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 Commit-
tee on Economic and Educational Opportunities, and in addition to the
Committee on Ways and Means, for a period to be subsequently deter-
mined 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 small-
business concerns.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION. 1. SHORT TITLE.
This Act may be referred to as the ‘‘Small Business
Emancipation Act of 1996’’.
SEC. 2. DEFINITION.
For purposes of this Act the term small-business con-
cern has the meaning given such term in section 3(a)(1)
of the Small Business Act (15 U.S.C. 632(a)(1)).
TITLE I—LABOR PROVISIONS
SEC. 101. SIMPLIFICATION OF EMPLOYEE’S ‘‘REGULAR
RATE’’ FOR PURPOSES OF CALCULATING
OVERTIME COMPENSATION.
Notwithstanding 7(e) of the Fair Labor Standards
Act of 1938 (29 U.S.C. 207(e)), the ‘‘regular rate’’ at
which an employee of a small-business concern is employed
shall not be deemed to include sums paid in recognition
of services performed during a given period if the pay-
ments are made to reward an employee or group of em-
ployees for meeting or exceeding the productivity, quality,
efficiency, or sales goals as specified in a gainsharing, in-
centive bonus, commission, or performance contingent
bonus plan.
SEC. 102. COMPENSATORY TIME.
Notwithstanding section 7(o) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 207(o))—
(1) An employee of a small-business concern
may receive, in accordance with this subsection and
in lieu of monetary overtime compensation, compen-
satory time off at a rate not less than 11⁄2 hours for
each hour of employment for which overtime com-
pensation is required by this subsection.
(2) An employer may provide compensatory
time under paragraph (1) only pursuant to—
(A) applicable provisions of a collective
bargaining agreement, memorandum of under-
standing, or any other agreement between the
employer and representative of such employees;
or
(B) in the case of employees not covered
by subparagraph (A), an agreement or under-
standing arrived at between the employer and
employee before the performance of the work.
(3) An employee may accrue not more than 240
hours of compensatory time. Not later than January
31 of each calendar year, the employee’s employer
shall provide monetary compensation for any com-
pensatory time off accrued during the preceding cal-
endar year which was not used prior to December 31
of the preceding year at a rate not less than 11⁄2
times the regular rate earned by the employee at the
time the employee receives such payment. An em-
ployer may designate and communicate to the em-
ployer’s employees a 12-month period other than the
calendar year, in which case such compensation shall
be provided not later than 31 days after the end of
such 12-month period.
(4) An employee who has accrued compensatory
time off authorized to be provided under paragraph
(1) shall, upon termination of employment, be paid
for the unused compensatory time at a rate of com-
pensation not less than—
(A) the average regular rate received by
such employee during the last 3 years of the
employee’s employment, or
(B) the final regular rate received by such
employee, whichever is higher.
(5) An employee—
(A) who has accrued compensatory time
off authorized to be provided under paragraph
(1), and
(B) who has requested the use of such
compensatory time,
shall be permitted by the employee’s employer to use such
time within a reasonable period after making the request
if the use of the compensatory time does not unduly dis-
rupt the operations of the employer.
(6) For purposes of this subsection the terms
‘‘compensatory time’’ and ‘‘compensatory time off’’
mean hours during which an employee is not work-
ing, which are not counted as hours worked during
the applicable workweek or other work period for
purposes of overtime compensation, and for which
the employee is compensated at the employee’s regu-
lar rate.
SEC. 103. FLEXIBLE AND COMPRESSED SCHEDULES.
(a) COMPRESSED
SCHEDULES.—Notwithstanding
any other provision of law, a small-business concern em-
ployer may establish programs that allow the use of a com-
pressed schedule that consists of—
(1) in the case of a schedule of a full-time em-
ployee, a 160-hour basic work requirement, over a 4-
week period, that is scheduled for less than 20 work-
days; and
(2) in the case of a schedule of a part-time em-
ployee, a basic work requirement of less than 160
hours, over a 4-week period, that is scheduled for
less than 20 workdays.
(b) FLEXIBLE SCHEDULES.—Notwithstanding any
other provision of law, a small-business concern employer
may establish programs that allow the use of flexible
schedules that include—
(1) designated hours and days during
which an employee on such a schedule must be
present for work; and
(2) designated hours during which an em-
ployee on such a schedule may elect the time of
the arrival of such employee at and departure
of such employee from work, solely for such
purpose or, if and to the extent permitted, for
the purpose of accumulating credit hours to re-
duce the length of the workweek or another
workday.
SEC. 104. SMALL-BUSINESS CONCERN AUDIT EXEMPTION.
Notwithstanding any other provision of law, a small-
business concern shall not be required to disclose any in-
formation obtained through a voluntary internal audit to
any regulatory agency.
SEC. 105. EXEMPTION FROM THE DAVIS-BACON ACT.
The provisions of the Act of March 3, 1931 (40
U.S.C. 276a et seq.) (commonly referred to as the Davis-
Bacon Act) shall not apply to any laborers or mechanics
employed by small-business concerns.
SEC. 106. OCCUPATIONAL SAFETY AND HEALTH STAND-
ARDS.
(a) STANDARD BASIS.—Section 6(b) of the Occupa-
tional Safety and Health Act (29 U.S.C. 655(b)) is
amended by inserting after paragraph (8) the following:
‘‘(9) In establishing standards under this sec-
tion, the Secretary shall consider and make findings
concerning whether there is a reasonable relationship
between the costs and benefits of the standard, and
the particular effects of the standard on small-busi-
ness concerns.’’.
(b) VIOLATIONS.—Section 17 of the Occupational
Safety and Health Act (29 U.S.C. 666) is amended by
redesignating subsection (l) as subsection (m) inserting
after subsection (k) the following:
‘‘(l) In the case of any small-business concern em-
ployer who received a citation for a violation of the re-
quirements of section 5, any standard, rule, or order pro-
mulgated pursuant to section 6 or of any regulations pre-
scribed under this Act, the Secretary shall waive up to
100 percent of such penalty to the extent that the em-
ployer uses the amount which would have been paid as
penalty for correction of the violation. This subsection
shall apply where
‘‘(1) the employer has made a good faith effort
to comply with applicable regulation, and
‘‘(2) the violation does not constitute a signifi-
cant threat to an employee’s health or safety or is
not a criminal violation.’’.
(c) EMPLOYEE PARTICIPATION.—The Occupational
Safety and Health Act (29 U.S.C. 651 et seq.) is amended
by adding at the end the following:
‘‘EMPLOYEE PARTICIPATION
‘‘SEC. 33. In order to carry out the purposes of this
Act to encourage employers and employees in their efforts
to reduce the number of occupational safety and health
hazards, an employee participation committee or other
mechanism—
‘‘(1) in which employees participate,
‘‘(2) which exists for the purpose, in whole or
in part, of dealing with employees concerning the
safety or health of working conditions or related
matters, and
‘‘(3) which does not have, claim, or seek author-
ity to negotiate or enter into collective bargaining
agreements with an employer or to amend existing
collective bargaining agreements between and em-
ployer and any labor organization,
shall not constitute a ‘labor organization’ for purposes of
section 8(a)(2) of the National Labor Relations Act or a
representative for purposes of sections 1 and 2 of the Rail-
way Labor Act.’’.
(d) SMALL BUSINESS ASSISTANCE AND TRAINING.—
The Occupational Safety and Health Act, as amended by
paragraph (3), is amended by adding after section 33 the
following:
‘‘SMALL BUSINESS ASSISTANCE AND TRAINING
‘‘SEC. 34. (a) The Secretary shall establish and im-
plement a program to provide technical assistance and
consultative services for employers and employees, either
directly or by grant or contract, concerning worksite safety
and health and compliance with this Act. Such assistance
shall be targeted at small employers and the most hazard-
ous industries.
‘‘(b) This subsection authorizes the consultative serv-
ices to employers provided under cooperative agreements
between the States and the Occupational Safety and
Health Administration and described in part 1908 of title
39 of the Code of Federal Regulations.
‘‘(c) Not less than one-fourth of the annual appro-
priation made to the Secretary to carry out this Act shall
be expended for the purposes described in this section.’’.
(e) VOLUNTARY PROTECTION PROGRAM AWARD.—
The Occupational Safety and Health Act, as amended by
paragraph (4), is amended by adding after section 34 the
following:
‘‘VOLUNTARY PROTECTION PROGRAM AWARD
‘‘SEC. 35. (a) The Secretary shall establish an award
which shall periodically be made to small-business con-
cerns which have implemented particularly effective ap-
proaches to addressing occupational safety and health in
the workplace, including those which provide for effective
employee involvement in improving safety and health and
which are as a consequence deserving of special recogni-
tion.
‘‘(b) A company or organization to which an award
is made under subsection (a) and which agrees to help
other American companies or organizations improve their
occupational safety and health may publicize its receipt
of such award and use the award in its advertising, but
it shall be ineligible to receive another such award in the
same category for a period of 5 years.
‘‘(c)(1) Subject to paragraph (2), separate awards
shall be made to qualifying organizations and companies
in each of the following categories—
‘‘(A) manufacturing;
‘‘(B) agricultural;
‘‘(C) concerns providing services;
‘‘(D) retail; and
‘‘(E) construction.
‘‘(2) Not more than 1 award may be made within
any subcategory in any year (and no award shall be made
within any category if there are no qualifying enterprises
in that category.
‘‘(d) An organization or company may qualify for an
award under subsection (a) only if it—
‘‘(1) applies to the Secretary in writing, for the
award,
‘‘(2) permits a rigorous evaluation of its occu-
pational safety and health operations, and
‘‘(3) meets such requirements and specifications
as the Secretary determines to be appropriate to
achieve the objectives of this section.
In applying paragraph (3) with respect to any organiza-
tion or company, the Secretary shall rely upon an intensive
evaluation of the occupational safety and health operation.
The examination should encompass all aspects of the orga-
nization’s or company’s current occupational safety and
health practice. The award shall be given only to organiza-
tions and companies which have made outstanding im-
provements in their occupational safety and health prac-
tices and which demonstrate effective occupational safety
and health practices through the training and involvement
of all levels of personnel.
‘‘(e) The Secretary shall ensure that all program par-
ticipants receive the complete results of their audits as
well as detailed explanations of all suggestions for im-
provements. The Secretary shall also provide information
about the awards and the successful quality improvement
strategies and programs of the award-winning participants
to all participants and other appropriate groups.
‘‘(f) The Secretary is authorized to seek and accept
gifts from public and private sources to carry out the pro-
gram under this section. If additional sums are needed
to cover the full cost of the program, the Secretary shall
impose fees upon the organizations and companies apply-
ing for the award in amounts sufficient to provide such
additional sums.
‘‘(g) The Secretary shall prepare and submit to the
President and the Congress, within 3 years after the date
of the enactment of this section, a report on the progress,
findings, and conclusions of activities conducted pursuant
to this section along with recommendations for possible
modifications thereof.’’.
SEC. 107. PROHIBITION OF PREFERENTIAL TREATMENT.
(a) It shall be an unlawful employment practice for
any small business concern employer to grant preferential
treatment to any individual or group with respect to selec-
tion for, discharge from, compensation for, or the terms,
conditions, or privileges of, employment or union member-
ship, on the basis of the race, color, religion, sex, or na-
tional origin of such individual or group, for any purpose,
except as provided in subsection (b).
(b) It shall not be unlawful employment practice for
an entity described in subsection (a) to undertake affirma-
tive action designed to recruit individuals of an underrep-
resented race, color, religion, sex, or national origin, to
expand the applicant pool of the individuals seeking em-
ployment or union membership with the entity.
(c) Nothing in the amendments made by this sub-
section shall be construed to affect the authority of courts
to remedy intentional discrimination under section 706(g)
of the Civil Rights Act of 1964 (Public Law 88–352).
TITLE II—TAX PROVISIONS
SEC. 201. EXCLUSION FROM GROSS ESTATE OF INTERESTS
IN CERTAIN SMALL BUSINESSES.
(a) IN GENERAL.—Part III of subchapter A of chap-
ter 11 of the Internal Revenue Code of 1986 (relating to
gross estate) is amended by adding at the end the follow-
ing new section:
‘‘SEC. 2047. EXCLUSION OF QUALIFIED SMALL BUSINESS IN-
TERESTS.
‘‘(a) IN GENERAL.—If the executor elects the appli-
cation of this section, the value of the gross estate shall
not include the value of the qualified small business inter-
ests of the decedent which are otherwise includible in the
estate.
‘‘(b) QUALIFIED SMALL BUSINESS INTEREST.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified small
business interest’ means—
‘‘(A) an interest as a proprietor in a small-
business concern which is a trade or business
carried on as a proprietorship, or
‘‘(B) an interest as a partner in a small-
business concern which is a partnership, or
stock in a small-business concern which is a
corporation, carrying on a trade or business, if
more than 50 percent of such partnership or
corporation (by vote or value) is owned by the
decedent.
‘‘(2) SMALL-BUSINESS
CONCERN.—For pur-
poses of this subsection, the term ‘small-business
concern’ has the meaning given such term in section
3(a)(1) of the Small Business Act.
‘‘(3) INDIRECT OWNERSHIP.—For purposes of
determining ownership under paragraph (1), the
rules of section 318 shall apply.
‘‘(4) LIMITATION
TO
SMALL-BUSINESS
CON-
CERNS
IN
UNITED
STATES.—The term ‘qualified
small business interest’ shall not include any interest
in a small-business concern the principal place of
business of which is not in the United States or its
possessions.’’
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter A of chapter 11 of such Code
is amended by adding at the end the following new item:
‘‘Sec. 2047. Exclusion of qualified small business interests.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to estates of decedents dying after
the date of the enactment of this Act.
SEC. 202. EXCLUSION OF 401(k) PLANS FROM TOP-HEAVY
RULES.
(a) IN GENERAL.—Paragraph (4) of section 416(g)
of the Internal Revenue Code of 1986 (relating to special
rules for top-heavy plans) is amended by adding at the
end the following new subparagraph:
‘‘(H) 401(k) PLANS.—The term ‘top heavy
plan’ shall not include a qualified cash or de-
ferred arrangement, as defined in section
401(k).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to plan years ending after the
date of the enactment of this Act.
SEC. 203. NO DISQUALIFICATION BY REASON OF GOOD
FAITH ADMINISTRATIVE ERROR.
(a) IN GENERAL.—Section 401 of the Internal Reve-
nue Code of 1986 (relating to qualified pension, profit-
sharing, and stock bonus plans) is amended by redesignat-
ing subsection (o) as subsection (p) and by inserting after
subsection (n) the following new subsection:
‘‘(o) NO DISQUALIFICATION BY REASON OF GOOD
FAITH ADMINISTRATIVE ERROR.—
‘‘(1) IN GENERAL.—A trust shall not be dis-
qualified for purposes of this part by reason of a
good faith administrative error which is—
‘‘(A) de minimis, or
‘‘(B) inadvertent,
if such error is corrected within a reasonable period
of time after the employer is notified (by the Sec-
retary or by any other person) of the error.
‘‘(2) INADVERTENT.—For purposes of para-
graph (1), an error shall be treated as inadvertent
if made without knowledge or reason to know of the
error.’’
(b) REPORT ON DEFINITIONS.—Not later than 90
days after the date of the enactment of this Act, the Sec-
retary of the Treasury shall submit to the Congress a re-
port setting forth the proposed interpretation by the Sec-
retary of the terms ‘‘good faith administrative error’’ and
‘‘de minimis’’ for purposes of subsection (o) of section 401
of the Internal Revenue Code of 1986, as added by this
section.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to plan years ending after the
date of the enactment of this Act.
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