipnic, who has served as Acting Chair since January 2017, and Charlotte Burrows. With her swearing-in, the Commission regains a quorum that it lost on January 3.
Ask the Experts May 21, 2019

(b)lines Ask the Experts – Effect of Overtime Rules on Plan Administration

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning 403(b) plans and regulations.
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“I recently read that the DOL is proposing a new overtime rule. As proposed, will that new rule have an impact on the 403(b) retirement plan that we sponsor?”

 

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Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

 

The Department of Labor (DOL) has actually proposed two rules which affect overtime. The first proposal would increase the salary thresholds for determining eligibility for overtime, while the second proposal would clarify the payments which are included in the “regular rate” used to calculate an employee’s overtime rate of pay. 

 

Under current law, to be exempt from the overtime requirements, an employee generally must (1) be a salaried employee, (2) with a weekly salary of $455 or more, (3) who primarily performs executive, administrative, or professional duties. The first proposal would increase the weekly salary threshold to $679 per week. (There is also a separate highly compensated employee (HCE) test, the threshold for which would increase under the proposal.) If implemented, this proposal would undoubtedly increase the number of employees who are required to receive overtime pay for hours worked in excess of 40 in a week. Therefore, if the plan’s definition of compensation includes overtime, these employees would have increased compensation on which contributions to a 403(b) plan are based.

 

The second proposal clarifies items that may be excluded from an employee’s regular rate of pay, such as payments for unused paid leave and certain reimbursed expenses and discretionary bonuses. As this proposal is generally intended to merely clarify the payments that are included in the regular rate, there should be minimal (if any) impact on compensation under 403(b) plans.

 

Many plans include overtime in the plan’s definition of compensation. Further, overtime must be included in calculating compensation for certain Code purposes, such as the compensation limit under Section 415. Therefore, while these two proposals do not directly effect a change to the definition of compensation for purposes of 403(b) plans, there could be impacts on the amount of “includible compensation” on which contributions will be calculated for some employees. Finally, for plans that EXCLUDE overtime from their definition of compensation and are subject to nondiscrimination testing, such testing may be impacted by the proposed rules.

 

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@strategic-i.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

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