The Valuing Employee Stock Today Act (S. 5615), legislation that would clarify how restricted stock units (RSU) are treated when calculating overtime pay under federal law, has been introduced in the Senate.
What’s happening: Sen. Ashley Moody (R-FL) introduced the bill, which has been referred to the Senate Committee on Health, Education, Labor, and Pensions. It is the companion to H.R. 8660, introduced by Rep. Ryan Mackenzie (R-PA), and which passed the House Education and the Workforce Committee in July.
Why this bill matters: Employers use equity compensation to give employees a stake in the long-term success of the businesses they help build. Since the Worker Economic Opportunity Act of 2000 (Public Law 106-202), federal law has excluded certain employer-provided equity awards—including stock options, stock appreciation rights and bona fide employee stock purchase programs—from the “regular rate” used to calculate overtime under Section 7(e) of the Fair Labor Standards Act (FLSA).
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RSUs, however, were not widely used when Congress enacted the law in 2000 and therefore were not explicitly addressed in the statute.
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The Act makes a targeted, practical fix to 29 U.S.C. 207(e)(8) by explicitly adding “restricted stock unit program” to the existing equity-related exemption from regular-rate calculations, along with conforming updates to ensure the exemption functions as intended.
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The bill adds much needed clarity for employers since RSUs are a common form of equity compensation for both salaried and hourly workers.
Our advocacy efforts: The CHRO Association has been a leading advocate for both the House and Senate versions of this legislation. Before it was introduced, we sent a letter of support and are hopeful the bill can be picked up as part of a year-end legislative vehicle. We will keep members updated as this bill moves forward.
