Although employers, particularly financial institutions, hedge funds and private equity funds, use bonus claw backs as a tool for protecting corporate interests, there has been a trend of increasing employee protection, which may make recovery more complex.
In her May 9, 2024 article in The Hedge Fund Journal, partner Gretchen Harders highlights key legal areas where significant legal challenges on bonus claw-backs are expected in the coming years. The article explores topics such as:
Contractual enforcement and choice of law
U.S. Federal and state laws protecting employee interests, including the new U.S. Federal Trade Commission non-compete clause ban
Tax treatment of the repayment and addressing deductions from the original payment, such as contributions to tax qualified plans
Special considerations for publicly listed companies for erroneously awarded incentive compensation
Clawbacks resulting from corporate crimes or wrongdoing