Salary Cap Act

AN ACT

To set salary caps, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled

SECTION 1. SHORT TITLE.

(a) This Act may be cited as the ‘‘Salary Cap Act.”

SEC 2. FINDINGS.

(a) Congress finds that—

(1) Over the past five decades, the top one percent of American earners has nearly doubled its share of national income;

(2) The average S&P 500 company’s CEO-to-worker salary ratio was 272-to-1 in 2022, up from 44-to-1 in 1989 and 15-to-1 in 1965;

(3) High CEO salaries linked to the share value of companies encourages short-term business decisions that negatively impact the USA’s social and ecological health;

(4) The growth of CEO pay widens gender and racial pay gaps;

(5) The top one percent in income in the USA is responsible for 23 percent of the growth in global carbon emissions between 1990 and 2019, while the bottom 50 percent is responsible for only 16 percent of emissions growth;

(6) Excessive salaries promotes unsustainable production and consumption, threatening the security and wellbeing of the United States and its citizens.

SEC 3. DEFINITIONS.

(a) In this Act—

(1) The term “Act” refers to the Salary Cap Act;

(2) The term “Secretary” refers to the Secretary of Labor;

(3) The term “Employee” refers to any individual employed by a business or any of its subsidiaries, whether as a full-time, part-time, seasonal, or temporary worker;

(4) The term “Salaries” refers to the sum total of remuneration for services performed by an employee for an employer, including—

(A) wages, bonuses, and tips;

(B) any elective deferrals, and;

(C) gains realized from the sale, exchange, or other disposition of stock acquired under a qualified stock option.

SEC. 4. OCCUPATION-SPECIFIC SALARY CAPS.

(a) IN GENERAL.—The Secretary shall develop and implement maximum occupation-specific salary caps.

(b) CAPS.—The Secretary shall update annually the maximum annual salary of each Standard Occupational Classification (SOC) major occupational group, such that the maximum annual salary for each detailed occupation within that major occupational group is 1.8 times the 90th percentile of salaries for that major occupational group.

(1) SECTORS.—These maximum salaries shall apply to all occupations classified under the following SOC Codes—

(A) Management Occupations (SOC Code 110000);

(B) Business and Financial Operations Occupations (SOC Code 130000);

(C) Computer and Mathematical Occupations (SOC Code 150000);

(D) Architecture and Engineering Occupations (SOC Code 170000);

(E) Life, Physical, and Social Science Occupations (SOC Code 190000);

(F) Community and Social Services Occupations (SOC Code 210000);

(G) Legal Occupations (SOC Code 230000);

(H) Education Instruction and Library Occupations (SOC Code 250000);

(I) Arts, Design, Entertainment, Sports, and Media Occupations (SOC Code 270000);

(J) Healthcare Practitioners and Technical Occupations (SOC Code 290000);

(K) Healthcare Support Occupations (SOC Code 310000);

(L) Protective Service Occupations (SOC Code 330000);

(M) Food Preparation and Serving Related Occupations (SOC Code 350000);

(N) Building and Grounds Cleaning and Maintenance Occupations (SOC Code 370000);

(O) Personal Care and Service Occupations (SOC Code 390000);

(P) Sales and Related Occupations (SOC Code 410000);

(Q) Office and Administrative Support Occupations (SOC Code 430000);

(R) Farming, Fishing, and Forestry Occupations (SOC Code 450000);

(S) Construction and Extraction (SOC Code 470000);

(T) Installation, Maintenance, and Repair Workers (SOC Code 490000);

(U) Production Occupation (SOC Code 510000); and

(V) Transportation and Material Moving Occupation (SOC Code 530000).

(2) APPLICATION.—This salary cap shall apply to—

(A) Corporations subject to Securities and Exchange Commission filing; and

(B) Corporations with gross revenues of at least $100,000,000 a year.

(c) ESTABLISHMENT.—The Secretary shall set occupation-specific salary caps annually, beginning no later than January 1, 2027.

(d) REGULATIONS.—The Secretary shall issue regulations as necessary to prevent avoidance of the purposes of this Act, including regulations to prevent the manipulation of the salary ratio by changes to the composition of the workforce (including by using the services of contractors rather than employees).

SEC. 5. ENFORCEMENT AND PENALTIES.

(a) ENFORCEMENT.—The Office of Labor-Management Standards shall be responsible for enforcing this Act and the regulations promulgated under this Act. 

(1) PETITION—The Office of Labor-Management Standards shall have the power to petition any court of appeals of the United States or any district court of the United States, within any circuit or district where excessive salaries have occurred, for the enforcement of such order and for appropriate temporary relief, issuance of a restraining order, or both.

(2) INJUNCTIONS—The Office of Labor-Management Standards shall have power, upon issuance of a complaint as provided in paragraph (1) to petition any United States district court for a restraining order against parties targeted in the complaint.

(b) PENALTIES.—Companies in violation of this section will be subject to criminal penalties of up to $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both punishments, in the discretion of the court.

SEC. 6. SELF-EMPLOYMENT AND EMPLOYEE-OWNER INCOME CAPS.

(a) NET EARNING TAX.— All net earnings from self-employment or employee-ownership exceeding $400,000 in a taxable year shall be taxed as ordinary income at 100%.