[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4097 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4097

 To provide transitional community employment for unemployed persons, 
   and other individuals in poverty, who live in certain identified 
                  communities, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 19, 1998

  Ms. Norton introduced the following bill; which was referred to the 
   Committee on Education and the Workforce, 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 provide transitional community employment for unemployed persons, 
   and other individuals in poverty, who live in certain identified 
                  communities, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strategic Transitional Employment 
Program Act''.

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Chief elected official.--The term ``chief elected 
        official'' means--
                    (A) the chief elected executive officer of the unit 
                of general local government in a local area; or
                    (B) if the local area includes more than 1 unit of 
                general local government, 1 or more chief elected 
                executive officers, determined in accordance with the 
                procedure described in section 308(d)(1) of Senate Bill 
                1186, 105th Congress, as reported on October 15, 1997.
            (2) Community.--The term ``community'' means 1 or more 
        contiguous census tracts or contiguous block numbering areas 
        within a local area.
            (3) Community employment.--The term ``community 
        employment'' means employment described in section 213(b).
            (4) Employment program.--The term ``employment program'' 
        means a strategic transitional employment program described in 
        section 101 and funded under this Act.
            (5) Identified community.--The term ``identified 
        community'' means--
                    (A) for purposes of title II, a community 
                identified by a Governor under section 202(c)(2); and
                    (B) for purposes of title III, a community 
                identified by a chief elected official under section 
                302(a).
            (6) Indian tribe.--The term ``Indian tribe'' has the 
        meaning given such term in section 4(e) of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450b(e)).
            (7) Local area.--The term ``local area'' means a local 
        workforce investment area designated as described in section 
        307 of Senate Bill 1186, 105th Congress, as reported on October 
        15, 1997.
            (8) Native hawaiian organization.--The term ``Native 
        Hawaiian organization'' has the meaning given such term in 
        section 9212(3) of the Native Hawaiian Education Act (20 U.S.C. 
        7912(3)).
            (9) Outlying area.--The term ``outlying area'' means the 
        United States Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, the Republic of 
        the Marshall Islands, the Federated States of Micronesia, and 
        the Republic of Palau.
            (10) Poverty line.--The term ``poverty line'' means the 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Community Services Block Grant Act (42 U.S.C. 9902(2))) 
        applicable to a family of the size involved.
            (11) Secretary.--The term ``Secretary'' means the Secretary 
        of Labor.
            (12) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.
            (13) Unemployed.--The term ``unemployed'' means unemployed 
        as defined by the Commissioner of Labor Statistics.
            (14) Unit of general local government.--The term ``unit of 
        general local government'' means any general purpose political 
        subdivision of a State that has the power to levy taxes and 
        spend funds, as well as general corporate and police powers.
            (15) Veteran.--The term ``veteran'' means an individual who 
        served in the active military, naval, or air service, and who 
        was discharged or released from such service under conditions 
        other than dishonorable.

    TITLE I--GRANTS TO STATES FOR DEVELOPMENT OF EMPLOYMENT PROGRAMS

SEC. 101. GRANTS.

    (a) In General.--From the funds appropriated to carry out this 
title for a fiscal year and not reserved under section 401, the 
Secretary shall make grants to assist eligible States and outlying 
areas in developing strategic transitional employment programs that 
provide community employment, in local areas with identified 
communities, in the States and in outlying areas. The Secretary shall 
make the grants to pay for the program share of the cost of the 
development.
    (b) Limits.--No State or outlying area shall receive a grant under 
this section in an amount that exceeds $1,000,000. No State or outlying 
area shall receive more than 1 grant under this section.
    (c) Period.--Grants made under this section shall be made for 
periods of 1 year.
    (d) Program Share.--
            (1) In general.--The program share of the cost of 
        developing employment programs in a State or outlying area is 
        66\2/3\ percent.
            (2) Non-program share.--The non-program share of the cost 
        may be provided in cash (including funds made available from 
        federally funded programs, other than programs carried out 
        under this Act, with a non-Federal share requirement, and 
        including funds from State, local, and private sources) or in 
        kind, fairly evaluated, including plant, equipment, or 
        services.

SEC. 102. APPLICATIONS.

    To be eligible to receive a grant under section 101 to develop 
employment programs under this title, a State or outlying area shall 
submit an application to the Secretary at such time, in such manner, 
and containing such information as the Secretary may require.

SEC. 103. DEVELOPMENT ACTIVITIES.

    A State or outlying area that receives a grant under section 101 
shall use the funds made available through the grant to develop 
employment programs by developing the State plan described in section 
202 or the application described in section 222, as appropriate.

SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this title 
$50,000,000 for fiscal year 1999 and such sums as may be necessary for 
each of fiscal years 2000 through 2002.

  TITLE II--GRANTS TO STATES FOR IMPLEMENTATION OF EMPLOYMENT PROGRAMS

                      Subtitle A--State Activities

SEC. 201. STATE ALLOTMENTS.

    (a) In General.--From the funds appropriated to carry out this 
title for a fiscal year and not reserved under section 221, 233, or 
401, the Secretary shall make allotments under subsection (b) to assist 
eligible States in making grants to local areas, in order to implement 
employment programs in the States. The Secretary shall make the 
allotments to pay for the program share of the cost of the 
implementation.
    (b) State Allotments.--Of the funds described in subsection (a), 
the Secretary shall allot--
            (1) 50 percent on the basis of the relative number of 
        unemployed individuals in each State, compared to the total 
        number of unemployed individuals in all States; and
            (2) 50 percent on the basis of the relative number of 
        individuals in poverty in each State, compared to the total 
        number of individuals in poverty in all States.
    (c) Eligibility.--To be eligible to receive an allotment under this 
section for a fiscal year, a State shall have received a grant under 
section 101 for a preceding fiscal year.
    (d) Reallotment.--If any part of the funds allotted under this 
section to a State for a fiscal year is not distributed to the State, 
or used for implementation grants to local areas under title III, for 
such fiscal year, any remaining funds from such part shall be 
reallotted under this section for such fiscal year to the remaining 
eligible States.
    (e) Program Share.--
            (1) In general.--The program share of the cost of 
        implementing employment programs in a State is 66\2/3\ percent.
            (2) Non-program share.--The non-program share of the cost 
        may be provided in cash (including funds made available from 
        federally funded programs, other than programs carried out 
        under this Act, with a non-Federal share requirement, and 
        including funds from State, local, and private sources) or in 
        kind, fairly evaluated, including plant, equipment, or 
        services.
    (f) Definition.--In this section, the term ``individual in 
poverty'' means an individual who received an income, or is a member of 
a family that received a total family income, for the most recent 12 
months, that, in relation to family size, does not exceed the poverty 
line.

SEC. 202. STATE PLANS.

    (a) In General.--For a State to be eligible to receive an allotment 
under section 201 for the implementation of employment programs, the 
Governor of the State shall submit an application to the Secretary at 
such time, in such manner, and containing such information as the 
Secretary may require.
    (b) Contents.--At a minimum, the application shall include a State 
plan containing--
            (1) a compilation of the information received by the State 
        in approved local plans submitted under section 212;
            (2) information describing and justifying the local areas 
        that will receive funds under this title to implement 
        employment programs, selected in accordance with subsection 
        (c); and
            (3) a certification that the Governor has developed the 
        State plan in a manner that will assure compliance with the 
        requirements of paragraphs (1) and (2) of section 214(b).
    (c) Selection of Local Areas for State Plans.--
            (1) Selection of local areas with identified communities.--
                    (A) Priority.--In selecting, for purposes of 
                subsection (b), the local areas of the State to receive 
                funding to implement an employment program under this 
                title, the Governor shall give priority to--
                            (i) local areas with a substantial number 
                        of identified communities, or substantial 
                        populations in such communities; and
                            (ii) local areas with identified 
                        communities, for which a chief elected official 
                        submits a plan that proposes--
                                    (I) employment projects to be 
                                carried out by public agencies and 
                                private nonprofit organizations; and
                                    (II) employment projects that 
                                directly affect affordable housing, 
                                human services, infrastructure, 
                                environmental conservation or 
                                restoration, and small business 
                                development, in identified communities.
                    (B) Need.--In selecting the local areas, the 
                Governor shall take into consideration the need of the 
                local areas for the employment to be provided through 
                the employment programs.
            (2) Identification of communities within local areas.--To 
        enable the chief elected officials of the local areas to 
        develop local plans under section 212 and to enable the 
        Governor to make the selection described in paragraph (1), the 
        Governor shall compile data, including information on income 
        levels, the poverty rate, the unemployment rate, education 
        levels, housing values, and the housing owner occupancy rate in 
        divisions in the local areas. The Governor shall compile the 
        data from the smallest geographic divisions that are common to 
        the areas and for which the data is available. The Governor 
        shall analyze the data to identify urban and rural communities 
        in the local area that, collectively, have high poverty rates 
        and unemployment rates and low income levels, education levels, 
        housing values, and housing owner occupancy rates relative to 
        such rates, levels, and values of the States and counties in 
        which the communities are located. The Governor shall 
        distribute the data, and the results of the analysis, to the 
        chief elected official.
    (d) Development Process.--In developing the State plan, the 
Governor shall, at a minimum, solicit the opinions of organizations and 
partnerships in the State that are responsible for planning, setting 
policy for, and administering employment and training programs 
described in section 212(b)(3)(E) in the State. To the extent possible, 
the Governor shall arrange for the organizations and partnerships to 
develop the State plan, including carrying out the responsibilities of 
the Governor under this section.

SEC. 203. STATE ADMINISTRATION.

    (a) In General.--Except as provided in subsection (b), the Governor 
shall carry out the administration of the State plan, including 
providing technical assistance to and monitoring the activities of 
chief elected officials in local areas that receive funds under this 
title, and conducting related data collection activities.
    (b) Organizations and Partnerships.--In carrying out the 
administration of the State plan, the Governor shall, at a minimum, 
solicit the opinions of organizations and partnerships described in 
section 202(d). To the extent possible, the Governor shall arrange for 
the organizations and partnerships to carry out the administration of 
the State plan. The Governor shall ensure the coordination of 
activities to be carried out under the plan with the employment and 
training programs carried out by the organizations and partnerships and 
with other social services programs.
    (c) Fiscal Agent.--The Governor of the State shall serve as the 
fiscal agent for the allotment to the State under section 201.
    (d) Administrative Expenses.--Not more than 10 percent of the funds 
made available to a State through an allotment made under section 201 
may be used for the administration of the State plan.

SEC. 204. STATE REPORTS.

    Each Governor of a State receiving funds under this title to carry 
out employment programs in the State shall annually prepare and submit 
to the Secretary a report containing--
            (1) the information received by the State from local 
        reports submitted under section 217; and
            (2) information on the costs of the programs to the State 
        and level of funding provided by the State for such programs.

                      Subtitle B--Local Activities

SEC. 211. LOCAL GRANTS.

    A State that receives an allotment under section 201 for a fiscal 
year shall use the funds made available through the allotment to make 
grants to local areas, in order to implement employment programs.

SEC. 212. LOCAL PLANS.

    (a) In General.--For a local area to be eligible to receive a grant 
under section 211 for an employment program, the chief elected official 
of the local area shall submit an application to the State at such 
time, in such manner, and containing such information as the State may 
require.
    (b) Contents.--At a minimum, the application shall include a local 
plan containing--
            (1) information describing and justifying the locations at 
        which, and the strategy by which, the chief elected official 
        will provide community employment positions in the area through 
        the employment program in the area, determined in accordance 
        with subsection (c);
            (2) information describing the community employment 
        projects to be carried out in the local area through the 
        employment program, the type of work to be performed by 
        participants in the projects, the eligible employers that will 
        carry out the projects, and the compensation and benefits to be 
        provided to participants in the projects;
            (3) information specifying the manner in which the chief 
        elected official will implement the employment program, 
        including--
                    (A) the manner in which the official will link the 
                employment provided through the program with--
                            (i) activities that provide training and 
                        skill development;
                            (ii) job readiness activities;
                            (iii) job placement assistance; and
                            (iv) support services;
                for placement in public or private employment that is 
                not subsidized with funds made available under this 
                Act, especially employment in growth occupations 
                specified by the Secretary and in occupations with 
                wages above the rates specified in subclauses (I) and 
                (II) of section 214(a)(1)(A)(ii);
                    (B) the manner in which the official will--
                            (i) ensure that the employment provided 
                        through the program will develop the skills of 
                        and provide work experience to participants in 
                        the program, including participants who are 
                        ages 16 through 25, and otherwise prepare the 
                        participants in the program for placement in 
                        public or private employment that is not 
                        subsidized with funds made available under this 
                        Act, especially employment in growth 
                        occupations specified by the Secretary and in 
                        occupations with wages above the rates 
                        specified in subclauses (I) and (II) of section 
                        214(a)(1)(A)(ii); and
                            (ii) provide for the generation of 
                        participant skill development plans, developed 
                        by the employer of the participant and the 
                        participant, setting forth goals and time 
                        frames for the development of skills by 
                        participants during the period of participation 
                        and after such period;
                    (C) the manner in which persons designated by the 
                official will assess the job readiness and skills of 
                applicants for the projects;
                    (D) the manner in which the employment provided 
                through the program will increase the number of 
                positions available to low-skilled workers, in a local 
                area with a severe shortage of such positions;
                    (E) the manner in which the official will 
                coordinate the employment program with other Federal 
                and State employment and training programs, including 
                programs funded through welfare-to-work grants made 
                under section 403(a)(5) of the Social Security Act (42 
                U.S.C. 603(a)(5)), with programs providing child care 
                and transportation services, and with other social 
                service programs; and
                    (F) the manner in which the official will provide 
                community employment through the employment program;
            (4) an assurance that the official will require each 
        employer who seeks to carry out an employment project to submit 
        a job description to the official for each position in the 
        project, that includes a description of--
                    (A) the tasks to be performed by participants in 
                the position; and
                    (B) the training to be provided by the employer to 
                participants in the position; and
            (5) a certification that the official has developed the 
        local plan in a manner that will assure compliance with the 
        requirements of paragraphs (1) and (2) of section 214(b).
    (c) Areas.--In determining the locations at which, and the strategy 
by which, the official will provide employment positions in the area, 
the chief elected official shall use the data described in section 
202(c)(2) and shall consider information supplied by public agencies 
and community-based organizations in the local area.
    (d) Development Process.--
            (1) In general.--In developing the local plan, the chief 
        elected official shall, at a minimum, solicit the opinions of 
        organizations and partnerships in the local area that are 
        responsible for planning, setting policy for, and administering 
        employment and training programs described in subsection 
        (b)(3)(E) in the local area. To the extent possible, the chief 
        elected official shall arrange for the organizations and 
        partnerships to develop the local plan, including carrying out 
        the responsibilities of the chief elected official under this 
        section.
            (2) Specific involvement.--At a minimum, representatives of 
        community-based organizations, organizations serving victims of 
        domestic violence, labor organizations, private employers, and 
        residents of the local area shall assist in the development of 
        the plan, especially the selection of the employment projects 
        and employers described in subsection (b)(2), the determination 
        of the compensation and benefits described in subsection 
        (b)(2), and the efforts to make the certification described in 
        subsection (b)(5). In addition, in any case in which a labor 
organization represents a substantial number of employees who are 
engaged in work or training, in the local area, similar to the 
activities proposed to be carried out under the local plan, the chief 
elected official shall provide an opportunity for the organization to 
submit comments with respect to the local plan.

SEC. 213. IMPLEMENTATION ACTIVITIES.

    (a) In General.--A local area that receives a grant under section 
211 shall use the funds made available through the grant to implement 
an employment program that provides community employment with eligible 
employers to eligible individuals in accordance with this title.
    (b) Community Employment.--
            (1) In general.--Community employment funded under this 
        title in a community shall consist of entry-level employment 
        that the chief elected official in the local area, after 
        consultation with representatives of organizations in the local 
        area, determines to meet the skills and needs of eligible 
        individuals in the identified communities in the local area and 
        the needs of the local area for affordable housing, human 
        services, infrastructure, environmental conservation or 
        restoration, and small business development. Such community 
        employment may include employment related to provision of 
        directory assistance services, recreational equipment design 
        and construction, removal of lead paint or asbestos, renovation 
        of schools and community centers, provision of after-school and 
        summer recreational programs, provision of child care and home 
        health care services, provision of elder care, provision of 
        teacher aide services, construction and renovation of 
        affordable housing, and community crime prevention.
            (2) Training and education programs and job search 
        activities.--Community employment funded under this title may, 
        at the election of the chief local official, include 
        participation in training and education programs (such as 
        functional context education programs, vocational training 
        programs, and secondary or postsecondary education programs) 
        for not more than 10 hours per week per participant. Community 
        employment funded under this title shall include participation 
        in structured job search activities in accordance with such 
        standards as the chief elected official shall specify. 
        Participants shall be paid for participation in the training 
        and education programs and job search activities in accordance 
        with section 214.
            (3) Requirements and restrictions.--The community 
        employment will be provided in accordance with the requirements 
        and restrictions specified in section 214 and 215.
            (4) Length of employment.--
                    (A) In general.--Except as provided in subparagraph 
                (B), an employer shall provide employment to a 
                participant in an employment program for not more than 
                a 12-month period.
                    (B) Additional term.--A chief elected official for 
                a local area involved in an employment program carried 
                out under this title may submit a request to the 
                Secretary for a waiver of the limit specified in 
                subparagraph (A), on behalf of the employers involved 
                in the program in the local area. The official shall 
                specify, in the request, the criteria the employers 
                will use to determine whether to provide employment to 
                a participant for more than 12 months and shall provide 
                a justification for the waiver based on information 
                collected by the official from the employers. The 
                Secretary may waive the limit for not more than an 
                additional 12-month period, and for not more than 20 
                percent of the participants in the program.
    (c) Eligible Employers.--To be eligible to be an employer in an 
employment program, an entity shall be an agency of a unit of general 
local government, a nonprofit private organization, or another private 
organization.
    (d) Eligible Individuals.--
            (1) Minimum eligibility requirements.--To be eligible to be 
        selected to be a participant in the employment program, an 
        individual shall be a person who--
                    (A) has been unemployed for a period of not less 
                than 15 weeks or is receiving assistance under a State 
                program funded under part A of title IV of the Social 
                Security Act (42 U.S.C. 601 et seq.);
                    (B) is an individual who received an income, or is 
                a member of a family that received a total family 
                income that, in relation to family size, does not 
                exceed the poverty line;
                    (C) resides in an identified community;
                    (D) has engaged in structured job search activities 
                for not less than 4 weeks; and
                    (E) meets such skill requirements for the position 
                involved as the chief elected official in the local 
                area shall prescribe.
            (2) Priorities.--In determining which of the eligible 
        individuals described in paragraph (1) shall be selected to 
        participate in an employment program, the chief elected 
        official shall give priority to veterans.
            (3) Continued eligibility.--To remain eligible to 
        participate in the employment program, a participant shall 
        participate in structured job search activities in accordance 
        with such standards as the chief elected official shall 
        specify.
    (e) Nonduplication.--
            (1) In general.--Assistance provided under this title shall 
        be used only for an employment program that is in addition to 
        activities otherwise available in the local area of such 
        program.
            (2) Private entity.--Assistance made available under this 
        title shall not be provided to a private entity to conduct 
        activities that are the same as or substantially equivalent to 
        activities provided by a State or local government agency that 
        serves the area that such entity resides in, unless the 
        requirements of section 214(b) are met.

SEC. 214. REQUIREMENTS AND RESTRICTIONS.

    (a) Benefits.--
            (1) Wages.--
                    (A) In general.--
                            (i) Rate of compensation.--Individuals 
                        participating in community employment in a 
                        program carried out under this title shall be 
                        compensated at the same rates as similarly 
                        situated employees, as determined by the 
                        Secretary, and in accordance with applicable 
                        law.
                            (ii) Minimum rate.--The rate of 
                        compensation provided by an employer for an 
                        individual under clause (i) shall not be less 
                        than the highest of--
                                    (I) the rate specified in section 
                                6(a)(1) of the Fair Labor Standards Act 
                                of 1938 (29 U.S.C. 206(a)(1));
                                    (II) the rate specified in 
                                applicable State or local minimum wage 
                                law;
                                    (III) the prevailing rate of pay 
                                for individuals employed in similar 
                                occupations, as determined by the 
                                Secretary, by the same employer; and
                                    (IV) an hourly rate, calculated as 
                                the rate that would enable a 
                                participant to earn 100 percent of the 
                                poverty line for a family of 3 if the 
                                participant were to perform 40 hours 
                                per week of work in the program, for a 
                                full year.
                    (B) Construction.--The reference in subparagraph 
                (A)(ii)(I) to section 6(a)(1) of the Fair Labor 
                Standards Act of 1938--
                            (i) shall be deemed to be a reference to 
                        section 6(c) of that Act (29 U.S.C. 206(c)) for 
                        individuals in the Commonwealth of Puerto Rico;
                            (ii) shall be deemed to be a reference to 
                        section 6(a)(3) (29 U.S.C. 206(a)(3)) of that 
                        Act for individuals in American Samoa (for 
                        purposes of subtitle C, if subparagraph (A) 
                        applies under that subtitle); and
                            (iii) shall not be applicable for 
                        individuals in other territorial jurisdictions 
                        in which section 6 of the Fair Labor Standards 
                        Act of 1938 (29 U.S.C. 206) does not apply (for 
                        purposes of subtitle C, if subparagraph (A) 
                        applies under that subtitle).
            (2) Benefits.--
                    (A) Health insurance.--
                            (i) In general.--A State involved in an 
                        employment program carried out under this title 
                        shall ensure the provision of a basic health 
                        care policy for each participant who is 
                        employed through the program, if the 
                        participant is not otherwise covered by a 
                        health care policy. The State may retain funds 
                        from a grant to a local area under section 211 
                        to ensure the provision of such policies for 
                        such participants in an employment program in 
                        the local area. The Secretary shall establish 
                        minimum standards that all plans shall meet in 
                        order to qualify for payment under this title, 
                        any circumstances in which an alternative 
                        health care policy may be substituted for the 
                        basic health care policy, and mechanisms to 
                        prohibit a participant from dropping existing 
                        coverage (in existence on the date the 
                        participant first applies for the program).
                            (ii) Option.--A State involved in an 
                        employment program carried out under this title 
                        may elect to provide from its own funds a 
                        health care policy for participants that does 
                        not meet all of the standards established by 
                        the Secretary if the fair market value of such 
                        policy is equal to or greater than the fair 
                        market value of a plan that meets the minimum 
                        standards established by the Secretary, and is 
                        consistent with other applicable laws.
                    (B) Coverage of certain employment-related taxes.--
                To the extent an employer involved in an employment 
                program carried out under this title is subject to the 
                taxes imposed on an employer under sections 3111 and 
                3301 of the Internal Revenue Code of 1986, and taxes 
                imposed on an employer under a workmen's compensation 
                act, for a participant, the assistance provided to an 
                employer for the participant under the program shall 
                include an amount equal to the amount of such taxes. 
                For purposes of section 3309(b)(5) of the Internal 
                Revenue Code of 1986, employment programs carried out 
                under this title shall not be considered to be programs 
                described in such section, and participants in 
                employment programs carried out under this title shall 
                not be considered to be individuals described in such 
                section.
                    (C) No contributions to retirement systems or 
                plans.--None of the funds made available under this 
                title may be used by an employer to make a contribution 
                on behalf of any participant to a private retirement 
                system or plan.
            (3) Treatment of allowances, earnings, and payments to 
        participants.--
                    (A) In general.--Notwithstanding any provision of 
                the Internal Revenue Code of 1986, for purposes of such 
                Code, including section 32 (relating to earned income 
                credits) and subtitle C (relating to employment taxes), 
                allowances, earnings, and payments to individuals 
                participating in programs carried out under this title 
                shall be includable in the gross income of individuals 
                as wages.
                    (B) Treatment for means-tested programs.--Such 
                allowances, earnings, and payments shall not be 
                considered to be income for the purposes of determining 
                eligibility for, and the amount of income transfer and 
                in-kind aid furnished under, any Federal or federally 
                assisted program based on need.
            (4) Denial of deductions and credits to employers.--For 
        purposes of the Internal Revenue Code of 1986, no deduction or 
        credit under such Code shall be allowed with respect to trade 
        or business expenses paid from or reimbursed by funds provided 
        under this title.
    (b) Labor Standards.--
            (1) Displacement.--
                    (A) Prohibition.--A participant in a program 
                authorized under this title (referred to in this 
                subsection as a ``specified activity'') shall not 
                displace (including a partial displacement, such as a 
                reduction in the hours of nonovertime work, wages, or 
                employment benefits) any employed employee.
                    (B) Prohibition on impairment of contracts.--A 
                specified activity shall not impair an existing 
                contract for services or collective bargaining 
                agreement, and no such activity that would be 
                inconsistent with the terms of a collective bargaining 
                agreement shall be undertaken without the written 
                concurrence of the labor organization and employer 
                concerned.
            (2) Other prohibitions.--
                    (A) In general.--A participant in a specified 
                activity shall not be employed in a job--
                            (i) when any other individual is on layoff 
                        from the same or any substantially equivalent 
                        job with the participating employer;
                            (ii) when the employer has terminated the 
                        employment of any regular employee or otherwise 
                        reduced the workforce of the employer with the 
                        effect of filling the vacancy so created with 
                        the participant;
                            (iii) when any other individual is on leave 
                        from, has recall rights pursuant to a 
                        collective bargaining agreement or applicable 
                        personnel procedures to, or is subject to a 
                        reduction in force relating to, the same or any 
                        substantially equivalent job, with the 
                        participating employer;
                            (iv) when any other employee is on strike 
                        or is being locked out with respect to the same 
                        or any substantially equivalent job with the 
                        participating employer;
                            (v) that is created in a promotional line 
                        that will infringe in any way on the 
                        promotional opportunities of currently employed 
                        individuals (as of the date of the 
                        participation); or
                            (vi) if the job position is vacant and was 
                        previously held by an employee whose wages and 
                        benefits were not subsidized under this Act.
                    (B) Concurrence.--Before an employer employs a 
                participant described in subparagraph (A) in a job that 
                is the same or substantially equivalent to a job held 
                by other employees of the employer, the employer shall 
                obtain the written concurrence of the local labor 
                organization, if any, representing the employees.
            (3) Health and safety.--Health and safety standards 
        established under Federal and State law, including the 
        Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et 
        seq.), otherwise applicable to working conditions of employees 
        shall be equally applicable to working conditions of 
        participants engaged in specified activities. With respect to 
        any participant who is engaged in activities that are not 
        covered by health and safety standards under the Occupational 
        Safety and Health Act of 1970, the Secretary shall prescribe, 
        by regulation, such standards as may be necessary to protect 
        the health and safety of such participant. To the extent that a 
State workers' compensation law applies, workers' compensation shall be 
provided to participants on the same basis as the compensation is 
provided to other individuals in the State in similar employment. To 
the extent that such law is not applicable, each employer receiving 
funds under this title shall secure insurance coverage for injuries 
suffered by such participants as a result of the participation, in 
accordance with regulations prescribed by the Secretary.
            (4) Employment conditions.--Individuals participating in 
        programs carried out under this title, shall be provided 
        equipment, supplies, family and medical leave, work space, and 
        other working conditions at the same level and to the same 
        extent as other trainees or employees working a similar length 
        of time and doing the same type of work.
            (5) Other labor protections.--Standards established under 
        the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.), 
        the National Labor Relations Act (29 U.S.C. 151 et seq.), the 
        Act of March 3, 1931 (commonly known as the ``Davis-Bacon 
        Act'') (46 Stat. 1494; chap. 411; 40 U.S.C. 276a et seq.), the 
        Service Contract Act of 1965 (41 U.S.C. 351 et seq.), and State 
        labor and employment laws (as defined by the appropriate State 
        agency), otherwise applicable to working conditions of 
        employees shall be equally applicable to working conditions of 
        participants engaged in specified activities. Participants in 
        employment programs carried out under this title shall be 
        considered to be employees, and the employers of the 
        participant shall be considered to be employers, for purposes 
        of the Fair Labor Standards Act of 1938 (29 U.S.C. 201 et 
        seq.).
            (6) Hearings and opportunity to submit comments.--
        Interested members of the public shall be provided an 
        opportunity for a public hearing on a State plan submitted 
        under section 202, and an opportunity to submit comments to the 
        State with respect to programs described in the State plan and 
        proposed to be funded under this title. The opportunities for a 
        public hearing and for the submission of comments shall be 
        provided in accordance with such procedures as the Secretary 
        shall specify.
    (c) Grievance Procedure.--
            (1) In general.--An employer receiving assistance under 
        this title shall establish and maintain a procedure for the 
        filing and adjudication of grievances or complaints alleging 
        violations of the requirements of this title (except as 
        otherwise provided in section 215) from participants, labor 
        organizations, and other interested parties. The procedures 
        shall provide that a hearing on such a grievance or complaint 
        shall be conducted not later than 30 days after the date of the 
        filing of the grievance or complaint and that a decision shall 
        be made concerning the grievance or complaint not later 60 days 
        after the date of filing. Except for complaints alleging fraud 
        or criminal activity, no grievance or complaint may be filed 
        under this paragraph later than 1 year after the date of the 
        alleged violation.
            (2) Investigation.--
                    (A) In general.--The Secretary shall investigate an 
                allegation of a violation described in paragraph (1) 
                if--
                            (i) a decision relating to such violation 
                        has not been reached within 60 days after the 
                        date of the filing of the grievance or 
                        complaint and either party appeals the decision 
                        to the Secretary; or
                            (ii) a decision relating to such violation 
                        has been reached within 60 days after the date 
                        of the filing and the party to which such 
                        decision is adverse appeals the decision to the 
                        Secretary.
                    (B) Additional requirement.--The Secretary shall 
                make a final determination relating to an appeal made 
                under subparagraph (A) no later than 120 days after the 
                date of such appeal.
                    (C) Secretarial authority.--The Secretary may also 
                investigate a violation described in paragraph (1) in 
                accordance with section 231.
            (3) Remedies.--Remedies that may be imposed under this 
        subsection for a violation of any requirement of this title 
        (except as otherwise provided in section 215) shall be 
        limited--
                    (A) to suspension or termination of payments under 
                this title to a person that has violated any such 
                requirement of this title;
                    (B) to prohibition of placement of a participant 
                with an employer that has violated any such requirement 
                of this title;
                    (C) where applicable, to reinstatement of an 
                employee, payment of lost wages and benefits, and 
                reestablishment of other relevant terms, conditions, 
and privileges of employment; and
                    (D) where appropriate, to other equitable relief.
            (4) Construction.--Nothing in paragraph (3) shall be 
        construed to prohibit a grievant or complainant from pursuing a 
        remedy authorized under another Federal, State, or local law 
        for a violation of this title.
    (d) Relocation.--
            (1) Prohibition on use of funds to encourage or induce 
        relocation.--No funds provided under this title shall be used, 
        or proposed for use, to encourage or induce the relocation of a 
        business or part of a business if such relocation would result 
        in a loss of employment for any employee of such business at 
        the original location and such original location is within the 
        United States.
            (2) Prohibition on use of funds for customized or skill 
        training and related activities after relocation.--No funds 
        provided under this title shall be used for customized or skill 
        training, on-the-job training, or company-specific assessments 
        of job applicants or employees for any business or part of a 
        business that has relocated, until the date that is 120 days 
        after the date on which such business commences operations at 
        the new location, if the relocation of such business or part of 
        a business results in a loss of employment for any employee of 
        such business at the original location and such original 
        location is within the United States.
            (3) Repayment.--If the Secretary determines that a 
        violation of paragraph (1) or (2) has occurred, the Secretary 
        shall require the State that has violated such paragraph to 
        repay to the United States an amount equal to the amount 
        expended in violation of such paragraph.
    (e) Limitation on Use of Funds.--No funds provided under this title 
shall be used for activities for--
            (1) the capitalization of businesses (except as provided in 
        section 501) investment in contract bidding resource centers, 
        or similar activities;
            (2) any partisan political activities associated with a 
        political party or association, or the campaign of any 
        candidate for public or party office;
            (3) foreign travel; or
            (4) the promotion or deterrence of union organizing.
    (f) Treatment of Participation.--Notwithstanding any other 
provision of law, no individual may be required to participate in an 
employment program carried out under this title as a condition of 
receiving any benefit under any Federal or State law.
    (g) Notification and Provision of Information on Worker Rights.--
Each employer carrying out an employment project under this title shall 
provide to participants in the project notification regarding, and 
information on, worker rights, including rights under this section and 
section 215, and any eligibility for earned income tax credits under 
the Internal Revenue Code of 1986 or applicable State law.

SEC. 215. NONDISCRIMINATION.

    (a) Prohibited Discrimination.--
            (1) Prohibition on discrimination in federal programs and 
        activities.--For the purpose of applying the prohibitions 
        against discrimination on the basis of age under the Age 
        Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), on the 
        basis of disability under section 504 of the Rehabilitation Act 
        of 1973 (29 U.S.C. 794), on the basis of sex under title IX of 
        the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), or 
        on the basis of race, color, or national origin under title VI 
        of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), 
        programs funded in whole or in part under this title shall be 
        considered to be programs and activities receiving Federal 
        financial assistance, and education programs and activities 
        receiving Federal financial assistance. For the purpose of 
        applying the provisions of title II of the Americans with 
        Disabilities Act of 1990 (42 U.S.C. 12131 et seq.) programs 
        funded, in whole or in part, under this title shall be 
        considered to be the services, programs, or activities of a 
        public entity, and each recipient or provider of Federal 
        financial assistance involved in the programs shall be 
        considered to be a public entity.
            (2) Prohibition of discrimination regarding participation, 
        benefits, and employment.--No individual shall be excluded from 
        participation in, denied the benefits of, subjected to 
        discrimination under, or denied employment in the 
        administration of or in connection with, any program funded in 
        whole or in part under this title because of race, color, 
        religion, sex, national origin, age, disability, or political 
        affiliation or belief.
            (3) Prohibition on assistance for facilities for sectarian 
        instruction or religious worship.--Participants shall not be 
        employed under this title to carry out the construction, 
        operation, or maintenance of any part of any facility that is 
        used or to be used for sectarian instruction or as a place for 
        religious worship.
            (4) Prohibition on discrimination on basis of participant 
        status.--No person may discriminate against an individual who 
        is a participant in a program or activity that receives funds 
        under this title, with respect to the terms and conditions 
        affecting, or rights provided to, the individual, solely 
        because of the status of the individual as a participant, in 
        carrying out any endeavor that involves--
                    (A) participants in programs that receive funding 
                under this title; and
                    (B) persons who receive no assistance under this 
                title.
            (5) Prohibition on discrimination against certain 
        noncitizens.--Participation in programs receiving funds under 
        this title shall be available to citizens and nationals of the 
        United States, lawfully admitted permanent resident aliens, 
        refugees, asylees, and parolees, other aliens lawfully present 
        in the United States, and other individuals authorized by the 
        Attorney General to work in the United States.
    (b) Action of Secretary.--Whenever the Secretary finds (in response 
to a complaint filed with the Secretary by a participant or on the 
initiative of the Secretary) that a State or other recipient of funds 
under this title has failed to comply with a provision of law referred 
to in subsection (a)(1), or with paragraph (2), (3), (4), or (5) of 
subsection (a), including an applicable regulation prescribed to carry 
out such provision or paragraph, the Secretary shall notify such State 
or recipient and shall request that the State or recipient comply. If 
within a reasonable period of time, not to exceed 60 days, the State or 
recipient fails or refuses to comply, the Secretary may--
            (1) refer the matter to the Attorney General with a 
        recommendation that an appropriate civil action be instituted;
            (2) exercise the powers and functions provided to the head 
        of a Federal department or agency under the Age Discrimination 
        Act of 1975, title V of the Rehabilitation Act of 1973 (29 
        U.S.C. 791 et seq.), title IX of the Education Amendments of 
        1972, or title VI of the Civil Rights Act of 1964, as may be 
        applicable; or
            (3) take such other action as may be provided by law.
    (c) Action of Attorney General.--When a matter is referred to the 
Attorney General pursuant to subsection (b)(1), or whenever the 
Attorney General has reason to believe that a State or other recipient 
of funds under this title is engaged in a pattern or practice of 
discrimination in violation of a provision of law referred to in 
subsection (a)(1) or in violation of paragraph (2), (3), (4), or (5) of 
subsection (a), the Attorney General may bring a civil action in any 
appropriate district court of the United States for such relief as may 
be appropriate, including injunctive relief.
    (d) Participants.--For purposes of this section, participants in 
employment programs shall be considered as the ultimate beneficiaries 
of an education program or activity receiving Federal financial 
assistance.

SEC. 216. LOCAL ADMINISTRATION.

    (a) In General.--Except as provided in subsection (b), the chief 
elected official shall carry out the administration of the local plan.
    (b) Organizations and Partnerships.--In carrying out the 
administration of the local plan, the official shall, at a minimum, 
solicit the opinions of organizations and partnerships described in 
section 202(d). To the extent possible, the official shall arrange for 
the organizations and partnerships to carry out the administration of 
the local plan. The official shall ensure the coordination of 
activities to be carried out under the plan with the employment and 
training programs carried out by the organizations and partnerships and 
with other social service programs.
    (c) Fiscal Agent.--The chief elected official shall serve as the 
fiscal agent for the funds made available to the local area under this 
title.
    (d) Administrative Expenses.--Not more than 15 percent of the funds 
made available to a local area through a grant made under section 211 
may be used for the administration of the local plan.

SEC. 217. LOCAL REPORTS.

    Each chief elected official in a local area receiving funds under 
this title to carry out an employment program shall annually prepare 
and submit to the State a report containing information on--
            (1) the number of participants in the program;
            (2) the number of positions created for the program;
            (3) the type of work performed by the participants;
            (4) the number and type of employers carrying out 
        employment projects through the program;
            (5) the wages and benefits provided to the participants;
            (6) the costs of the program to the local areas;
            (7) the employment status (including placement in public or 
        private employment that is not subsidized with funds made 
        available under this Act) and wages (during the year for which 
        the report is prepared) of former participants in the program, 
        for the 5 years after the participants end their participation 
        in the program;
            (8) the impact of the employment positions in the 
        employment projects on the identified communities in the local 
        area; and
            (9) the extent to which, and the manner in which, the 
        official has ensured the coordination described in section 
        216(b).

                Subtitle C--Activities in Outlying Areas

SEC. 221. GRANTS.

    From the funds appropriated to carry out this title for a fiscal 
year, the Secretary shall reserve not more than \1/4\ of 1 percent to 
make grants to eligible outlying areas in order to implement employment 
programs in the outlying areas.

SEC. 222. APPLICATION.

    To be eligible to receive a grant under section 221, an outlying 
area shall submit an application to the Secretary at such time, in such 
manner, and containing such information and assurances as the Secretary 
may require.

SEC. 223. REGULATIONS.

    The Secretary shall issue regulations specifying requirements of 
this title that apply to outlying areas receiving funds under section 
221.

                     Subtitle D--General Provisions

SEC. 231. MONITORING.

    (a) In General.--The Secretary is authorized to monitor all 
recipients of financial assistance under this title to determine 
whether the recipients are complying with the provisions of this title, 
including the regulations issued under this title.
    (b) Investigations.--The Secretary may investigate any matter the 
Secretary determines to be necessary to determine the compliance of the 
recipients with this title, including the regulations issued under this 
title. The investigations authorized by this subsection may include 
examining records (including making certified copies of the records), 
questioning employees and participants, and entering any premises or 
onto any site in which any part of an employment program of such a 
recipient is conducted or in which any of the records of the recipient 
are kept.
    (c) Witnesses and Production.--For the purpose of any investigation 
or hearing conducted under this title by the Secretary, the provisions 
of section 9 of the Federal Trade Commission Act (15 U.S.C. 49) 
(relating to the attendance of witnesses and the production of 
documents) apply to the Secretary, in the same manner and to the same 
extent as the provisions apply to the Federal Trade Commission.

SEC. 232. REPORT TO CONGRESS.

    The Secretary shall prepare and submit to Congress a report 
containing--
            (1) the information received by the Secretary from State 
        reports submitted under section 204; and
            (2) information on the costs of the programs to the Federal 
        Government and level of funding provided by the Federal 
        Government for such programs.

SEC. 233. FEDERAL ADMINISTRATION.

    From the amounts appropriated under section 234 for a fiscal year, 
the Secretary may reserve not more than 10 percent for the 
administration of this title.

SEC. 234. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this title, 
$2,300,000,000 for fiscal year 2000, $6,800,000,000 for fiscal year 
2001, and $11,300,000,000 for fiscal year 2002.

    TITLE III--FEDERAL GRANTS TO LOCAL AREAS FOR IMPLEMENTATION OF 
                          EMPLOYMENT PROGRAMS

SEC. 301. GRANTS

    (a) Funds.--If the funds allotted under section 201 to a State for 
a fiscal year are not distributed to the State for such fiscal year, 
the Secretary--
            (1) shall first use the funds for implementation grants to 
        local areas in the State in accordance with this title; and
            (2) shall reallot any remaining funds to remaining eligible 
        States in accordance with section 201(d).
    (b) Grants.--Using the funds described in subsection (a), the 
Secretary may provide implementation grants, on a competitive basis, 
directly to local areas in States described in subsection (c), in such 
amounts as the Secretary may determine to be necessary, to implement 
employment programs in the local areas. The Secretary shall make the 
grants to pay for the program share of the cost of the implementation.
    (c) Eligibility.--To be eligible to receive a grant under this 
section for a fiscal year, a local area shall be located in a State for 
which the Secretary has not approved an application under section 202 
for the fiscal year.
    (d) Program Share.--
            (1) In general.--The program share of the cost of 
        implementing an employment program in a local area is 66\2/3\ 
        percent.
            (2) Non-program share.--The non-program share of the cost 
        may be provided in cash (including funds made available from 
        federally funded programs, other than programs carried out 
        under this Act, with a non-Federal share requirement, and 
        including funds from State, local, and private sources) or in 
        kind, fairly evaluated, including plant, equipment, or 
        services.

SEC. 302. APPLICATIONS.

    (a) Identification of Communities Within Local Areas.--To develop 
the applications under subsection (b) and enable the Secretary to make 
the selection described in subsection (c), the chief elected officials 
of the local areas in a State described in section 301(c) shall compile 
and analyze data in accordance with the requirements applicable to 
Governors under section 202(c)(2).
    (b) Application.--For a local area to be eligible to receive a 
grant under this section, the chief local official of the local area 
shall submit the application described in section 212.
    (c) Selection Priority and Consideration.--In selecting local areas 
to receive grants under this section, the Secretary shall give priority 
to local areas described in section 202(c)(1)(A) and take into 
consideration the need of the local areas for the employment to be 
provided through the employment programs.

SEC. 303. ADMINISTRATION.

    (a) In General.--The chief elected officials of the local areas 
shall implement the employment programs in accordance with--
            (1) the requirements applicable to local areas and chief 
        elected officials under subtitle B of title II, including the 
        requirements of section 216(b); and
            (2) the provisions applicable to States and Governors under 
        sections 202(c)(2) and 214.
    (b) References.--For purposes of subsection (a), references in the 
requirements described in subsection (a)(1) (other than the provisions 
described in subsection (a)(2)) to a State, Governor, or State entity 
shall be considered to be references to the Secretary.
    (c) Regulations.--The Secretary shall issue regulations specifying 
the manner in which the requirements and provisions described in 
subsection (a) shall apply to chief elected officials under this title 
and the manner in which the requirements of subtitle D of title II 
shall apply to programs carried out under this title.

TITLE IV--GRANTS TO INDIAN TRIBES AND NATIVE HAWAIIAN ORGANIZATIONS FOR 
                          EMPLOYMENT PROGRAMS

SEC. 401. GRANTS.

    From the amounts appropriated under sections 104 and 234 for a 
fiscal year, the Secretary shall reserve not more than 3 percent to 
make grants to Indian tribes and Native Hawaiian organizations for 
development and implementation, respectively, of employment programs.

SEC. 402. PLANS.

    To be eligible to receive a grant under section 401, an Indian 
tribe or Native Hawaiian organization shall submit a plan to the 
Secretary at such time, in such manner, and containing such 
information, as the Secretary may require.

SEC. 403. REGULATIONS.

    The Secretary shall issue regulations specifying requirements of 
title II that apply to Indian tribes and Native Hawaiian organizations 
receiving grants under section 401. Such requirements shall not include 
a non-program share requirement.

             TITLE V--COMMUNITY DEVELOPMENT VENTURE CAPITAL

SEC. 501. COMMUNITY DEVELOPMENT VENTURE CAPITAL ACTIVITIES

    (a) In General.--The Administrator is authorized to make grants to 
1 or more intermediary organizations to develop the capacity of 
community development venture capital organizations.
    (b) Use of Assistance.--An intermediary organization that receives 
a grant under subsection (a) may use the funds made available through 
the grant to--
            (1) provide training, education, support, peer exchanges, 
        and advice to enhance the technical and administrative capacity 
        of community development venture capital organizations;
            (2) provide capacity building grants, operating support, 
        and capital in the form of investments, loans, or grants, to 
        enable community development venture capital organizations to 
        provide financing to--
                    (A) private businesses with enterprises benefiting 
                low-income communities, as defined by the 
                Administrator; or
                    (B) entities carrying out community development 
                projects benefiting the communities;
            (3) invest, in partnership with community development 
        venture capital organizations, in such enterprises or projects; 
        and
            (4) such other activities as may be determined to be 
        appropriate by the organization in consultation with the 
        Administrator.
    (c) Allocation of Assistance.--The Administrator shall ensure that 
not less than 25 percent of the funds made available under this section 
are made available to support activities described in subsection 
(b)(3).
    (d) Matching Requirement.--No intermediary organization shall 
receive a grant under this section unless that organization agrees 
that, with respect to the costs to be incurred by the organization in 
carrying out the activities for which the grant was awarded, the 
organization will make available (directly or through donations from 
public or private entities) non-Federal contributions in an amount 
equal to not less than $1 for every $1 of Federal funds provided under 
the grant. The non-Federal contributions may be in cash or in kind, 
fairly evaluated, including plant, equipment, or services.
    (e) Requirements.--The Administrator may issue such requirements as 
may be necessary to carry out this section. The requirements shall take 
effect on issuance.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $20,000,000 for fiscal years 
1999 through 2002.
    (g) Definitions.--
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Small Business Administration.
            (2) Community development venture capital organization.--
        The term ``community development venture capital organization'' 
        means--
                    (A) a private nonprofit organization that has a 
                primary mission of promoting community development in 
                low-income communities, as defined by the 
                Administrator, through investment in private business 
                enterprises or community development projects; and
                    (B) administers or is in the process of 
                establishing a community development venture capital 
                fund for the purpose of making equity investments in 
                private business enterprises or community development 
                projects in such communities.
            (3) Intermediary organization.--The term ``intermediary 
        organization'' means a private, nonprofit entity that provides 
        technical assistance or financial assistance to community 
        development venture capital organizations, including 
        organizations in the process of establishing community 
        development venture capital funds.

                      TITLE VI--REVENUE PROVISIONS

SEC. 601. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCESSIVE COMPENSATION.

    (a) In General.--Section 162 of the Internal Revenue Code of 1986 
(relating to deduction for trade or business expenses) is amended by 
inserting after subsection (h) the following new subsection:
    ``(i) Excessive Compensation.--
            ``(1) In general.--No deduction shall be allowed under this 
        chapter for any excessive compensation with respect to any 
        full-time employee.
            ``(2) Excessive compensation.--For purposes of this 
        subsection, the term `excessive compensation' means, with 
        respect to any employee, the amount by which--
                    ``(A) the compensation for services performed by 
                such employee during the taxable year, exceeds
                    ``(B) an amount equal to 25 times the lowest 
                compensation for services performed by any other full-
                time employee during such taxable year.
            ``(3) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Compensation.--
                            ``(i) In general.--The term `compensation' 
                        means salary, wages, and bonuses.
                            ``(ii) Part-year employees.--In the case of 
                        any part-year employee, the compensation of the 
                        employee shall be computed on an annualized 
                        basis.
                    ``(B) Employer.--All persons treated as a single 
                employer under subsection (a) or (b) of section 52 or 
                subsection (m) or (o) of section 414 shall be treated 
                as 1 employer.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 602. REPEAL OF DEFERRAL FOR INCOME OF CONTROLLED FOREIGN 
              CORPORATIONS.

    (a) General Rule.--Section 952 of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 952. SUBPART F INCOME.

    ``(a) General Rule.--For purposes of this subpart, the term 
`subpart F income' means the earnings and profits of the controlled 
foreign corporation for the taxable year computed with the following 
adjustments:
            ``(1) There shall be excluded the amount of the earnings 
        and profits which are attributable to income from sources 
        within the United States which is effectively connected with 
        the conduct by the controlled foreign corporation of a trade or 
        business within the United States, except to the extent such 
        income is exempt from taxation (or subject to a reduced rate of 
        tax) pursuant to a treaty obligation of the United States. For 
        purposes of the preceding sentence, income described in 
        paragraph (2) or (3) of section 921(d) shall be treated as 
        derived from sources within the United States.
            ``(2) In determining earnings and profits (or the deficit 
        in earnings and profits), the amount of any illegal bribe, 
        kickback, or other payment (within the meaning of section 
        162(c)) shall not be taken into account to decrease such 
        earnings and profits or to increase such deficit. The payments 
        referred to in the preceding sentence are payments which would 
        be unlawful under the Foreign Corrupt Practices Act of 1977 if 
        the payor were a United States person.
            ``(3) Under regulations prescribed by the Secretary, there 
        shall be excluded the part of any earnings and profits if it is 
        established to the satisfaction of the Secretary that such part 
        could not have been distributed by the controlled foreign 
        corporation to United States shareholders who own (within the 
        meaning of section 958(a)) stock of such controlled foreign 
        corporation because of currency or other restrictions or 
        limitations imposed under the laws of any foreign country.
            ``(4) Earnings and profits shall be determined without 
        regard to paragraphs (4), (5), and (6) of section 312(n). Under 
        regulations, the preceding sentence shall not apply to the 
        extent it would increase earnings and profits by an amount 
        which was previously distributed by the controlled foreign 
        corporation.
Except as provided in this subsection and section 312(k)(4), the 
earnings and profits of any foreign corporation, and any deficit in 
earnings and profits of any foreign corporation, for any taxable year 
shall be determined according to rules similar to those applicable to 
domestic corporations, under regulations prescribed by the Secretary.
    ``(b) Certain Deficits May Be Taken Into Account.--
            ``(1) Treatment of certain prior year deficits.--
                    ``(A) In general.--The amount included in the gross 
                income of any United States shareholder under section 
                951(a)(1)(A)(i) for any taxable year with respect to 
                any controlled foreign corporation shall be reduced by 
                the amount of such shareholder's pro rata share of any 
                qualified deficit of such controlled foreign 
                corporation.
                    ``(B) Qualified deficit.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `qualified 
                        deficit' means any deficit in the earnings and 
                        profits of the controlled foreign corporation 
                        for any prior taxable year which began after 
                        December 31, 1998, and for which such 
                        corporation was a controlled foreign 
                        corporation, but only to the extent such 
                        deficit has not previously been taken into 
                        account under this paragraph.
                            ``(ii) Special rule for deficits before 
                        1999.--The term `qualified deficit' includes 
                        any deficit in earnings and profits for any 
                        taxable year beginning before January 1, 1999, 
                        to the extent that such deficit qualified as a 
                        qualified deficit under subsection (c)(1)(B) of 
                        this section (as in effect on the day before 
                        the date of the enactment of the Strategic 
                        Transitional Employment Act); except that any 
                        such deficit may be taken into account under 
                        this paragraph only to offset amounts 
                        attributable to the same activity as the 
                        activity giving rise to such deficit.
                    ``(C) Pro rata share.--For purposes of this 
                paragraph, the shareholder's pro rata share of any 
                deficit shall be determined under rules similar to the 
                rules of section 951(a)(2) for whichever of the 
                following yields the smallest share:
                            ``(i) the close of the taxable year, or
                            ``(ii) the close of the taxable year in 
                        which the deficit arose.
            ``(2) Certain deficits of member of the same chain of 
        corporations may be taken into account.--
                    ``(A) In general.--A controlled foreign corporation 
                may elect to reduce the amount of its subpart F income 
                for any taxable year by the amount of any deficit in 
                earnings and profits of a qualified chain member for a 
                taxable year ending with (or within) the taxable year 
                of such controlled foreign corporation. To the extent 
                any deficit reduces subpart F income under the 
                preceding sentence, such deficit shall not be taken 
                into account under paragraph (1).
                    ``(B) Qualified chain member.--For purposes of this 
                paragraph, the term `qualified chain member' means, 
                with respect to any controlled foreign corporation, any 
                other corporation which is created or organized under 
                the laws of the same foreign country as the controlled 
                foreign corporation but only if--
                            ``(i) all the stock of such other 
                        corporation (other than directors' qualifying 
                        shares) is owned at all times during the 
                        taxable year in which the deficit arose 
                        (directly or through 1 or more corporations 
                        other than the common parent) by such 
                        controlled foreign corporation, or
                            ``(ii) all the stock of such controlled 
                        foreign corporation (other than directors' 
                        qualifying shares) is owned at all times during 
                        the taxable year in which the deficit arose 
                        (directly or through 1 or more corporations 
                        other than the common parent) by such other 
                        corporation.
                    ``(C) Coordination.--This paragraph shall be 
                applied after paragraph (1).
            ``(3) Determination of deficit.--In determining the amount 
        of any deficit in earnings and profits, the adjustments set 
        forth in subsection (a) shall apply.''
    (b) Special Rules for Insurance Companies.--Section 953 of the 
Internal Revenue Code of 1986 is amended by striking ``section 
952(a)(1)'' in subsection (a) and inserting ``this section''.
    (c) Repeal of Foreign Base Company Income.--Section 954 of the 
Internal Revenue Code of 1986 is hereby repealed.
    (d) Repeal of Export Trade Corporation Provisions.--Subpart G of 
part III of subchapter N of chapter 1 of the Internal Revenue Code of 
1986 (relating to export trade corporations) is hereby repealed.
    (e) Conforming Amendments to Subpart F.--
            (1) Subparagraph (A) of section 955(a)(1) of the Internal 
        Revenue Code of 1986 is amended by inserting ``(as in effect 
        for taxable years beginning before 1999)'' after ``section 
        954(b)(2)''.
            (2) Subsection (b) of section 955 of such Code is amended 
        by striking ``within the meaning of section 954(d)(3)'' and 
        inserting ``within the meaning of section 964(a)''.
            (3) Paragraph (2) of section 956(c) of such Code is amended 
        by inserting ``(as in effect on the day before the date of the 
        enactment of the Strategic Transitional Employment Program Act) 
        or under section 952(a)(1)'' after ``section 952(b)'' in 
        subparagraph (H).
            (4) Subsection (b) of section 958 of such Code is amended--
                    (A) by striking ``954(d)(3), 956(b)(2), and 957'' 
                and inserting ``956(b)(2), 957, and 964(a)'', and
                    (B) by striking ``954(d)(3)'' the second place it 
                appears and inserting ``964(a)''.
            (5) Subsection (b) of section 959 of such Code is amended 
        by striking ``be also included in the gross income'' and 
        inserting ``be also included in the subpart F income''.
            (6) Subsection (a) of section 964 of such Code is amended 
        to read as follows:
    ``(a) Related Person.--For purposes of this part, a person is a 
related person with respect to a controlled foreign corporation, if--
            ``(1) such person is an individual, corporation, 
        partnership, trust, or estate which controls, or is controlled 
        by, the controlled foreign corporation, or
            ``(2) such person is a corporation, partnership, trust, or 
        estate which is controlled by the same person or persons which 
        control the controlled foreign corporation.
For purposes of the preceding sentence, control means, with respect to 
a corporation, the ownership, directly or indirectly, of stock 
possessing more than 50 percent of the total voting power of all 
classes of stock entitled to vote or of the total value of stock of 
such corporation. In the case of a partnership, trust, or estate, 
control means the ownership, directly or indirectly, more than 50 
percent (by value) of the beneficial interests in such partnership, 
trust, or estate. For purposes of this paragraph, rules similar to the 
rules of section 958 shall apply.''
            (7) Section 964 of such Code is amended by striking 
        subsection (b).
            (8) The table of sections for subpart F of part III of 
        subchapter N of chapter 1 of such Code is amended by striking 
        the item relating to section 954.
    (f) Other Conforming Amendments.--
            (1) Paragraph (2) of section 552(c) of the Internal Revenue 
        Code of 1986 is amended--
                    (A) by amending subparagraph (A) to read as 
                follows:
                    ``(A) is received from a related person which (i) 
                is a corporation created or organized under the laws of 
                the same foreign country under the laws of which the 
                foreign corporation involved was created or organized, 
                and (ii) has a substantial part of its assets used in 
                its trade or business located in such same foreign 
                country, and'', and
                    (B) by striking ``954(d)(3)'' and inserting 
                ``964(a)''.
            (2) Subparagraph (B) of section 861(c)(2) of such Code is 
        amended by striking ``954(d)(3)'' and inserting ``964(a)''.
            (3) Subparagraph (A) of section 864(d)(5) of such Code is 
        amended by striking clauses (ii), (iii), and (iv).
            (4) Subparagraph (A) of section 881(c)(4) of such Code is 
        hereby repealed.
            (5) Clause (i) of section 904(d)(2)(A) is amended by 
        inserting ``, as in effect on the day before the date of the 
        enactment of the Strategic Transitional Employment Act,'' after 
        ``section 954(c)''.
            (6) Subparagraph (D) of section 904(d)(2) is amended--
                    (A) by inserting ``, as in effect on the day before 
                the date of the enactment of the Strategic Transitional 
                Employment Act,'' after ``954(f)'', and
                    (B) by inserting ``or passive income'' before the 
                period at the end thereof.
            (7) Subparagraph (H) of section 904(d)(2) is amended by 
        striking ``954(d)(3)'' and inserting ``964(a)''.
            (8) Subparagraph (E) of section 904(d)(3) is hereby 
        repealed.
            (9) Subparagraph (C) of section 988(a)(3) is amended by 
        striking ``954(d)(3)'' and inserting ``964(a)''.
            (10) Subsection (c) of section 999 is amended--
                    (A) by striking ``, 952(a)(3),'' in paragraph (1), 
                and
                    (B) by striking ``, the addition to subpart F 
                income under section 952(a)(3),'' in paragraph (2).
            (11) The table of subparts for part III of subchapter M of 
        chapter 1 is amended by striking the item relating to subpart 
        G.
    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years of controlled foreign corporations beginning 
after December 31, 1998, and to the taxable years of United States 
shareholders with which (or in which) such taxable years of controlled 
foreign corporations end.
                                 <all>