Sponsor
Ryan Mackenzie
Representative · R-PA
Adds restricted stock unit programs to the FLSA exemption so RSU value is excluded from the overtime regular-rate calculation, and clarifies "acceptance" counts alongside "exercise."
Representative · R-PA
The bill reduces employer uncertainty and modernizes how RSUs are treated for overtime calculations, but that clarity comes with a trade‑off: many workers may receive less cash overtime and become more reliant on illiquid, taxable equity with fewer enforceable protections.
Employers and payroll departments (especially small businesses) get clearer, consistent rules on how RSUs count for FLSA regular‑rate calculations, reducing litigation risk and payroll ambiguity.
Employers offering RSU programs can treat certain equity awards like other covered employee equity plans, lowering compliance costs and making it easier to offer RSUs to rank‑and‑file workers.
Specifying that 'acceptance' (not just 'exercise') triggers the exemption clarifies timing for award treatment, reducing legal uncertainty for financial institutions and payroll processors.
Workers who receive RSUs (middle‑class, overtime‑eligible employees) could see lower cash overtime pay because RSU value would be excluded from the FLSA regular‑rate.
Employers may shift compensation toward RSUs to reduce overtime costs, increasing employees' reliance on illiquid and taxable equity instead of cash wages.
Excluding RSU value from the regular rate can create tax and payroll reporting complications for employees who face tax liability on RSU vesting but lack the immediate cash to pay those taxes.
Based on analysis of 3 sections of legislative text.
Official title: To amend the Fair Labor Standards Act of 1938 to protect worker access to employer equity, and for other purposes.
Introduced May 4, 2026 by Ryan Mackenzie · Last progress May 4, 2026
Changes the Fair Labor Standards Act to explicitly treat restricted stock unit (RSU) programs like other employer equity programs for overtime calculations, so the value of RSUs is excluded from the overtime regular-rate calculation. It also clarifies that acceptance of awards (not just exercise) counts for a referenced activity. The amendments take effect 90 days after enactment.