But big corporations use their power as leverage over average people by finding clever ways to steal people’s income, Ajamie said.
Companies have taken their power to a new level with something called the “top hat” plan, where companies hold back the compensation of high-level executives because they have a lot more leverage in negotiating power than the average employees.
Ajamie said the “top hat” clause is a complex formula that allows companies to add to the pool of people they can hold compensation from.
“And so, you see more companies come up with clever ways to find out how they can hold some of your compensation back, and a lot of companies have gotten away with that,” Ajamie said.
Wells Fargo argued in the Berry case that the forfeiture of deferred compensation was legal because the brokers involved were highly compensated employees covered by “top hat” retirement plans.
Ajamie said his firm and the attorneys on the case were among the first to challenge these deferred compensation policies. He said they are actively looking at and dissecting compensation plans to see if companies in general are holding back compensations that they should not be holding back.
Because of the Wells Fargo case, Ajamie said, they are seeing a lot of companies reviewing and reevaluating whether or not they can withhold compensation. “And some are tightening things up to see if they can do it or not,” he said.
But he noted that there are a host of companies that are not aware of this development in the law and are not doing anything.
He said financial advisors are reaching out to them and requesting that they look at their employers’ plan. “We have to examine them and try to determine if we can, how many of the employees are subject to the plan and what percentage are having their compensation withheld and which ones aren’t,” he said.