Slashdot Mirror
IBM Responds to Overtime Lawsuits With 15% Salary Cut
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."
This, folks, is a good example of why labor unions are still around. Not that it's going to help any in this case...
That remind me why I stopped being an employee, and became a contractor.
The bad thing about being a contractor is I only get paid for the time I work (no sick leave, public holidays, annual leave etc)
The good thing about being a contractor is I get paid for _every_ hour I work.
Strangely enough, once I was working on a strictly per-hour basis, the boss found far fewer 'emergencies' that required me to work all weekend.
Quidquid Latine dictum sit, altum videtur (anything said in Latin sounds important)
15%? That's cheap compared to the damage from the loss of morale and confidence in management.
It also doesn't account for the possibility that the staff who work overtime will now be paid more than the clockwatchers who participate in the stampede to the parking lot at 4:30.
Where did they think that money was going to come from? That IBM would suddenly have that much extra money to throw around?
Personally, if it were me, I'd be happy about the change. Less guaranteed money, but for quite a while I've wished I could work -less- than 40 hours a week, even if it meant a pay cut. SO much other stuff I want to experiment with and no time to do it. So to have that overtime on the books instead of just being expected...
I'd guess many of these people will find newhires in their departments and 40hr/wk jobs again, too.
There are some who only lose in this story, though... The 1/3 of the affected workers who were -not- working overtime and were not involved in this lawsuit. They get paycuts anyhow. I can imagine how nice the workplace will be for the next year... Assuming any of those 1/3 stay. I sure wouldn't in their shoes.
"If you make people think they're thinking, they'll love you; But if you really make them think, they'll hate you." - DM
And how exactly do you live if you don't work? Property is owned by the government so you must always pay taxes or you loose "your" land. Food, power, transportation? Yes, why don't you show us all how you can live without working aside from taking up residence in a shopping cart on the corner. Also, don't the employees who do the work deserve some of the benefit? It seems corporate executives want to make multi-million dollar bonuses based on the work of others without sharing. Work hard so the boss can buy his 16 year old daughter a $65,000 car! Look at the striking writers guild in Hollywood. Are they wrong for wanting a piece of what they create or should they allow the executives who do nothing to take all the money for themselves? How about all these mergers? Can anyone compete against a mega-corp that owns politicians and writes the laws themselves? If you think the market is "free" then you are living in another world.
I wouldn't be surprised to see a (relative) handful of people quit over this, but I'd bet good money the majority will stay put - despite the 'insult' the paycut hands out. The reason - take a good look at the US economy. There isn't a lot of upward mobility it the numbers, economists are worried about a recession - and that fear usually turns into a self-fulfilling prophecy; at least to a point. Things aren't looking so good right now, people are worried. The Housing sector is the number one place not to be stuck working right now, tech isn't far behind.
Do you honestly think they (IBM) care? Seriously. The whole idea of (mostly big) companies caring about "engagement" and "morale" is a bunch of trash. Lip-service. Hypocrisy. Whatever you want to call it. Know this: they only care just enough to keep you around. You can argue that this is the way it should be or "free-market" or "just doing business" and you'd probably have a good argument, but please don't fool yourself or anyone else into thinking that companies preemptively care about the loss of morale. They don't. They always react, never plan ahead.
Wow. I really sound bitter! Can you tell what size company I work for?
Please don't use "umm" or "err" or "erm".
The end result is exactly what IBM did. Suddenly starting to pay for overtime means IBM is raising effective salaries by 10-20% or more, so naturally IBM lowers base salaries. The end result is that we are exactly where we started - people work the same hours, and get the same pay.
Well, at least on average; for individuals who work more or who work less, there will be some change. There are also motivational issues - if you are paid for overtime, you have less incentive to work efficiently (one reason why hi-tech managers, and many workers, don't like paid overtime and prefer to raise the base pay). Overall, it is hard to say that the change is for the better. The old salaries and norms were already 'working' - they were comparable to industry norms, were arrived at after years of haggling, corrections, and so forth, and most importantly people knew what they were getting when they signed on.
It's fine that for you the slow weeks compensate for the crunch ones, but if you are at your desk for at least 40 hours a week (working or not) then there's no compensation whatever, you are still giving away your free time.
I must say that I'm also willing to work more than 40 hours (any reasonable number of hours) when needed, but I'm actually getting my time back (in time, not in cash - which I actually prefer).
It's a short term monetary gain (in the form of a settlement), for a net loss in wage security
Depending on the job, wage security is often less of a concern than schedule security, ie the possibility that the boss will tell you you're working 80 hours next week. Now he has to account for extra overtime over the usual in his budget, and that's a heck of a deterrent.
Each may very well be more important to different people. As another respondent said, this probably is best for the quality employees who always find themselves overcommitted and working hard, and maybe less good for clockwatchers.
No, this is great business and I love it. I am considered an exempt employee, so I am salaried with no OT; however, I love seeing corporations telling their employees to fuck off when they pull shit like this. IBM said, "You want to be hourly, fine here is your old pay minus 15%." Now, do not cry too much for these people. Assume their old salary was equivalent to a rate of $x per hour. Their new rate would be about $(x * .85).
Previously, their annual salary would've been approximately 2000*x. It is now about 1700*x. Assume overtime is time and a half, they would get paid 1.275*x for each hour of OT. This means they would need to work about 236 hours of OT a year, or about 4.5 hours per week. If they were working so much OT that they were willing to sue, then this should be easy to make up and in the end they are making more money, since they weren't getting paid OT before.
Their only other option would've been to unionize; however, if these are programming and/or engineering jobs, you can bet IBM would've outsourced them in a second to save the money and the hassle of dealing with a workers union. Also, don't think there aren't plenty of engineers in the US who are willing to "scab". Most the engineers I know (myself included) absolutely abhor unions.
What's wrong with not working overtime?
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
"We can categorically state we have not released man-eating badgers into the area." - UK military spokesman, July 2007
Not bad. Not bad until you got to the part about housing.
US housing costs are dramatically cheaper (on average) than those in western Europe. The primary reason for the difference is that housing costs in the US reflect the fact that land on which to build is cheap, so the cost of buying an existing house has to compete with the fact that you could, if you were willing, simply build a new one. This option is generally unimaginable for inhabitants of most of Europe, where land prices make this option absurd. As a result, house/apartment/rental costs there are not competing with the "i'll do it myself" option, and can climb to levels contained only by median salaries.
Your inevitablity stance on a global economy is also a little sad. Things like the "global economy" don't just happen. They happen because a specific (if large) set of vested interests arrange/push for it to happen. In this case, owners of capital who stand to see huge benefits from the free flow of their property, have pushed hard for it while telling everyone that the whole world will benefit from it. They have resisted similarly free flow of labor, while relying on the fact that moving labor around is much harder than moving capital. It was never inevitable - its the result of power and money seeking more power and more money, just like so much of human history has been.
I have to disagree. The best employees may be the one who are smart, effective, and efficient, and can get their work done in forty hours. They'll get screwed.
The problem is that there are some jobs where time spent is the most important metric. Working the help desk, for example, or being a cashier. More productive employees (in theory) should make a better hourly wage, but there's a pretty close correlation between time spent and work accomplished. However, that's not the guideline for what makes an "exempt" employee. That has more to do with issues of self directedness. If the boss says "this week your setting up these servers", your probably not an exempt employee However, some people might take 8 hours, some might take all week. In that kind of work, the difference in efficiency between people can be enormous. It's a lot less if you're delivering packages.
If IBM hired these people with the understanding that this would be a forty hour a week job with "occasional" overtime, than this is an admission that they lied. Which stinks. It also smacks as a power play against people who complained. Which also stinks. My sympathies to everyone affected by this - I'd be mighty pissed if it was me.
It's not wasting time, I'm educating myself.
Detroit isn't a good example of this. The foreign car brands that produce their vehicles domestically have proven that the American auto worker, despite being unionized, can produce a good product at a price point that is both affordable to the consumer and profitable to the company.
The problem with Detroit is that they design and sell a shitty product. The line worker doesn't control the quality of the parts he/she bolts onto the car as it passes by. All he/she can do is his/her job to the best of his/her ability, but a poorly designed engine mated to a shit transmission inside an ugly-ass package can't be improved by paying the worker less. Detroit is a victim of their own mis-management.
Now I'm not saying that the UAW doesn't share some of the blame for Detroit's financial woes; I'm sure they protect incompetent workers all the time. The problem is, if they're going to protect the competent ones, they have to protect everyone.
Never underestimate the power of stupid people in large groups.
You seem to have come to the erroneous conclusion that the people who work the most hours are the most valuable to the company or accomplish the most in a week. You're not alone in this, but it's still not correct.
Don't get me wrong, there are super-producers out there who get a ton done in a 40 hour week and then work another 40 hours every week. (Although I'd argue that this isn't really sustainable long term.) But for every one of those, there's at least one person who works a ton overtime and makes a lot of drama about what a hard worker they are, but doesn't actually get shit done, and there's also at least one person who works hard and busts out more than their fair weekly share of work but manages to do it within 40 hours.
A lot of company cultures reward the high hours low output employee over the 40 hours high output employee, and it's their loss when those people leave.
Wrong. Harm done. Sure, you keep working overtime and your take-home remains about the same. Except when you take a vacation or go on maternity or other medical leave, and suddenly your income drops 15% for the duration. Also, the company's annual pension payout to you drops 15% because that amount is based on your base salary, not overtime.
Jesus Christ, you don't get it, do you? IBM broke the law by wrongfully classifying these employees as exempt. They sued to force IBM to comply with the law. And now they're being punished for it. Tell me, when a cop arrests a criminal, should we throw the cop in jail?
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.