Small Business Emancipation Act of 1996

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 concern 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 
payments are made to reward an employee or group of employees for 
meeting or exceeding the productivity, quality, efficiency, or sales 
goals as specified in a gainsharing, incentive 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, compensatory time off at a rate not less 
        than 1\1/2\ hours for each hour of employment for which 
        overtime compensation 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 understanding, 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 understanding 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 compensatory time off accrued during the 
        preceding calendar year which was not used prior to December 31 
        of the preceding year at a rate not less than 1\1/2\ times the 
        regular rate earned by the employee at the time the employee 
        receives such payment. An employer may designate and 
        communicate to the employer'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 compensation 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 disrupt 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 working, 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 regular rate.

SEC. 103. FLEXIBLE AND COMPRESSED SCHEDULES.

    (a) Compressed Schedules.--Notwithstanding any other provision of 
law, a small-business concern employer may establish programs that 
allow the use of a compressed schedule that consists of--
            (1) in the case of a schedule of a full-time employee, a 
        160-hour basic work requirement, over a 4-week period, that is 
        scheduled for less than 20 workdays; and
            (2) in the case of a schedule of a part-time employee, 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 employee 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 reduce 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 information 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 STANDARDS.

    (a) Standard Basis.--Section 6(b) of the Occupational 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 section, 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-business 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 employer who 
received a citation for a violation of the requirements of section 5, 
any standard, rule, or order promulgated pursuant to section 6 or of 
any regulations prescribed under this Act, the Secretary shall waive up 
to 100 percent of such penalty to the extent that the employer 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 significant 
        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 authority to 
        negotiate or enter into collective bargaining agreements with 
        an employer or to amend existing collective bargaining 
        agreements between and employer 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 Railway 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 implement 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 
hazardous industries.
    ``(b) This subsection authorizes the consultative services 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 appropriation 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 concerns which have implemented 
particularly effective approaches 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 recognition.
    ``(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 occupational 
        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 organization 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 organization's or company's current 
occupational safety and health practice. The award shall be given only 
to organizations and companies which have made outstanding improvements 
in their occupational safety and health practices 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 participants 
receive the complete results of their audits as well as detailed 
explanations of all suggestions for improvements. 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 program 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 
applying 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 selection for, discharge from, 
compensation for, or the terms, conditions, or privileges of, 
employment or union membership, on the basis of the race, color, 
religion, sex, or national 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 affirmative action designed to 
recruit individuals of an underrepresented race, color, religion, sex, 
or national origin, to expand the applicant pool of the individuals 
seeking employment or union membership with the entity.
    (c) Nothing in the amendments made by this subsection 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 chapter 11 of the 
Internal Revenue Code of 1986 (relating to gross estate) is amended by 
adding at the end the following new section:

``SEC. 2047. EXCLUSION OF QUALIFIED SMALL BUSINESS INTERESTS.

    ``(a) In General.--If the executor elects the application of this 
section, the value of the gross estate shall not include the value of 
the qualified small business interests 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 purposes 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 concerns 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 deferred 
                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 Revenue Code of 1986 
(relating to qualified pension, profit-sharing, and stock bonus plans) 
is amended by redesignating 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 disqualified 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 Secretary or by any 
        other person) of the error.
            ``(2) Inadvertent.--For purposes of paragraph (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 Secretary of the Treasury shall 
submit to the Congress a report setting forth the proposed 
interpretation by the Secretary 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.

Summary: TABLE OF CONTENTS: 
     Title I:  Labor Provisions 
     Title II:  Tax Provisions 
Small Business Emancipation Act of 1996 - 
Title I:  Labor Provisions
 - States that the "regular rate" at which a small business employee (SBE) is employed shall not include sums paid under a performance plan as a reward for meeting or exceeding productivity, quality, efficiency, or sales goals. 
Authorizes an SBE to receive, in lieu of overtime compensation, compensatory time off at a rate of not less than one and one-half hours off for each hour of employment for which overtime compensation would have been paid.  Limits the annual accrual of compensatory time to 240 hours.  Provides for the payment of unused compensatory time upon termination. 
(Sec. 103) Authorizes a small business employer to establish compressed and flexible work schedules. 
(Sec. 104) States that a small business shall not be required to disclose to any regulatory agency any information obtained through a voluntary internal audit. 
(Sec. 105) Exempts laborers or mechanics employed by a small business from the provisions of the Davis-Bacon Act. 
(Sec. 106) Amends the Occupational Safety and Health Act (the Act) to:  (1) direct the Secretary of Labor, in establishing occupational safety and health (OSH) standards, to consider the relationship between the costs and benefits of a standard and its effect on small businesses; (2) authorize the Secretary to waive up to 100 percent of an OSH violation penalty to be paid by a small business to the extent that the employer uses the amount to correct the violation; and (3) provide that an employee participation committee formed to attempt to reduce the number of OSH hazards shall not be considered a "labor organization" for purposes of specified labor representation provisions. 
Directs the Secretary to:  (1) establish and implement a program to provide technical assistance and consultative services for small business employers and employees concerning worksite OSH and compliance with the Act; (2) establish an award to be periodically made to small businesses which have implemented effective approaches to addressing OSH in the workplace; and (3) prepare and submit to the President and the Congress a report on the progress, findings, and conclusions of activities conducted under this section, along with recommendations for modifications. 
(Sec. 107) Prohibits a small business employer from granting preferential treatment to any individual or group on the basis of race, color, religion, sex, or national origin. 
Title II:  Tax Provisions
 - Amends the Internal Revenue Code to:  (1) exclude from the gross estate the value of a qualified small business interest of a decedent; (2) exclude a qualified cash or deferred arrangement from the definition of a "top heavy plan"; and (3) provide that a trust shall not be disqualified from consideration as a qualified pension, profit-sharing, or stock-bonus plan by reason of a good faith administrative error.