I
106TH CONGRESS
2D SESSION
H. R. 4109
To amend the Fair Labor Standards Act of 1938 to clarify the treatment
of stock options under the Act.
IN THE HOUSE OF REPRESENTATIVES
MARCH 29, 2000
Mr. BALLENGER (for himself, Mr. KUYKENDALL, Mr. DAVIS of Virginia, Mr.
MORAN of Virginia, Mr. OWENS, Mr. ROEMER, Mr. BOEHNER, Mr.
DOOLEY of California, Mr. GOODLING, Ms. ESHOO, Mr. BLUNT, Mr.
KIND, Mr. CONDIT, Mr. ADERHOLT, Mr. ARMEY, Mr. SAM JOHNSON of
Texas, Mr. EHRLICH, and Mr. HOEKSTRA) introduced the following bill;
which was referred to the Committee on Education and the Workforce
A BILL
To amend the Fair Labor Standards Act of 1938 to clarify
the treatment of stock options under the Act.
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 cited as the ‘‘Worker Economic Op-
portunity Act’’.
SEC. 2. AMENDMENTS TO FAIR LABOR STANDARDS ACT OF
1938.
(a) EXCLUSION FROM REGULAR RATE.—Section
7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C.
207(e)) is amended—
(1) in paragraph (6), by striking ‘‘or’’ at the
end;
(2) in paragraph (7), by striking the period and
inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(8) any value or income derived from em-
ployer-provided grants or rights provided pursuant
to a stock option, stock appreciation right, or bona
fide employee stock purchase program which is not
otherwise excludable under any of paragraphs (1)
through (7) if—
‘‘(A) grants are made pursuant to a pro-
gram, the terms and conditions of which are
communicated to participating employees either
at the beginning of the employee’s participation
in the program or at the time of the grant;
‘‘(B) in the case of stock options and stock
appreciation rights, the grant or right cannot
be exercisable for a period of at least 6 months
after the time of grant (except that grants or
rights may become exercisable because of an
employee’s death, disability, retirement, or a
change in corporate ownership, or other cir-
cumstances permitted by regulation), and the
exercise price is at least 85 percent of the fair
market value of the stock at the time of grant;
‘‘(C) exercise of any grant or right is vol-
untary; and
‘‘(D) any determinations regarding the
award of, and the amount of, employer-provided
grants or rights that are based on performance
are—
‘‘(i) made based upon meeting pre-
viously established performance criteria
(which may include hours of work, effi-
ciency, or productivity) of any business
unit consisting of at least 10 employees or
of a facility, except that, any determina-
tions may be based on length of service or
minimum schedule of hours or days of
work; or
‘‘(ii) made based upon the past per-
formance (which may include any criteria)
of one or more employees in a given period
so long as the determination is in the sole
discretion of the employer and not pursu-
ant to any prior contract.’’.
(b) EXTRA COMPENSATION.—Section 7(h) of the
Fair Labor Standards Act of 1938 (29 U.S.C. 207(h)) is
amended—
(1) by striking ‘‘Extra’’ and inserting the fol-
lowing:
‘‘(2) Extra’’; and
(2) by inserting after the subsection designation
the following:
‘‘(1) Except as provided in paragraph (2), sums ex-
cluded from the regular rate pursuant to subsection (e)
shall not be creditable toward wages required under sec-
tion 6 or overtime compensation required under this sec-
tion.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date that is 90 days
after the date of enactment of this Act.
(d) LIABILITY OF EMPLOYERS.—No employer shall
be liable under the Fair Labor Standards Act of 1938 for
any failure to include in an employee’s regular rate (as
defined for purposes of such Act) any income or value de-
rived from employer-provided grants or rights obtained
pursuant to any stock option, stock appreciation right, or
employee stock purchase program if—
(1) the grants or rights were obtained before
the effective date described in subsection (c);
(2) the grants or rights were obtained within
the 12-month period beginning on the effective date
described in subsection (c), so long as such program
was in existence on the date of enactment of this
Act and will require shareholder approval to modify
such program to comply with section 7(e)(8) of the
Fair Labor Standards Act of 1938 (as added by the
amendments made by subsection (a)); or
(3) such program is provided under a collective
bargaining agreement that is in effect on the effec-
tive date described in subsection (c).
(e) REGULATIONS.—The Secretary of Labor may
promulgate such regulations as may be necessary to carry
out the amendments made by this Act.
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