Page 751 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

736 The Complete Guide to Executive Compensation

1938 Fair Labor Standards Act (FLSA)
• Established minimum pay of 25¢ per hour
• Established employee categories that were exempt from overtime pay
• Those who were not exempt were entitled to time and a half for all hours worked over 40 in
the week
• Act applied to all engaged in interstate commerce
1938 Revenue Act
• Employer contribution to pension plan must be irrevocable
1939 Revenue Act
• Employee compensation for injuries and illness not taxable
1940 Investment Company Act
• Law governing mutual fund industry
• Enforced by the SEC

1942 Revenue Act
• Lump-sum distribution eligible for capital gains treatment
• Pension plans cannot discriminate in favor of higher-paid employees
1942 Stabilization Act
• Froze wages and salaries but permitted increases in fringe benefits
1943 Current Tax Payment Act
• Income tax withholding instituted
1944 Victory Tax
• Maximum tax of 94% on income over $200,000
• Capital gains tax raised to 25%
1944 G.I. Bill of Rights
• Provided education benefits to thousands of veterans

1947 Labor-Management Relations Act (Taft-Hartley)
• Put restrictions on union organization activities
• Stated that pensions plans are subject to collective bargaining
1947 Portal-to-Portal Act
• Limited paid time to time worked, not simply time on the work site
1948 Revenue Act
• Tax rates scaled back, with a maximum tax of 82.13% on annual income over $400,000

1950 Defense Production Act
• Created the Wage Stabilization Board, with orders to limit pay increases while permitting
reasonable increases in fringe benefits

1950 Revenue Act
• Tax rates increased, with a maximum tax of 91% on annual income over $400,000
• Introduced the first statutory stock option (Section 421) permitting the following:
– Option prices as low as 85% of fair market value (FMV) at time of grant
– No tax until sold if held for more than six months after exercise and two years after grant
– Gain taxed as capital gain at 25%
– Term of grant not to exceed 10 years