S. 5615: Valuing Employee Stock Today Act

This bill would change federal wage-and-hour law so that certain restricted stock units (RSUs) are treated similarly to other forms of employee equity for overtime calculations.

What the bill does

Under current law, some employer-provided equity benefits such as stock options, stock appreciation rights, and bona fide employee stock purchase programs are excluded when figuring an employee’s “regular rate” of pay for overtime purposes. The bill would amend the Fair Labor Standards Act to make clear that restricted stock unit programs are also covered by this exclusion.

In plain terms, if a worker receives RSUs from their employer, the value or income from those RSUs generally would not have to be counted as part of their regular hourly rate when calculating overtime pay.

How the law would change

• It adds “restricted stock unit program” to the list of employer equity programs that are exempt from overtime-rate calculations.
• It also changes one wording reference so the law covers equity rights that are accepted as well as those that are exercised, reflecting how RSUs work.

When it would take effect

The change would take effect 90 days after enactment.

Protection for employers during the transition

The bill includes rules limiting employer liability for certain RSUs during the transition period. In general, employers would not be liable for not counting RSU value in overtime calculations for:

• RSUs granted before the effective date;
• RSUs granted during the first 12 months after the effective date, if the RSU program already existed when the bill was enacted and would need shareholder approval to be changed to comply with the new law; or
• RSU programs covered by a collective bargaining agreement already in effect on the effective date.

Overall effect

The bill would mainly affect how employers calculate overtime pay for workers who receive RSUs as part of compensation. It would not create RSU programs by itself; rather, it would clarify how those awards are treated under overtime law.

Relevant Companies

None found