Labor Department Asks for Legislative Fix to Options Overtime Issue

T. Michael Kerr, head of the Department of Labor's Wage and Hour Administration, has asked Congress to amend the Fair Labor Standards Act to clarify that gains made from the exercise of stock options or other employee ownership programs do not have to be counted as compensation for the purpose of calculating overtime pay. The Department had reached that conclusion in an opinion letter issued last year. Department officials said they were not going to retract the letter, which applies only to the specific company that asked for it and does not necessarily represent Department policy. However, Kerr said that the Department would support a legislative solution to the problem.

Kerr made his remarks at a hearing March 3 before the Subcommittee on Workforce Protection of the House Committee on Education. Committee members are already drafting bipartisan legislation on this subject, and staffers have begun a similar effort in the Senate. Legislation could be brought to committee votes on the next several weeks.