ML BeneBits

On April 23, the Federal Trade Commission (FTC) approved by a 3-2 vote a Final Rule that, if it becomes effective, will ban almost all noncompete clauses for nearly all workers. This is the first in a blog series exploring the fallout from the sweeping ban, specifically in terms of executive compensation and employee benefits. In Part 1, we address the first important threshold questions posed by the Final Rule. Future posts in the series will address the wide scope of the Final Rule and the types of executive compensation arrangements it prohibits; the types of arrangements that survive the Final Rule; and specific issues related to equity compensation, corporate transactions, Section 280G of the Internal Revenue Code (Code), and other compensation-related tax issues.

The Securities and Exchange Commission (SEC) is continuing its focus on disclosure of executive perquisites—and aircraft usage in particular—in registration statements, periodic reports, and proxy statements.

The US Department of Labor (DOL) final amendment to Prohibited Transaction Class Exemption 84-14, the so-called QPAM Exemption that is commonly relied upon by investment managers for ERISA-governed employee benefit plans and individual retirement accounts to avoid potential prohibited transaction issues, was published in the Federal Register on April 3, with the changes becoming effective on June 17, 2024.

US state and federal laws have increasingly sought to regulate environmental, social, and governance (ESG) investing—a trend that continued in 2023. This increased regulatory focus has impacted benefit plans, including ERISA plans and, especially, public retirement plans.

Anti-ESG state legislation continues to focus on public retirement plan investing and asset management. Over the last year, 18 states have proposed or adopted state legislation or regulation limiting the ability of the state government, including public retirement plans, to do business with entities that are identified as “boycotting” certain industries based on environmental, social, and governance (ESG) criteria. Since our last update, four states have either adopted or proposed legislation or other forms of regulation that would restrict ESG activities using state assets.

A group of state treasurers and state attorneys general (AG) have raised concerns that certain environmental, social, and governance (ESG) features of certain fund disclosures and other marketing collateral could create liability under state Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) and Anti-Boycott, Divestment, and Sanctions (Anti-BDS) laws. This is an issue that could impact government retirement plans and/or asset managers to public and private retirement plans.

This post serves as an update to our prior blog post analyzing the impact of this anti-ESG state legislation on public retirement plan investing.

At the same time that the federal government, through the US Department of Labor, appears to be easing retirement plan fiduciaries’ paths to considering certain environmental, social, or governance (ESG) factors in making investment decisions, some states are passing legislation that would prohibit the states from doing business with managers who invest based on ESG criteria.

The US Department of Labor (DOL) recently announced that it is seeking comment on the impact of climate change on retirement security and what actions, if any, the agency should take to protect retirement savings from such risks.

New York Governor Kathy Hochul enacted an auto-IRA law, effective October 21, which requires certain New York employers to either offer their employees a qualified retirement plan or join the state-run IRA program. The new law amends the New York’s Secure Choice Savings Program, a voluntary IRA program that has been in place since 2018 and is run by the New York State Secure Choice Savings Program Board.