- The Washington Times - Thursday, May 4, 2000

The House yesterday voted to reverse a Labor Department policy that would have limited the trend toward giving employees stock options in growing companies.
The policy "illustrates how out of step Washington really is with the opportunities of the new economy," said Rep. John A. Boehner, Ohio Republican.
The House bill, passed unanimously, says stock options do not count as income for purposes of calculating overtime pay, a reversal of the Labor Department opinion written last year. The Senate previously passed the bill unanimously and the president is likely to sign it.
While seemingly a highly technical point, the question is crucial for any worker who is paid by the hour and also receives stock options. If stock options are considered part of a worker's regular pay, a company would be forced to pay a vastly inflated amount for overtime work, which is paid on a time-and-a-half basis.
A worker earning $6 per hour, for example, would normally receive $9 per hour for overtime work. If he receives stock options that average an extra $4 per hour, however, the company would be forced to treat him as a $10-per-hour employee and pay $15 per hour for overtime.
Faced with a huge boost in the cost of overtime and the administrative nightmare of calculating the average value of options, supporters of the bill say, many companies would be hesitant to start stock-option programs, or to continue existing ones.
"Allowing hourly workers to share in the growth of their companies is good for the employees, good for families, and good for the economy," said Rep. Cass Ballenger, North Carolina Republican.
In a letter written to an unidentified company last year, the Department of Labor said that the existing law, first passed in 1938, makes no exception for stock-option income in calculating wages for overtime.
Stock options have been a fixture for businesses for decades, but usually only for senior managers, who are paid a salary and are not usually paid overtime. Only in the last decade, led by high-tech firms, has it become common for companies to offer stock options to hourly employees.
"We're trying to run businesses, labor and management on rules written back in the 1930s, when it was a manufacturing economy and men only," said House Education and Workforce Committee Chairman Bill Goodling, Pennsylvania Republican. "You can't do that in the 21st century."
The bill enjoyed support from both political parties after the House included some technical provisions that Democrats say will prevent companies from converting employees' hourly wages into stock options to artificially lower overtime costs.
"The overtime law plays the most important role in the everyday life of Americans than any other provision of labor law," said Rep. Major R. Owens, New York Democrat.

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