Claw Backs And Preemption

Last week, the Securities and Exchange Commission announced that it was reopening the comment period on proposed rules for listing standards for the recovery of erroneously awarded compensation.   One issue that I doubt that they are looking for is whether stock exchange listing rules can preempt state labor and employment laws.   This was an issue that I raised over six years ago in a post.  Section 221 of the California Labor Code has long provided that "It shall be unlawful for any employer to collect or receive from an employee any part of wages theretofore paid by said employer to said employee".  In this regard, some readers may recall this 2013 post discussing Judge Diarmuid F. O'Scannlain's opinion in McDaniel v. Wells Fargo Invs., LLC, 717 F.3d 668 (9th Cir. 2013) in which he states that SRO rules have the "force of law".