In a significant development for employers that issue equity compensation, H.R. 8660, the Valuing Employee Stock Today (VEST) Act, passed out of the House Education and Workforce Committee this week. The Association proudly advocated in support of this legislation, which addresses a long-standing area of ambiguity for HR and compensation professionals.
Why it matters: The VEST Act clarifies that Restricted Stock Units (RSUs) are excluded from nonexempt employees’ regular rate of pay under the Fair Labor Standards Act (FLSA), allowing more employees to receive and participate in equity compensation. For employers that grant RSUs to nonexempt staff, this has historically created uncertainty around overtime calculations and wage compliance.
While Congress changed the law in 2000 to clarify that granting stock options and stock appreciation rights are not included when calculating overtime, RSUs were not explicitly mentioned, and some plaintiffs’ attorneys have seized on this, alleging that overtime is owed by employers who have granted them. This bill would provide clear, much-needed guidance employers have been seeking.
Our effort: Ahead of this week’s committee vote, the Association led an employer coalition letter in support of the bill, helping to demonstrate broad business community backing for the legislation. You can read the full letter here.
What’s next: While committee passage is an encouraging step, we’re still a long way from a formal win. The bill must still be considered by the full House, which will likely happen this fall, and then the Senate.
The Association will continue to advocate strongly in support of the VEST Act as it moves through the legislative process. We’ll keep members updated at each step.
