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March 13, 2000
Labor Department Backtracks on Stock Options and Overtime
It'
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s becoming a familiar pattern at OSHA and the Department of Labor. One of these agencies writes an opinion letter that tries to answer a specific query from a company about how to handle some tricky area of compliance. The next thing it knows there is a full-blown attack from the media and pro-business groups, using the opinion as a full scale attack on some popular, mom and apple pie kind of issue.

The latest comes at the Department of Labor over its interpretation of complicated overtime laws, and follows OSHA's flap over regulation of safety in home offices. On the overtime issue, businesses were quick to howl that calculating overtime with the value of stock options was going to be so complicated that no one would offer stock options to hourly personnel. Thus a key incentive to attracting workers would be lost and the progress of technology impeded.

Secretary of Labor Alexis Herman released a statement recently that stepped the Agency back from the impression taken by many that it was anti-stock option:

"The Department of Labor supports the use of stock option plans which allow workers to obtain a stake in their employer's growth, prosperity and profits. We recognize that the workplace is constantly changing, and that to maintain the spirit of the law, sometimes the letter of the law must change. To that end, we have been working with interested parties to develop a targeted, bi-partisan legislative proposal to amend the Fair Labor Standards Act and make these plans available to employees while still protecting their hourly wage.

If all interested parties work together in a constructive way, we can arrive at a solution that will benefit both employees and their employers."

Secretary Herman concluded by restating that "the Labor Department's Wage and Hour Division's compliance assistance opinion letter of February 12, 1999-- responding to a hypothetical stock option plan--accurately reflects the application of the Fair Labor Standards Act to that hypothetical plan, but not to every possible plan. DOL staff have been meeting with many groups to learn more about both stock option plans and other means for employees to obtain a stake in their company's success. "

For more on this see HR.BLR.com.com story: "Companies Exercised over Options Opinion", http://hr.blr.com/news/00-02/09_03.html

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