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Recently, a Department of Labor opinion letter stated that in certain circumstances, the value of employee stock options must be factored into the employee's regular pay rate for determining overtime pay. Employer groups across the country engaged in heavy lobbying to rescind this Labor Department advisory letter. The Worker Economic Opportunity Act was unanimously approved by both the United States Senate and the House of Representatives and on May 18, President Clinton signed the Act amending the Fair Labor Standards Act.
Employers no longer need to include profits from certain employer - provided stock options, stock appreciation rights and bona fide stock purchases in overtime pay calculations. This change in the law reflects the changes in the new economy. Corporate salaried executives have always been able to take advantage of lucrative stock options. Now, hourly employees also have access to their company stock option plans, without employers having to be concerned about the "overtime" roll-up factor.
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