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IBM Responds to Overtime Lawsuits With 15% Salary Cut

Posted by samzenpus on from the give-with-one-hand-and-take-with-the-other dept.

bcmbyte writes "IBM in recent months has been hit with lawsuits filed on behalf of thousands of U.S. employees who claim the company illegally classified them as exempt from federal and state overtime statutes in order to avoid paying them extra whenever they worked more than 40 hours per week. The good news for those workers is that IBM now plans to grant them so-called "non-exempt" status so they can collect overtime pay. The bad news: IBM will cut their base salaries by 15% to make up the difference."

4 of 620 comments (clear)

  1. Hmm by Tesen · · Score: 5, Informative

    Maybe I am confused, now that they are classified non-excempt, does that mean the OT pay is retroactive? If so, grab money, cue job search...

    1. Re:Hmm by nesabishii · · Score: 5, Informative

      Typically the settlement includes retroactive overtime pay for a limited amount of time, maybe a year or possibly even more. The new pay scheme is probably exactly equivalent to the old, but substitutes overtime hours for base pay, meaning wages stay the same. However, this doesn't account for the possibility that now, if their hours are reduced to below overtime, they are compensated much more poorly. It's a short term monetary gain (in the form of a settlement), for a net loss in wage security (as fewer hours now means lower wages, compared to under the "exempt" pay plans). So, jumping ship could be a smart move here, or at least an easier one with the settlement.

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  2. Again. by nesabishii · · Score: 5, Informative

    I wonder how many times this will work, before large companies adjust their payrolls. Radioshack settled a similar lawsuit with their store managers several years ago, and lowered their base salaries to offset the new overtime payouts. I'd think they'd want to act preemptively, to avoid a lawsuit--I'm somewhat surprised IBM had succumbed to this practice.

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  3. Re:regulated in contract or law? by DoofusOfDeath · · Score: 5, Informative

    Don't they have their salary regulated in contract? Or is it accept-or-be-fired (article doesn't tell)?


    When I used to work for IBM (10 - 8 years ago), it was standard U.S. practice: each year, your manager calls you into a meeting and tells you what your new pay level is. You can accept it, or quit your job, or treat it like the beginning of a negotiation, which will in most cases get you labeled as a difficult employee.

    It's pretty laissez faire, except that they can't base your pay level / pay level changes on race, religion, etc.