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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."
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...
This is the last straw....
This, folks, is a good example of why labor unions are still around. Not that it's going to help any in this case...
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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if the free market responds correctly, i would expect ibm to lose quite a few employees over this. i know if i was working there i'd be shopping my resume around after a slap in the face like this.
In Soviet Russia jokes are formulaic and decidedly non-humorous.
I used to work for a Accenture, a rival firm. While we officially got paid overtime, booking it could get you into a lot of trouble. Bosses would say, not in writing, to not book OT. Try confirming that by email and you get stern warnings to not be a smart-ass. One guy I knew booked OT anyway. Legally, they couldnt say no. Next thing he knew, he was staffed in St. Louis! Ouch. So the people *suing* IBM? Expect pain much worse than salary cuts. They will probably be executing 100,000 line test scripts soon.
When I started working, I heard from multiple sources that our company budgeted for exempt employees by treating them as hourly employees who worked 5 hours of overtime per week. Given that most overtime is paid at time and a half, that's the equivalent of being paid for 47.5 hours at at a straight hourly wage. 7.5/47.5 = .1579, or about 15.8% of salary. Now the real question is, how many of these folks will get 5 or more hours of overtime per week?
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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.
Every job I've ever worked was salary based, and I've always understood that going a bit over 40 hours (and still being paid my regular salary) is in exchange for those slow weeks where I might only work 20 hours, and still collect 40 hours worth of salary. It's a pretty fair trade-off since some weeks (as an IT person) I'm twiddling my thumbs doing nothing and other weeks I'll be pulling 12 hour work days.
The fact that they were collecting commission on top of their salary, and still trying to demand OT pay is simply greedy IMO. Sales has always been a "You'll make as much as you want to" position.
Just because you disagree doesn't make it offtopic or flamebait.
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 don't get it. If you are exempt and feel you are being worked too much, simply: don't. I'm exempt and I tell my management "I can't work on that right now" more often than I'd like to - I treat the exempt idea as if I'm simply "contracted" so to speak, for 40 hours a week. If I work more I work more, if I work less I work less.
Maybe the IBM folks (didn't rtfa much) aren't making par with their peers in other places. That would be an issue, I suspect.
But going to hourly is only going to get them "watched" more, and to boot, it got their pay cut. Why? Probably because management is the same at IBM as it is everywhere: Exempt people are paid more than nonexempt because they are "on call" 24/7, etc.
Which is the exact reason my management here tells us that when we *are* on call, we do not get differential pay, etc. It's "built into our salary."
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.
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.
Somebody please explain me why engaging in war with your own employees, specially on such delicate matters as payment, is going to affect the stocks of the company in a positive way.
Wouldn't they ensure employee happiness so they perform better so the company earns more and be more productive etc etc?
Hourly and manual labor types usually have a union behind them to stop this kind of idiocy, but for reasons beyond me, my white collar cohorts refuse to stand up for themselves and unionize, so continue to have to accept crap like this, or worse, have their jobs summarily shipped overseas.
And before someone puts a political bent on it, it was like this even when the Democrats were in power.
"In Soviet Amerika, programmers don't have unions, and without unions, the company own YOU!"
I live in Canada, and I have a friend who works for our tax collectors. He says that Canada won't take your land. You won't be able to sell it, and they can make life miserable for you in other ways, but you can keep on living under your roof and on your property.
That seems fair to me, by today's standards.
testing out my trending skills
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".
However, knowing IBM, this is what they planned--with the current economic downturn, they probably want to decrease their payroll anyway and in so doing bolster their stock price. Still, it's critical (IMHO) that employees who quit know they can file for benefits so they don't get double-shafted by IBM.
"We can categorically state we have not released man-eating badgers into the area." - UK military spokesman, July 2007
I am an exempt employee and I do put in some overtime when required by a project schedule.
Even though the company doesn't have to pay us for our overtime they have "thanked" us
for our effort with some perks. Two years in a row they gave the software development team
a week's worth of "comp time" (extra vacation time) "under the table" as a reward for the extra time worked.
While this wasn't even close to a one-to-one payback for the overtime worked, it was the
thought that counted. Put it this way, if they HADN'T done SOMETHING, the next time a project
schedule was threatened fewer hours of overtime might have been available from the team.
The free market only works if everyone is on a level playing field. The employees of IBM and IBM itself are far from being on a level playing field.
This does sound like a slap in the face, but the first slap was by the employees -- suing your employer (or anyone) "means war".
No, the first slap was IBM breaking the law by classifying employees as exempt when they were not. The employees are totally in the right here, and IBM 100% on the wrong side.
Companies like to claim exempt vs. non-exempt is a "gray area." Its only gray when you're trying to screw your employees out of overtime pay.
My personal belief is that salary pay should be made illegal except for strickly management positions. That would solve this problem nicely.
http://www.dol.gov/esa/regs/compliance/whd/whdfs23.pdf>U.S. Department of Labor Fact Sheet #23: Overtime Pay Requirements of the FLSA
29 CFR Part 541, Defining and delimiting the exemptions for executive, administrative, professional, outside sales and computer employees, final rule
IBM may very well have been legally justified to not reimburse these folks the overtime pay in the first place. However, since it was found otherwise, I think the 15% pay cut to compensate is just spitting in the face of their employees. How many good engineers and other employees will they lose as a result of this move? It seems to me that if you have good people working for you, willing to stay after hours to keep things moving, you should reward them for the extra effort. Too bad if it happens that computer employees rack up lots of overtime, but it's the nature of the business and should be considered cost of doing business.
Exempt employees get paid more because it's anticipated that they will work some uncompensated overtime. If you change from exempt to non-exempt, then your pay SHOULD be cut. You can't get the best of both worlds - unless you're a contractor. This is especially important for government contracts - you negotiate rates for certain job categories, and you're stuck with them. Your profit is limited by law, so you can't just absorb a 15% hit like this. So you've got to cut the salaries.
Agreed immediately. However, the story moved from the realm of "normal" relationship, when the employees tried to force IBM via lawsuits. That "meant war" and moved things into the legal realms. Now IBM is simply looking for legal ways to continue paying these people, what they have always been paid.
If that is making a mockery of the law, well, the laws, which attempt to regulate relationship between private parties, are largely idiotic to begin with...
In Soviet Washington the swamp drains you.
Let me start by saying that I am a very strong Republican conservative, and I normally hate labor unions, especially since most of them don't do much but collect money from workers and use it to buy politicians. That said, in this instance I absolutely think those workers should immediately unionize and walk off the job. IT workers are already treated as slaves just about everywhere, and it's about time they got paid for their overtime AND STILL recieved a salary commensurate with the difficulty of their jobs and the level of their education.
Furthermore, this move by IBM is complete garbage. Google spends a heck of a lot more money on its employees than this, and it doesn't have any trouble with the "competitive pressures" cited by IBM. The reason it doesn't have any trouble is twofold:
Honestly, the only things they seem to produce anymore are a few supercomputers (and the market for those is clearly limited), some mainframes (again, limited and shrinking market), and some stupid "software development processes" like the Rational Unified Process (RUP). (News Flash for IBM: a process isn't a product. I can go out and make my own process that suits my work (which is what most people do), or use one of many free and well known process like Agile or UP). IBM also produces a lot of marketing speak and vague references to "services" that they can offer to companies (not sure what those actually are or why I would want them), they produce a lot of commercials about servers spiraling out of control, and they spend a lot of time on clearly stupid strategies like building a corporate office in Second Life and having a director of Internet and Virtual Worlds.
With all that sort of vaporware and garbage products, it's no wonder that they are facing big competitive price pressures. They deserve the problems they are having. But the regular employees shouldn't be the ones penalized. The problems (and pay cuts) should be directly placed in the laps of their management, especially their top executives. IBM has repeatedly had the chance to conquer the world, and they blow it on stupid ideas every time.
Beware of bugs in the above code; I have only proved it correct, not tried it.
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or treat it like the beginning of a negotiation, which will in most cases get you labeled as a difficult employee.
There are ways to do this politically. Explain why you think you deserve a higher salary in terms of absolute values. Don't be smug or arrogant. Just make a business case for a higher salary.
You have obviously not thought that through to completion. You decide to form a union, and your employer does not like it. One of several things can happen:
1) Your employer takes it on the chin and suffers from a significant loss in net earnings (usually gets executive types all fired up, pun intended).
2) Your employer accepts it after fighting about it and is then undercut by union free competitors, typically using H1B labor, or worse yet simply outsourcing to another country altogether.
3) Your employer gets smart and simply outsources your job, thereby skipping all of the intermediate steps.
Our economy has become a service economy because those are the only jobs that cannot be outsourced easily, but a service economy can't survive indefinitely without outside support. Either way, unionization is not the answer, the only viable answer is to accept that you will suffer a significant drop in standard of living to adjust for the fact that you were way far above the median to start with. Don't like it? tough, welcome to the global economy, there isn't a damn thing you or I can do about it. If you shut down all foriegn trade, there goes your cheap goodies from china, and your standard of living plummets. Imagine if you had to pay $30,000 for a low end car, because it was made using exclusively american labor? How about $120 for a pair of jeans? What about $5,000 for an entry level PC? If you need proof, just look at the cost of housing. It is hideously expensive because there is no good way to offshore the labor needed to build the houses, and as such the cost of these things has been rising at many times the rate of inflation. It is a no-win situation. Americans are not going to enjoy their standard of living much longer, but there isn't anything we can do to stop it. Maybe slow it down a little, or speed it up, but there is no stopping it.
-=Geoskd
I wish I had a good sig, but all the good ones are copyrighted
Considering how much the dollar has dropped. Employees have already received a %15 pay cut through inflation alone. Another %15 percent cut is adding insult to injury.
"You'll get nothing, and you'll like it!"
The problem I've always had is that few employers seem to really grasp the concept of a salaried position. In a salaried position, I'm hired to get a job done, irrespective of how many hours it takes. If it takes me 40 hours a week, great. 50 hours a week, oh well. 30 hours a week? PARTY! But most employers don't get this. So they look on salaried as a minimum of 40 hours week. In my particular specialty (troubleshooting really big systems), that's just silly, because often there's nothing to do... so when I was really doing my specialty, I would often end up doing nothing, sitting at my computer just to keep the IM icon lit up, when I could have been resting up for the next 48 hour marathon problem. It's just annoying ... I mean, if I'm salaried, why do a timesheet? Yet they all want a timesheet. If they want me to work free overtime, then they need to g
"He who would learn astronomy, and other recondite arts, let him go elsewhere. " -- John Calvin, commenting on Genesis 1
Unemployment is taxed in the US; the government just doesn't take the taxes out up front. Unemployment is only good for a certain number of weeks, it is not pertetual.
If someone is passing you on the right, you are an asshole for driving in the wrong lane.
Those would be the same gutless slaves who sued their employer in the first place?
C'mon. There's two sides to this story and if you don't consider both, you will continue to blather mindless tripe like this.
If someone is working 45 hours/week, this will net them slightly more, but only if the OT pay is straight. If it is time and a half, then the employee will actually make more. If the employee winds up putting in 50 or 60 hour weeks, they get even more yet.
Isn't this what they sued for?
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.
Being allowed to. The re-classification does not guarantee the workers that 5 hours of overtime. In fact, going forward, you can bet they will push back on allowing overtime that HAD been done before as "exempt" work. Even worse, there are plenty of people affected by this that will not qualify for overtime to begin with (they work a standard 9-5 position). Those are the ones that are really screwed in this.
Yes, they are free to leave. It has nothing to do with that. It has everything to do with the fact that the employee still needs to eat. If they can find another job, great. But you can't argue that a sudden 15% paycut won't have an effect on the employees, and may put them in danger of losing their house, depending on individual situation. One employee leaving IBM won't have any effect whatsoever. That's where the power divide lies.
More to the point, does it do the employee any good to leave if any other company knows they can break the law, lose a lawsuit but be able to cut everyone's base pay so everything evens out for them?
Kind of like it was before workers saftey rights; your employer doesn't make your workplace safe, so you're free to leave... except without force of law, no other employer bothers to ensure the saftey of their employees either. So what good does freedom to leave do you?
Personal Experience: I briefly worked for IBM when one of my employers "sold" my whole department to them (we went from being full time employees to being IBM contractors doing the same job). IBM looked like a pretty good deal at first -- same pay, same job, but better benefits and more time off. The catch is, they require a minimum of 2000 "billable hours" per year. 52 wks x 40hr/wk is 2080 hours, so that may sound reasonable at first, but the 12 holidays and 2 weeks of vacation you get and any sick days you need are not "billable". Nor is time spent at IBM company meetings. So in effect you get 2 weeks off and anything beyond that you are expected to make up for with unpaid overtime.
I left IBM after about a year. Many companies expect or pressure their employees to work unpaid overtime and have been getting away with it for years, but IBM actually made it an official policy - I suspect that's why they are getting in trouble. I'm a big free market proponent, and normally would say, "if a company's compensation plan is bad, then don't work there!". Well, I did leave, but you could say I didn't exactly choose to work for IBM in the first place.
Prov 9:8 Do not rebuke mockers or they will hate you; rebuke the wise and they will love you.
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.
They wanted to be treated like blue collar, hourly employees - now they can be paid like them. If you want a salaried, career position and the pay that comes with, get used to working more than 40 hours.
Or you can go out on your own, work 80 hours a week, and possibly not get paid at all.
Quit whining and get back to your oars (ok - this line is a joke, but I'm serious about the rest).
That way, you get a good paycheck, you are in charge of your OWN money/retirment, and you NEVER work for free. You get paid for every hour you work.
I swear, if possible, I'd NEVER go back to working as a W2 employee again...
The only thing needed for a mass transition to this, is to make it easier for single person corps to be able to buy into a group insurance scheme, or make it easier for individuals to get insurance for themselves (it isn't THAT expensive, but, hard to get if you aren't in 100% top health).
Anyway, doing this would cut companies' HR expenses, cut all the overhead of benefits, and then they could easily pay the bill rates required.
I mean, in todays world of "at will" employment, and the lack of loyalty from either employer or employee, why not just get the formalities of W2 employment out of the way, and call the workforce of today, what it is, and pay for it that way.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
When people start talking about a 'pending recession', it means that the recession started about three months earlier.
The formal definition of recession is "two or more successive quarters of GDP decline". You can't assign the first quarter to a recession until the second one arrives meaning that we're not technically in a recession, as of this writing. Wait for March 31st (end of 2nd US FY08), then we can comfortably claim that Jan 24th was part of it.
By the way:
since so many people look to the federal funds rate, it's easier to illustrate the overall attitude by looking at the changes to it and when they occurred. We see a minimal regular increase (+.25) in rate until September 18 when suddenly the rate drops by twice that interval (-.50).
September 18 also happens to be about one quarter ago.
Even though that is just one marker to a complex market, it is one that all participants use.Politicians will say anything, so disregard those comments. In this case, it's not just politicians talking about recession.
This is not my sig
We had on our site, an SE from IBM who actually got pushed into that trap. His evil manager took a great disliking to him and at his inevitable last review was warned that due to his difficult employee status he would either be terminated at his next (imaginary) infraction, and that it might be a good idea to accept a resignation package. His hand was forced. Meanwhile, to replace his skill sets in order to accomodate our needs, they now have FIVE SE's on site. Each has a tiny niche of knowledge.
:-)
If IBM is so nerved out by wages, they ought to hire illegals
Well, announcing a 15% salary cut is essentially announcing a layoff. Hopefully, losing some percentage of their workforce was what IBM had in mind.
Being an independent contractor simply isn't suited for everyone, and I would not be surprised to hear that many people would prefer to keep their current salary than take a 100% raise as a contractor. Nothing in employment is certain, but in general an employee is going to keep a stable steady paycheck longer than a contractor. Yes, reasonable contractors take in more income overall, but they still go from contract to contract, with down time between. To some, that's a positive aspect (more money, lots of vacation time), but to others the downtimes can be scary.
And exactly whose fault is it that the employee is so overextended that losing their job will cause loss of house, car and going into bankruptcy? It's not IBM's responsibility to ensure their employees are financially responsible adults.
Wow, lots of assumptions in there. Is someone out of work for a year and runs out of savings "finicanlly irresponsible?" Or are you arguing that everyone should be paying cash for their homes? You're out of touch of reality either way it would seem.
To the point though, it IS IBM's responsiblity to pay their employees in accordence with the law. They don't have a right to cut someone's pay when they are caught and that person has planned things so that his salary DOES meet his finincal responsiblities.
That's the fundamental problem with today's society. People think it's someone else's job to feed them. Sorry, but it's your job to feed yourself by entering into agreements with others to exchange work for money.
Yes, and because I need to eat, those contracts are often unfair and unbalanced. I think the fundamentl problem with today's society are sociopaths like you that feel they can do whatever they want to employees, because its THEIR company. Sorry, but your right to swing your fist ends at other people's faces.
Lets get real here; weren't not talking about people sitting around getting handed money by IBM; the workers were WORKING, IBM was not paying them what they LEGALLY were entitled to and you think IBM has the right to hit back because they got caught? Bull.
Every single employee could leave if they wanted to. Exactly which ones can't? And if they can't find another job where they are, then they should move. That's how responsible adults act.
Moving in and of itself is a huge cost. All the employees could leave in theory. In practice they can't, because there aer only so many open jobs, and not all of them can move. You talk a lot about employees being responsible; how has IBM acted responsiblely in this? That's right, they don't have to, because the legal fiction doesn't force them to.
The biggest lesson in life that everyone seems to learn sooner or later is that NO ONE OWES YOU ANYTHING. And that's the way life should be. It's a better world when people take care of themselves.
Huh.. and here I thought having a job and working WAS taking care of yourself. I don't buy the idea that a company can decide they aren't making enough profit, and show someone the door. Ih other words, its not ok to screw someone over for your own benefit.
In any case, the reason IBM did the pay cut was so that the net pay would stay the same. So the employees are working the same number of hours for the same net amount of money (I'm sure there are some variations here and there). The only difference is in how the hours are counted. Some employees will probably make more money since they're working more hours.
Many will make less, because they weren't working overtime to begin with. Others now have to give more of their life to the company for less money. Sounds dangerously close to slavery to me.
Form your own corp....got corp to corp, figure your bill rate to cover your paying your own insurance, vacation time, etc....and be done with it.
Well, because there is an uncertainty in the level of work (especially since I'm in a small market - Alaska) and the bill rate to get me my current level of compensation would be uncompetitive. I worked for a consulting company that provided the same services I'd provide as a contractor. They charged less for my time than it would take to match my current salary, and I'd be competing against them (of course, they paid me much less at the time as well). So I'd have to charge 50% more than a direct competitor for service as a single individual when the competitor has a company of 10+ people they can throw at the same issue.
I swear, if possible, I'd NEVER go back to working as a W2 employee again...
Well, I get $10,000 per year retirement put into my account, not matching, even if I put in $0, they give me $10,000 per year. They paid for my masters degree. I have medical and dental and vision and all that, for a cost of $0. They pay about $15,000 per year for it. I can take off 4 weeks and 4 days per year at full pay. Starting in April, it goes to 6 weeks and 4 days per year. I'd have to charge an additional 15% above everything else just to cover the vacation. I get mileage, travel per diem that is above market rate, free training and time away from working for the training. I love being a W2 employee. My paycheck is the same every time. I've never been fired or laid off (well, except one time when I wanted it and got just under $30,000 severance after a merger). I have more job security than a contractor and greater income. Only if I thought I could be billed out at $250 an hour for 20+ hours a week would it make any sense for me to even consider contracting. The bill rate is much lower than that here, and I have no idea what my billed hours would be. For me (and the majority of people) being a W2 employee is vastly superior to contracting.
Learn to love Alaska
In theory, the only reason why a W2 is superior to a 1099 is the legal backdrop and reduced responsibilities that go with it.
I'll leave the pros and cons to both out of the discussion here as I'm sure most folks have a clue what they are.
This. What I wanted to contribute is this may be one tipping point where contracting may come ahead of being an employee in the years to come. With "right to work" laws being what they are in most states, the notion of "job security" and "employer loyalty" is obviously being more spurious, with "layoffs" being the happy norm over outright firings. It would seem that "sue the pants off the bastards" is not as much of a deterrent to loosing one's job as we'd all like to believe, so you're left with about the same security as an independent contractor would have.
For that matter, putting your fiscal and professional future in the hands of an entity that things of nothing but the bottom line seems like rather spurious judgment. This is especially so when put in the cold light of the rash of IT layoffs ten years ago.
You got that right. I get quite a few calls from companies that want to hire me on a W2/full-time basis. The only thing they can really offer me is paycheck security--twice a month I'd get a reliable paycheck. But that word "reliable" should definitely be in quotes because there is no loyalty from companies to employees which is why there is no loyalty from employees to companies. So why would I take a pay cut and give up my freedom (being able to work at 2am if I want, deciding when I'll take vacations, etc.) for a "reliable" paycheck that isn't really reliable? It just doesn't make sense.
It'd have to be an awfully juicy offer to get me to go back to W-2. I don't think anyone could afford what I'd have to ask for to accept a W-2 position.
If you're working on an hourly consulting basis, sure, if you can get the job done in 20 hours when a slow person gets it done in 40 hours, the slow guy is actually going to get paid more for you to get the same job done slower. But once a company realizes you are reliable and efficient, you're going to get the jobs in the future--not the slow guy.
I used to think like you. Even as a consultant I'd try to spec a project and come up with a fixed-price bid. That way both the client and I could focus on getting the work done rather than stressing about counting hours. But last year I got burned by two projects that, through no fault of my own, ended up being significantly more complex than could be known in the quoting process--but since the complexity wasn't known, it wasn't specifically limited in the contract. So it wasn't specification creep (which would definitely be billable), it was just more complex to get the things done than either the client or I recognized. So I had a tough year.
Having learned from that, I have to protect my own rear end. I've come to the conclusion that billing on a strict hourly basis is in everyone's interest because:
So now I give clients a good-faith estimate of how long certain things will take, but the actual billing amount is based on the actual amount of time I spend on them. The estimate is just that: An estimate so they can have a reasonably accurate idea of what they're getting into. If it takes less time, they pay less. If it takes more time, they pay more. And they know that up front. And if, as I proceed, it's becoming clear that my estimate was low, I immediately let the client know why and how much more I think it will end up costing. Then they make the decision. Of course, I virtually always come in at or below the estimate so the client is actually pleased to pay less.
The only reason a per-hour arrangement might not be ideal is if 1)You are not honest about the hours you work--in which case you shouldn't be billing by the hour or, 2) The client is suspicio
Depends on the gigs. I know people that work 6 mos a year, and enjoy the other half of the year off. Or, you can find gigs, often with the govt. that are contract positions...but, pretty much permanet..at least in the contract sense. Gigs that last multiple years are out there. So, it is pretty much like a steady job.
There are all kinds of gigs out there to suit various tastes. There are a number of companies, that if you do the corp-to-corp thing...will take you over a salaried employee, just to bypass the HR and legal grief. I think more of this is to come in the future.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
When is the last time IBM produced something good that people wanted to buy?
What planet are you living on? IBM is, and has been since the day it was founded as the Tabulating Machine Company by Herman Hollerith in the 1880's, the largest provider of electronic IT to the businesses of the world.
For the $98.8 Billion they made in revenue last year, somebody must think they have something worth buying; like:
Mainframes: The world's largest IT systems still run on IBM Mainframes because they simply pretty much never break, and they have had continuous, complete, software and hardware backward compatibility for about forty years. (As in, you can theoretically take a functioning punch-card reader from the '70's, a succession of interface adapters, a stack of cards, and use them to boot a mainframe fresh off the assembly line in New York without changing a single line, er... card, of code.) This sort of stuff is important to large businesses, who hate re-writing major, working, systems. I have personally seen an insurance company still using reel-to-reel tape connected to a mainframe only a couple of years old. (They received employee data from the state on the tapes.)
Chips: All three major game consoles use IBM processors.
Software: Somebody must like Lotus Notes, because a lot of people still use it. IBM also produces the DB2 database, Tivoli management software, WebSphere middleware, Rational dev tools, and a host of other products.
Services: IBM is the largest provider of IT services spanning the whole spectrum of services a business might want to provide from hardware field service to management consulting.
Servers: They still have the largest market share for servers.
OS'es: Plenty of folks still purchase z/OS, i/OS, and AIX. OS/2 was small potatoes in comparison...
Oh, also, the Rational Unified Process is more than just a book with some suggestions in it. There is also a large suite of tools to back it up. And for large I/T projects involving very large teams of programmers, it doesn't pay to just make up a development process on the fly.
Lastly, Google does indeed spend more per employee than this, but all the "scut" work at Google (i.e. Hardware Maint., customer service, etc.) is farmed out to contractors, who don't get Google benefits or Google pay.
SirWired
It was doing perfectly fine.
No it wasn't. In the early 1900's some workplaces had a 12 percent mortality rate.
Let me repeat that: 12 PERCENT MORTALITY RATE.
Let me repeat that again: There was statistically a 12% chance that you would DIE for every 1 YEAR you worked.
In 1908 US Steel began to record safety incidents and worked to minimize the accident rate in a "safety first" program; in 1913 the Department of Labor was formed to coordinate a federal response; by 1915 the National Safety Council was established to improve working conditions in multiple industries. Without this effort, there was a good chance the US would have gone Communist before 1930.