On May 18, 2000, President Clinton signed the Worker Economic Opportunity Act, P.L. 106-202. The Act makes stock options more readily available to hourly workers by exempting employees’ profits on stock options, stock appreciation rights, and employee stock purchase plans from the employees’ "regular rate" of pay under the Fair Labor Standards Act.
This reverses a Labor Department opinion that had held that stock option profits had to be counted as wages when calculating overtime pay.
Beginning August 16, grants must meet several requirements to be excluded from the employee’s "regular rate." First, the terms of the grant must be explained to the employee no later than the grant date. Second, grants of stock options or stock appreciation rights cannot be exercisable for at least six months from the date of grant (except in the event of death, disability, retirement or change in control). Third, the exercise price of a stock option or stock appreciation right must be at least 85%
