Archives for September 2013

Shareholders Will Benefit From New CEO Pay-Disclosure Rule

It’s no secret that executives of companies earn more than the average worker. However, the pay disparity between CEOs and workers has skyrocketed over the past 30 years. In 2012, CEOs in the S&P 500 index earned 354 times more pay than other workers, as compared to 30 years ago, when CEOs earned about 42 times more than the average worker.

Thanks to a recent vote by the U.S. Securities and Exchange Commission (“SEC”), CEO pay is likely to become more transparent to shareholders. On Wednesday, the SEC voted on a proposed rule that will require public companies to disclose how much their CEOs earn compared to their other workers. Public companies will be required to include a ratio of CEO-to-worker annual compensation in their regulatory filings.

The rule will deliver important additional information to shareholders. According to Commissioner Luis Aguilar, “As owners of public companies, shareholders have the right to know whether CEO pay multiples reflect CEO performance. Shareholders have the right to know how their company’s internal pay comparisons may impact employee morale, productivity, hiring, labor relations, succession planning, growth and incentives for risk-taking.”

The next step for the rule is a 60-day public comment period.

To schedule your free initial consultation, contact us online or call (619) 342-8000 today!

Law Firms May Hire Law Students as Unpaid Interns For Pro Bono Cases

Last week, the U.S. Department of Labor clarified its position on unpaid internships for law students at law firms, explaining that under federal law, unpaid internships are permissible in some circumstances.

The federal Fair Labor Standards Act (“FLSA”) generally does not permit individuals to volunteer to work unpaid for for-profit businesses such as law firms. The FLSA has a very broad definition of which individuals qualify as employees, and requires employers to pay their employees minimum wage and overtime (unless an exemption or exclusion applies).

However, law students are permitted to work as unpaid interns for private law firms under limited circumstances. The internship must be for the benefit of the intern, and must be similar to training which would be given in a law school clinical environment. The intern must not displace regular employees, and must work on non-fee-generating pro bono cases so that the law firm derives no immediate advantage from the internship. Additionally, the intern and law firm must understand that the intern is not entitled to wages, and that the intern is not necessarily entitled to a job at the end of the internship.

Recent law school graduates who have not yet passed any bar examination are not permitted to work as unpaid interns under the same circumstances. The Department of Labor reasoned that graduates have already completed their legal education, so law schools would not have the same ability to act as intermediaries between graduate interns and law firms.

To schedule your free initial consultation, contact us online or call (619) 342-8000 today!

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