[Congressional Record Volume 146, Number 37 (Wednesday, March 29, 2000)]
[Senate]
[Pages S1906-S1908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCONNELL (for himself, Mr. Dodd, Mr. Jeffords, Mr. Enzi, 
        Mr. Abraham, Mr. Bennett, Mr. Robb, Mr. Warner, Mrs. Murray, 
        Mr. Gorton, Mr. Hutchinson Mr. Lieberman, Mr. Bingaman, Mr. 
        Reed, Mr. Kerry, and Mr. Lugar):
  S. 2323. A bill to amend the Fair Labor Standards Act of 1938 to 
clarify the treatment of stock options under the act; read the first 
time.


                    worker economic opportunity act

 Mr. McCONNELL. Mr. President, I rise today to introduce the 
Worker Economic Opportunity Act. Senator Dodd and I have worked closely 
with Senators Jeffords and Enzi, as well as Senators Abraham, Bennett, 
Lieberman, and others to develop this important bill. This important 
bipartisan bill will ensure that American workers can receive lucrative 
stock options from their employers--once considered the exclusive perk 
of corporate executives.
  In recent years our country's innovative new workplaces and creative 
employers have offered new financial opportunities--such as stock 
options--for hourly employees. The Department of Labor recently issued 
an interpretation of the decades-old labor and employment laws that 
could keep normal employees from reaping the benefits of these perks. 
When I realized this, I decided we needed to fix this problem--it would 
have been a travesty for us to let old laws steal this chance for the 
average employee to share in his or her company's economic growth.
  This law simply says: it makes no difference if you work in the 
corporate boardroom or on the factory floor--everyone should be able to 
share in the success of the company.

[[Page S1907]]

  Our bill changes the outdated laws so they don't stand in the way of 
economic opportunity for American workers. In sum, the bill would amend 
the Fair Labor Standards Act to ensure that employer-provided stock 
option programs are allowed just like employee bonuses already are. 
Also, this legislation includes a broad ``safe harbor'' that specifies 
that employers have no liability because of any stock options or 
similar programs that they have given to employees in the past. The 
bill I am introducing today is what I hope will be the first of many 
common-sense efforts to drag old labor and employment laws into the new 
millennium.
  I am very pleased that Secretary Herman and the Department of Labor 
have worked with us on this legislation. The Worker Economic 
Opportunity Act is also supported by a broad range of high tech and 
business groups who have joined together to form the Coalition to 
Promote Employee Stock Ownership. This group has been of great 
assistance throughout the development of this bill.
  An identical companion bill to the Worker Economic Opportunity Act is 
being introduced in the House today. As a result, I am optimistic that 
we can work to ensure that this much-needed fix to the FLSA becomes law 
in the near future.
  Mr. DODD. Mr. President, today I join with my colleague Senator 
McConnell in introducing the Worker Economic Opportunity Act. This 
common sense bill will allow companies to continue to offer stock 
option programs to their hourly employees without violating the Fair 
Labor Standards Act with respect to overtime. We are joined today by 
Senators Jeffords, Enzi, Robb, Murray, Lieberman, Bingaman, Reed, 
Kerry, Abraham, Bennett, Gorton, Hutchinson, and Warner.
  Sotck options, stock appreciation rights, and employee stock purchase 
programs are tools used by some companies to give employees a stake in 
a company's success and to retain employees in a tight labor market. 
These programs are used by well-known companies such as Xerox, GTE, and 
PepsiCo. as well as hi-tech startups. In more and more situations, non-
exempt and exempt employees are able to participate. For example, it 
has been GTE's practice to give stock options to all 110,000 employees, 
of which 53,000 are non-exempt. Xerox corporation employs approximately 
52,000 employees in the United States, and offers stock options to all 
employees who have completed one year of service. It employs 93,000 
people worldwide and 57 percent of them are non-exempt.
  Clearly, the trend in our economy is that more and more companies are 
providing this type of compensation package. Not surprisingly, then, my 
office was beset with letters and phone calls recently concerning a 
1999 Department of Labor advisory letter regarding one company's 
proposed stock option plan for non-exempt employees. The opinion 
letter, which does not carry the weight of law, states that the value 
of the options would have to be included in the non-exempt workers base 
wages when calculating their overtime rates. The Fair Labor Standards 
Act (FLSA) exempts some employee benefits from overtime calculations 
including health insurance, thrift savings plans, and discretionary 
bonuses. When providing its opinion letter, the Department of Labor 
determined that stock option plans did not fall within any of the 
current exemptions. While the Department did point out that their 
opinion was based on only one company's proposed plan, it became clear 
that legislation was needed to exempt these programs, lest businesses 
begin to exclude non-exempt employees from receiving stock options. I 
commend the Department for calling for a legislative fix and working 
closely with us to craft this bipartisan bill.
  Our legislation would amend the Fair Labor Standards Act to exclude 
from the regular rate stock options, stock appreciation rights or 
bonafide stock purchase programs that meet certain vesting, disclosure, 
and determination requirements. A safe harbor would be in effect to 
protect companies that have already established stock option programs 
for non-exempt workers, including those programs provided under a 
collective bargaining agreement or requiring shareholder approval.
  Just several years ago, stock option plans were only offered 
corporate CEO's and other very senior executives. Today's flexible 
benefit packages give that same opportunity throughout the corporate 
structure. I don't believe that non-exempt employees who form the 
backbone of most businesses should be excluded from this opportunity. 
They deserve the right to share in the prosperity of the new economy.
  Clearly, stock option programs have risk attached, so we wanted to be 
very clear that our legislation requires that the terms and conditions 
of any program are communicated to employees and that the exercise of 
any grants is voluntary. Employees need to make informed choices.
  I am pleased that this has been a bipartisan effort, and also one 
where we have worked very constructively with the Administration. I 
hope we can move it quickly for the benefit of all working families.
 Mr. JEFFORDS. Mr. President, I am delighted to be here today 
to introduce the Worker Economic Opportunity Act. Having worked with 
colleagues from both sides of the aisle and the Department of Labor, I 
am extremely proud of this collaborative effort which has resulted in 
this legislation which will encourage employers to provide equity 
ownership opportunities to their hourly employees.
  In the last 10 years, we have witnessed tremendous change in the 
structure of our Nation's economy in large part due to the birth of the 
internet and e-commerce. The vitality of our economy is a tribute to 
the creative and entrepreneurial genius of thousands of individual 
business people and the indispensable contribution of the American 
workforce.
  As legislators during this exciting time, we are challenged to 
maintain an environment that will foster the continued growth of our 
economy. We must work to ensure that our laws are in sync with the 
changing environment. However, many of the laws and policies governing 
our workplace have fallen out of sync with the information age and 
there has been particular resistance to changing our labor laws. As 
Chairman of the Senate Committee with jurisdiction over workplace 
issues, I believe it is time to examine and modify these laws to meet 
the rapidly involving needs of the American workforce.
  The Fair Labor Standards Act (FLSA), for example, was enacted in the 
late 1930s, to establish basic standards for wages and overtime pay. 
While the principles behind the FLSA have not changed, its rigid 
provisions make it difficult for employers to accommodate the needs of 
today's workforce. Most recently, we discovered that the FLSA actually 
operates to deter employers from offering stock option programs to 
hourly employees.
  While stock option programs are most prevalent in the high tech 
industry, increasingly employers across the whole spectrum of American 
industry have begun to offer stock option programs to all of their 
employees. Broad-based stock option programs prove valuable to both 
employers and employees. For employers, stock options programs have 
become a key tool for employee recruitment, motivation and retention. 
Employees seek out companies offering these programs because they 
enable workers to become owners and reap the benefits of their 
company's growth.
  When I heard about the FLSA's application to stock options, I became 
very concerned about its impact on our workforce. I was pleased to 
discover that Senators' McConnell, Dodd, and Enzi shared similar 
concerns and that the Department of Labor also recognized that we had a 
problem on our hands that would require a legislative solution. 
Together we have crafted the Worker Economic Opportunity Act which will 
create a new exemption under the Fair Labor Standards Act for stock 
options, stock appreciation rights and employee stock purchase 
plans.
 Mr. ENZI. Mr. President, I am pleased to be part of the 
introduction today of the Worker Economic Opportunity Act, a bipartisan 
bill to exclude stock options and stock option profits from overtime 
pay calculations under the Fair Labor Standards Act. I want to 
acknowledge and commend my colleagues Senators McConnell, Dodd, and 
Jeffords for their hard work on this issue.

[[Page S1908]]

  Earlier this year, the Department of Labor advised employers that 
they would be required to include stock options in overtime 
calculations. The advisory also prescribed an extremely complicated 
method of calculation that created a virtual administrative 
impossibility for employers. We received overwhelmingly negative 
feedback that this advisory would result in the end of stock options 
for hourly employees and create a lose-lose situation for employees and 
employers alike. The legislation we introduce today ensures that 
companies can continue to give stock options to hourly employees so 
that these employees--and not just executives--can share in this 
country's economic boom. And employers will be able to continue to use 
stock options as a valuable tool for recruiting and retaining employees 
in a competitive labor market.
  This bipartisan legislation also represents an important first step 
towards reforming outdated labor statutes that no longer meet the needs 
of today's workforce. Most of the major labor statutes were drafted 
between 30 and 60 years ago and many of their heavy-handed restrictions 
are now more harmful than helpful to employees in the modern workplace. 
We need to think about how to encourage--not discourage--employers' 
development of new and creative measures to benefit employees, such as 
stock option programs and telecommuting arrangements. Our legislation 
will provide just such encouragement and ensure that stock option 
programs do not fall prey to obsolete legislative prohibitions.
  Finally, I am particularly proud that both Democrats and the 
Department of Labor have worked with us on this bill. As chairman of 
the Employment, Safety and Training Subcommittee, I firmly believe that 
cooperation between lawmakers and agencies is the best way to develop 
practical solutions that benefit both employees and businesses. I 
sincerely hope that we can continue to work together on similar 
measures in the future.
                                 ______