I

104TH CONGRESS

2D SESSION H. R. 4252

To establish labor provisions and tax provisions for small-business concerns.

IN THE HOUSE OF REPRESENTATIVES

SEPTEMBER 27, 1996

Mr. HEFLEY introduced the following bill; which was referred to the Committee on Economic and Educational Opportunities, and in addition to the

Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To establish labor provisions and tax provisions for smallbusiness concerns.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION. 1. SHORT TITLE.

4 This Act may be referred to as the ‘‘Small Business

5 Emancipation Act of 1996’’.

6 SEC. 2. DEFINITION.

7 For purposes of this Act the term small-business con8 cern has the meaning given such term in section 3(a)(1)

9 of the Small Business Act (15 U.S.C. 632(a)(1)).
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1 TITLE I—LABOR PROVISIONS

2 SEC. 101. SIMPLIFICATION OF EMPLOYEE’S ‘‘REGULAR

3 RATE’’ FOR PURPOSES OF CALCULATING

4 OVERTIME COMPENSATION.

5 Notwithstanding 7(e) of the Fair Labor Standards

6 Act of 1938 (29 U.S.C. 207(e)), the ‘‘regular rate’’ at

7 which an employee of a small-business concern is employed

8 shall not be deemed to include sums paid in recognition

9 of services performed during a given period if the pay10 ments are made to reward an employee or group of em11 ployees for meeting or exceeding the productivity, quality,

12 efficiency, or sales goals as specified in a gainsharing, in13 centive bonus, commission, or performance contingent

14 bonus plan.

15 SEC. 102. COMPENSATORY TIME.

16 Notwithstanding section 7(o) of the Fair Labor

17 Standards Act of 1938 (29 U.S.C. 207(o))—

18 (1) An employee of a small-business concern

19 may receive, in accordance with this subsection and

20 in lieu of monetary overtime compensation, compensatory time off at a rate not less than 11 21 ⁄2 hours for

22 each hour of employment for which overtime com23 pensation is required by this subsection.

24 (2) An employer may provide compensatory

25 time under paragraph (1) only pursuant to—
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1 (A) applicable provisions of a collective

2 bargaining agreement, memorandum of under3 standing, or any other agreement between the

4 employer and representative of such employees;

5 or

6 (B) in the case of employees not covered

7 by subparagraph (A), an agreement or under8 standing arrived at between the employer and

9 employee before the performance of the work.

10 (3) An employee may accrue not more than 240

11 hours of compensatory time. Not later than January

12 31 of each calendar year, the employee’s employer

13 shall provide monetary compensation for any com14 pensatory time off accrued during the preceding cal15 endar year which was not used prior to December 31

of the preceding year at a rate not less than 11 16 ⁄2

17 times the regular rate earned by the employee at the

18 time the employee receives such payment. An em19 ployer may designate and communicate to the em20 ployer’s employees a 12-month period other than the

21 calendar year, in which case such compensation shall

22 be provided not later than 31 days after the end of

23 such 12-month period.

24 (4) An employee who has accrued compensatory

25 time off authorized to be provided under paragraph
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1 (1) shall, upon termination of employment, be paid

2 for the unused compensatory time at a rate of com3 pensation not less than—

4 (A) the average regular rate received by

5 such employee during the last 3 years of the

6 employee’s employment, or

7 (B) the final regular rate received by such

8 employee, whichever is higher.

9 (5) An employee—

10 (A) who has accrued compensatory time

11 off authorized to be provided under paragraph

12 (1), and

13 (B) who has requested the use of such

14 compensatory time,

15 shall be permitted by the employee’s employer to use such

16 time within a reasonable period after making the request

17 if the use of the compensatory time does not unduly dis18 rupt the operations of the employer.

19 (6) For purposes of this subsection the terms

20 ‘‘compensatory time’’ and ‘‘compensatory time off’’

21 mean hours during which an employee is not work22 ing, which are not counted as hours worked during

23 the applicable workweek or other work period for

24 purposes of overtime compensation, and for which
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1 the employee is compensated at the employee’s regu2 lar rate.

3 SEC. 103. FLEXIBLE AND COMPRESSED SCHEDULES.

4 (a) COMPRESSED SCHEDULES.—Notwithstanding

5 any other provision of law, a small-business concern em6 ployer may establish programs that allow the use of a com7 pressed schedule that consists of—

8 (1) in the case of a schedule of a full-time em9 ployee, a 160-hour basic work requirement, over a 4-

10 week period, that is scheduled for less than 20 work11 days; and

12 (2) in the case of a schedule of a part-time em13 ployee, a basic work requirement of less than 160

14 hours, over a 4-week period, that is scheduled for

15 less than 20 workdays.

16 (b) FLEXIBLE SCHEDULES.—Notwithstanding any

17 other provision of law, a small-business concern employer

18 may establish programs that allow the use of flexible

19 schedules that include—

20 (1) designated hours and days during

21 which an employee on such a schedule must be

22 present for work; and

23 (2) designated hours during which an em24 ployee on such a schedule may elect the time of

25 the arrival of such employee at and departure
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1 of such employee from work, solely for such

2 purpose or, if and to the extent permitted, for

3 the purpose of accumulating credit hours to re4 duce the length of the workweek or another

5 workday.

6 SEC. 104. SMALL-BUSINESS CONCERN AUDIT EXEMPTION.

7 Notwithstanding any other provision of law, a small8 business concern shall not be required to disclose any in9 formation obtained through a voluntary internal audit to

10 any regulatory agency.

11 SEC. 105. EXEMPTION FROM THE DAVIS-BACON ACT.

12 The provisions of the Act of March 3, 1931 (40

13 U.S.C. 276a et seq.) (commonly referred to as the Davis14 Bacon Act) shall not apply to any laborers or mechanics

15 employed by small-business concerns.

16 SEC. 106. OCCUPATIONAL SAFETY AND HEALTH STAND17 ARDS.

18 (a) STANDARD BASIS.—Section 6(b) of the Occupa19 tional Safety and Health Act (29 U.S.C. 655(b)) is

20 amended by inserting after paragraph (8) the following:

21 ‘‘(9) In establishing standards under this sec22 tion, the Secretary shall consider and make findings

23 concerning whether there is a reasonable relationship

24 between the costs and benefits of the standard, and
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1 the particular effects of the standard on small-busi2 ness concerns.’’.

3 (b) VIOLATIONS.—Section 17 of the Occupational

4 Safety and Health Act (29 U.S.C. 666) is amended by

5 redesignating subsection (l) as subsection (m) inserting

6 after subsection (k) the following:

7 ‘‘(l) In the case of any small-business concern em8 ployer who received a citation for a violation of the re9 quirements of section 5, any standard, rule, or order pro10 mulgated pursuant to section 6 or of any regulations pre11 scribed under this Act, the Secretary shall waive up to

12 100 percent of such penalty to the extent that the em13 ployer uses the amount which would have been paid as

14 penalty for correction of the violation. This subsection

15 shall apply where

16 ‘‘(1) the employer has made a good faith effort

17 to comply with applicable regulation, and

18 ‘‘(2) the violation does not constitute a signifi19 cant threat to an employee’s health or safety or is

20 not a criminal violation.’’.

21 (c) EMPLOYEE PARTICIPATION.—The Occupational

22 Safety and Health Act (29 U.S.C. 651 et seq.) is amended

23 by adding at the end the following:

24 ‘‘EMPLOYEE PARTICIPATION

25 ‘‘SEC. 33. In order to carry out the purposes of this

26 Act to encourage employers and employees in their efforts
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1 to reduce the number of occupational safety and health

2 hazards, an employee participation committee or other

3 mechanism—

4 ‘‘(1) in which employees participate,

5 ‘‘(2) which exists for the purpose, in whole or

6 in part, of dealing with employees concerning the

7 safety or health of working conditions or related

8 matters, and

9 ‘‘(3) which does not have, claim, or seek author10 ity to negotiate or enter into collective bargaining

11 agreements with an employer or to amend existing

12 collective bargaining agreements between and em13 ployer and any labor organization,

14 shall not constitute a ‘labor organization’ for purposes of

15 section 8(a)(2) of the National Labor Relations Act or a

16 representative for purposes of sections 1 and 2 of the Rail17 way Labor Act.’’.

18 (d) SMALL BUSINESS ASSISTANCE AND TRAINING.—

19 The Occupational Safety and Health Act, as amended by

20 paragraph (3), is amended by adding after section 33 the

21 following:

22 ‘‘SMALL BUSINESS ASSISTANCE AND TRAINING

23 ‘‘SEC. 34. (a) The Secretary shall establish and im24 plement a program to provide technical assistance and

25 consultative services for employers and employees, either

26 directly or by grant or contract, concerning worksite safety
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1 and health and compliance with this Act. Such assistance

2 shall be targeted at small employers and the most hazard3 ous industries.

4 ‘‘(b) This subsection authorizes the consultative serv5 ices to employers provided under cooperative agreements

6 between the States and the Occupational Safety and

7 Health Administration and described in part 1908 of title

8 39 of the Code of Federal Regulations.

9 ‘‘(c) Not less than one-fourth of the annual appro10 priation made to the Secretary to carry out this Act shall

11 be expended for the purposes described in this section.’’.

12 (e) VOLUNTARY PROTECTION PROGRAM AWARD.—

13 The Occupational Safety and Health Act, as amended by

14 paragraph (4), is amended by adding after section 34 the

15 following:

16 ‘‘VOLUNTARY PROTECTION PROGRAM AWARD

17 ‘‘SEC. 35. (a) The Secretary shall establish an award

18 which shall periodically be made to small-business con19 cerns which have implemented particularly effective ap20 proaches to addressing occupational safety and health in

21 the workplace, including those which provide for effective

22 employee involvement in improving safety and health and

23 which are as a consequence deserving of special recogni24 tion.

25 ‘‘(b) A company or organization to which an award

26 is made under subsection (a) and which agrees to help
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1 other American companies or organizations improve their

2 occupational safety and health may publicize its receipt

3 of such award and use the award in its advertising, but

4 it shall be ineligible to receive another such award in the

5 same category for a period of 5 years.

6 ‘‘(c)(1) Subject to paragraph (2), separate awards

7 shall be made to qualifying organizations and companies

8 in each of the following categories—

9 ‘‘(A) manufacturing;

10 ‘‘(B) agricultural;

11 ‘‘(C) concerns providing services;

12 ‘‘(D) retail; and

13 ‘‘(E) construction.

14 ‘‘(2) Not more than 1 award may be made within

15 any subcategory in any year (and no award shall be made

16 within any category if there are no qualifying enterprises

17 in that category.

18 ‘‘(d) An organization or company may qualify for an

19 award under subsection (a) only if it—

20 ‘‘(1) applies to the Secretary in writing, for the

21 award,

22 ‘‘(2) permits a rigorous evaluation of its occu23 pational safety and health operations, and
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1 ‘‘(3) meets such requirements and specifications

2 as the Secretary determines to be appropriate to

3 achieve the objectives of this section.

4 In applying paragraph (3) with respect to any organiza5 tion or company, the Secretary shall rely upon an intensive

6 evaluation of the occupational safety and health operation.

7 The examination should encompass all aspects of the orga8 nization’s or company’s current occupational safety and

9 health practice. The award shall be given only to organiza10 tions and companies which have made outstanding im11 provements in their occupational safety and health prac12 tices and which demonstrate effective occupational safety

13 and health practices through the training and involvement

14 of all levels of personnel.

15 ‘‘(e) The Secretary shall ensure that all program par16 ticipants receive the complete results of their audits as

17 well as detailed explanations of all suggestions for im18 provements. The Secretary shall also provide information

19 about the awards and the successful quality improvement

20 strategies and programs of the award-winning participants

21 to all participants and other appropriate groups.

22 ‘‘(f) The Secretary is authorized to seek and accept

23 gifts from public and private sources to carry out the pro24 gram under this section. If additional sums are needed

25 to cover the full cost of the program, the Secretary shall
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1 impose fees upon the organizations and companies apply2 ing for the award in amounts sufficient to provide such

3 additional sums.

4 ‘‘(g) The Secretary shall prepare and submit to the

5 President and the Congress, within 3 years after the date

6 of the enactment of this section, a report on the progress,

7 findings, and conclusions of activities conducted pursuant

8 to this section along with recommendations for possible

9 modifications thereof.’’.

10 SEC. 107. PROHIBITION OF PREFERENTIAL TREATMENT.

11 (a) It shall be an unlawful employment practice for

12 any small business concern employer to grant preferential

13 treatment to any individual or group with respect to selec14 tion for, discharge from, compensation for, or the terms,

15 conditions, or privileges of, employment or union member16 ship, on the basis of the race, color, religion, sex, or na17 tional origin of such individual or group, for any purpose,

18 except as provided in subsection (b).

19 (b) It shall not be unlawful employment practice for

20 an entity described in subsection (a) to undertake affirma21 tive action designed to recruit individuals of an underrep22 resented race, color, religion, sex, or national origin, to

23 expand the applicant pool of the individuals seeking em24 ployment or union membership with the entity.
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1 (c) Nothing in the amendments made by this sub2 section shall be construed to affect the authority of courts

3 to remedy intentional discrimination under section 706(g)

4 of the Civil Rights Act of 1964 (Public Law 88–352).

5 TITLE II—TAX PROVISIONS

6 SEC. 201. EXCLUSION FROM GROSS ESTATE OF INTERESTS

7 IN CERTAIN SMALL BUSINESSES.

8 (a) IN GENERAL.—Part III of subchapter A of chap9 ter 11 of the Internal Revenue Code of 1986 (relating to

10 gross estate) is amended by adding at the end the follow11 ing new section:

12 ‘‘SEC. 2047. EXCLUSION OF QUALIFIED SMALL BUSINESS IN13 TERESTS.

14 ‘‘(a) IN GENERAL.—If the executor elects the appli15 cation of this section, the value of the gross estate shall

16 not include the value of the qualified small business inter17 ests of the decedent which are otherwise includible in the

18 estate.

19 ‘‘(b) QUALIFIED SMALL BUSINESS INTEREST.—For

20 purposes of this section—

21 ‘‘(1) IN GENERAL.—The term ‘qualified small

22 business interest’ means—

23 ‘‘(A) an interest as a proprietor in a small24 business concern which is a trade or business

25 carried on as a proprietorship, or
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1 ‘‘(B) an interest as a partner in a small2 business concern which is a partnership, or

3 stock in a small-business concern which is a

4 corporation, carrying on a trade or business, if

5 more than 50 percent of such partnership or

6 corporation (by vote or value) is owned by the

7 decedent.

8 ‘‘(2) SMALL-BUSINESS CONCERN.—For pur9 poses of this subsection, the term ‘small-business

10 concern’ has the meaning given such term in section

11 3(a)(1) of the Small Business Act.

12 ‘‘(3) INDIRECT OWNERSHIP.—For purposes of

13 determining ownership under paragraph (1), the

14 rules of section 318 shall apply.

15 ‘‘(4) LIMITATION TO SMALL-BUSINESS CON16 CERNS IN UNITED STATES.—The term ‘qualified

17 small business interest’ shall not include any interest

18 in a small-business concern the principal place of

19 business of which is not in the United States or its

20 possessions.’’

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for part III of subchapter A of chapter 11 of such Code

23 is amended by adding at the end the following new item:

‘‘Sec. 2047. Exclusion of qualified small business interests.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to estates of decedents dying after

3 the date of the enactment of this Act.

4 SEC. 202. EXCLUSION OF 401(k) PLANS FROM TOP-HEAVY

5 RULES.

6 (a) IN GENERAL.—Paragraph (4) of section 416(g)

7 of the Internal Revenue Code of 1986 (relating to special

8 rules for top-heavy plans) is amended by adding at the

9 end the following new subparagraph:

10 ‘‘(H) 401(k) PLANS.—The term ‘top heavy

11 plan’ shall not include a qualified cash or de12 ferred arrangement, as defined in section

13 401(k).’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to plan years ending after the

16 date of the enactment of this Act.

17 SEC. 203. NO DISQUALIFICATION BY REASON OF GOOD

18 FAITH ADMINISTRATIVE ERROR.

19 (a) IN GENERAL.—Section 401 of the Internal Reve20 nue Code of 1986 (relating to qualified pension, profit21 sharing, and stock bonus plans) is amended by redesignat22 ing subsection (o) as subsection (p) and by inserting after

23 subsection (n) the following new subsection:

24 ‘‘(o) NO DISQUALIFICATION BY REASON OF GOOD

25 FAITH ADMINISTRATIVE ERROR.—
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1 ‘‘(1) IN GENERAL.—A trust shall not be dis2 qualified for purposes of this part by reason of a

3 good faith administrative error which is—

4 ‘‘(A) de minimis, or

5 ‘‘(B) inadvertent,

6 if such error is corrected within a reasonable period

7 of time after the employer is notified (by the Sec8 retary or by any other person) of the error.

9 ‘‘(2) INADVERTENT.—For purposes of para10 graph (1), an error shall be treated as inadvertent

11 if made without knowledge or reason to know of the

12 error.’’

13 (b) REPORT ON DEFINITIONS.—Not later than 90

14 days after the date of the enactment of this Act, the Sec15 retary of the Treasury shall submit to the Congress a re16 port setting forth the proposed interpretation by the Sec17 retary of the terms ‘‘good faith administrative error’’ and

18 ‘‘de minimis’’ for purposes of subsection (o) of section 401

19 of the Internal Revenue Code of 1986, as added by this

20 section.

21 (c) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall apply to plan years ending after the

23 date of the enactment of this Act.

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