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Stock Value

Calculating stock options into a worker's base pay is creating debate.
Magazine Contributor
2 min read

This story appears in the June 2000 issue of Entrepreneur. Subscribe »

Negotiations are underway between small-business groups and the Labor Department about including stock options in the calculation of base pay to figure out the overtime pay of hourly workers.

The Labor Department's Wage and Hour division (WHD) shook up the business community after it found out about an "opinion" letter from the division to an unnamed company, which told the company it couldn't exclude profits made from the sale of stock options from an hourly employee's base pay (or "regular rate" in Labor Department parlance).

But business groups don't consider stock options part of an employee's regular rate-and therefore excluded them from the time-and-a-half calculation. T. Michael Kerr, administrator of the WHD, says the letter "didn't make a general statement on whether all stock option programs do or should affect the regular rate, nor was it intended to do so."

However, Michael Bartlett, manager of labor law policy for the U.S. Chamber of Commerce, insists the letter, by implication, affects nearly all companies.

The Chamber and other business groups are now talking with Kerr about sculpting legislation to satisfy both sides and clarify the issue once and for all.

Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.

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