The Labor Department, already under pressure over a ruling on safety for at-home workers, came under fire again Tuesday for telling a company it must figure stock options into worker's overtime pay rate.
Department officials rushed to provide a same-day response to
complaints Tuesday by Washington-based LPA Inc., an association of
corporate human resources executives, which said the guidance could
discourage companies from offering stock options to lower-level
The department said the guidance letter, written in February
1999, had been tailored to a specific circumstances presented by
"There are (other) circumstances under which stock option
programs would not need to be included when calculating overtime,"
said a letter to LPA from Employment Standards Administration Wage
and Hour Division Administrator T. Michael Kerr.
Kerr's letter did not elaborate, but invited LPA officials to
meet with him to discuss the matter.
It was the second time in two weeks that the Labor Department
has faced criticism for advice given to one company in guidance
letters that are routinely publicly released and consulted by
Last week, in a controversy that lawmakers have promised to
follow up with an investigation, the department withdrew a letter
that told a Texas credit services firm that companies have the same
safety responsibilities for employees working at home as in the
The stock option guidance letter responded to an unidentified
corporate attorney's questions about a hypothetical stock option
Workers included in the hypothetical plan would be able to
choose to buy 100 shares of their company's stock at a preset price
any time during a five-year period.
Labor Department officials said that under such a scenario, the
company should treat the stock options as part of the worker's
normal compensation not a special bonus or profit-sharing plan.
That would mean a higher base pay for the worker and therefore a
higher overtime rate.
LPA, in a written complaint sent to Labor Secretary Alexis
Herman, noted that a growing number of companies offering similar
stock option plans to hourly wage workers don't currently count
them as normal compensation.
"We recently circulated the letter among our members and those
who provide such options to nonexempt (from overtime) employees are
very upset with the opinion," said president Jeffrey McGuiness in