[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2323 Enrolled Bill (ENR)]

        S.2323

                       One Hundred Sixth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

           Begun and held at the City of Washington on Monday,
             the twenty-fourth day of January, two thousand


                                 An Act


 
 To amend the Fair Labor Standards Act of 1938 to clarify the treatment 
                     of stock options under the Act.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Worker Economic Opportunity Act''.

SEC. 2. AMENDMENTS TO THE FAIR LABOR STANDARDS ACT OF 1938.

    (a) Exclusion From Regular Rate.--Section 7(e) of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 207(e)) is amended--
        (1) in paragraph (6), by striking ``or'' at the end;
        (2) in paragraph (7), by striking the period and inserting ``; 
    or''; and
        (3) by adding at the end the following:
        ``(8) any value or income derived from employer-provided grants 
    or rights provided pursuant to a stock option, stock appreciation 
    right, or bona fide employee stock purchase program which is not 
    otherwise excludable under any of paragraphs (1) through (7) if--
            ``(A) grants are made pursuant to a program, the terms and 
        conditions of which are communicated to participating employees 
        either at the beginning of the employee's participation in the 
        program or at the time of the grant;
            ``(B) in the case of stock options and stock appreciation 
        rights, the grant or right cannot be exercisable for a period 
        of at least 6 months after the time of grant (except that 
        grants or rights may become exercisable because of an 
        employee's death, disability, retirement, or a change in 
        corporate ownership, or other circumstances permitted by 
        regulation), and the exercise price is at least 85 percent of 
        the fair market value of the stock at the time of grant;
            ``(C) exercise of any grant or right is voluntary; and
            ``(D) any determinations regarding the award of, and the 
        amount of, employer-provided grants or rights that are based on 
        performance are--
                ``(i) made based upon meeting previously established 
            performance criteria (which may include hours of work, 
            efficiency, or productivity) of any business unit 
            consisting of at least 10 employees or of a facility, 
            except that, any determinations may be based on length of 
            service or minimum schedule of hours or days of work; or
                ``(ii) made based upon the past performance (which may 
            include any criteria) of one or more employees in a given 
            period so long as the determination is in the sole 
            discretion of the employer and not pursuant to any prior 
            contract.''.
    (b) Extra Compensation.--Section 7(h) of the Fair Labor Standards 
Act of 1938 (29 U.S.C. 207(h)) is amended--
        (1) by striking ``Extra'' and inserting the following:
    ``(2) Extra''; and
        (2) by inserting after the subsection designation the 
    following:
    ``(1) Except as provided in paragraph (2), sums excluded from the 
regular rate pursuant to subsection (e) shall not be creditable toward 
wages required under section 6 or overtime compensation required under 
this section.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date that is 90 days after the date of enactment of this 
Act.
    (d) Liability of Employers.--No employer shall be liable under the 
Fair Labor Standards Act of 1938 for any failure to include in an 
employee's regular rate (as defined for purposes of such Act) any 
income or value derived from employer-provided grants or rights 
obtained pursuant to any stock option, stock appreciation right, or 
employee stock purchase program if--
        (1) the grants or rights were obtained before the effective 
    date described in subsection (c);
        (2) the grants or rights were obtained within the 12-month 
    period beginning on the effective date described in subsection (c), 
    so long as such program was in existence on the date of enactment 
    of this Act and will require shareholder approval to modify such 
    program to comply with section 7(e)(8) of the Fair Labor Standards 
    Act of 1938 (as added by the amendments made by subsection (a)); or
        (3) such program is provided under a collective bargaining 
    agreement that is in effect on the effective date described in 
    subsection (c).
    (e) Regulations.--The Secretary of Labor may promulgate such 
regulations as may be necessary to carry out the amendments made by 
this Act.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.