Innovative Compensation Plans to Retain Key Executives

The stock market is volatile and unpredictable, but the basic economic indicators are solid. The job market is as tight as it has ever been, particularly in major metro areas like San Francisco and New York City.  When was the last time you looked at compensation options for your key players?  Attracting, developing and retaining top talent is always important, but especially with the nation at nearly full employment as it is today.

While it is true there has been greater regulation around executive incentive plans in recent years, there are still some interesting and viable options employers should consider. Many organizations cannot or are not interested in setting up stock option plans or any type of equity transfer plan.  But the right kind of executive compensation plan can supplement a 401(k) or 403(b) plan and can provide an interesting tier of compensation that competitors may not offer.

Non-Qualified Plans

There are several major types of non-qualified plans but in general a non-qualified plan is a type of employer sponsored retirement plan which falls outside the employee retirement income security act and is exempt from the discriminatory and top-heavy testing that qualified plans are subject to. While contributions into these plans are still taxable to the employee, they are tax-deferred, the hope being that during retirement the key employee will be in a lower tax bracket than they were while working. Non-qualified plans are a good way of creating incentive and retention strategies for key players and executives.

Deferred Compensation Plans

Deferred compensation plans enable you to add a tier of compensation over and above the limits of a 401(k) or 403(b) plan. There are several ways to design non-qualified deferred compensation plans, but the overall goal is to allow the employee to defer some of their income now, in order to receive that income later during retirement and receive the tax advantage. Many programs can offer a way to defer compensation on a pre-tax basis that can grow tax deferred and enhance the personal financial program for key executives.  The decision to defer compensation must be made before the income is paid and there are important regulations removing funds during a distribution event.  It is also important to note that these plans are essentially a contract obligation between the company and the employee and have limited protections and regulation under ERISA.  A well-designed deferred compensation plan can help an executive decide how much compensation will be deferred and when the income might be needed.  For example, timing can be set up to pay for college expenses or a second home with the advantage of reducing current taxable income.  Most of these plans have an insurance component which can provide protection for both the individual executive as well as the company.

Please contact ABD SharedHR if you have an interest in this type of benefit for your key players executives.

Paul Finkle, SPHR, CMC – Executive Vice President

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

Are California Employers Ready for New Sexual Harassment Training Requirements?

On the heels of the #MeToo movement, California is taking broad steps to increase requirements for businesses. On September 30th, 2018, Governor Brown signed a variety of bills on the topic of sexual harassment, among them was SB 1343.  This bill changed how employers are required to address the topic of sexual harassment in two ways: training for your employees and how to draft company policies.

Training Requirements         

While California has required employers to provide training to supervisors on the topic of sexual harassment previously, SB 1343 changes those requirements in several ways:

  • Previously companies with 50 or more employees were required to provide sexual harassment training to supervisors every two years, now employers with five or more employees must provide training;
  • In addition to supervisors, regular, temporary, and seasonal employees are also required to participate in training. Regular employees must receive training within six months of hire. Seasonal and temporary employees must be trained within thirty calendar days from date of hire or before they work 100 hours, whichever comes first;
  • Training must be interactive and include guidance on prevention of sexual harassment, as well as what resources victims of sexual harassment have to report and stop harassment;
  • Training must also include information on preventing abusive conduct, education on harassment based on gender identity, gender expression, and sexual orientation;
  • Training for supervisors must be two hours long and one hour long for all other employees;
  • Employers have between January 1st, 2019 through January 1st, 2020 to provide this training to their employees and every two years after that.

Policy Language Requirements

While the Department of Fair Employment and Housing (DFEH) has produced an information sheet on sexual harassment that employers can provide employees in order to be compliant with SB 1343, the bill does allow for employers to provide their own in information as long as it meets the requirements of the bill. If your company handbook has a policy regarding sexual harassment, it must discuss:

  • The illegality of sexual harassment,
  • The definition of sexual harassment under state and federal law,
  • Descriptions and examples of what could constitute sexual harassment,
  • The internal complaint process or procedure of the employer,
  • Legal remedies and complaint process available through the DFEH,
  • Directions on how to contact the DFEH,
  • Descriptions of what constitutes retaliation and protections against retaliation for reporting sexual harassment or cooperating with an investigation, and
  • A link to, or web address for, online sexual harassment training courses

While many companies do have their own policies about sexual harassment, SB 1343 requires some very specific information, such as the description under the laws and information about the DFEH, that may be missing. As 2019 begins, a thorough review of your policy language will better help define your company’s views regarding sexual harassment and to make sure you’re compliant with the new requirements.

Next Steps

  • Find a vendor online that offers updated, on demand sexual harassment education. Make sure that vendor and track and report on who has complete the training;
  • Begin distributing the Department of Fair Employment and Housing information sheet on SB 1343;
  • Review your handbook and policies to ensure they educate employees about these new training requirements and point employees to correct resources for learning more about workplace harassment;
  • Consider setting up an HR helpline so employees can report any kind of workplace harassment

Contact ABD SharedHR for help with next steps!

Matt Marovich – HR Consultant

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services