The fastest-growing area of employment litigation in recent years has been wage-and-hour class actions, perhaps the biggest subset of which are lawsuits charging that white-collar employees have been misclassified as exempt from hourly wage and overtime calculations. Like many big employers, IBM has been hit with such suits from lawyers seeking to represent thousands of its employees. Information 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, InformationWeek has learned.
The plan has been greeted with howls of protest from affected workers.
The payroll restructuring goes into effect Feb. 16 and applies to about 8,000 IBM employees classified as technical services and IT specialists, according to internal IBM documents reviewed by InformationWeek and sources at the computer maker.
The plan calls for a “15% base salary adjustment down across all units with eligibility for overtime,” the documents state. The move is a direct response to the employee lawsuits — at least one of which has apparently been settled.
“To avoid protracted litigation in an area of law widely seen as ambiguous, IBM chose to settle the case — and to conduct a detailed review of the jobs in question,” the documents state.
The giant tech company also intends to lobby for modernization of New Deal era wage-and-hour laws which might allow it to restore the previous compensation methods. Good luck with that — even if it can show that most of the workers involved would themselves favor salaried rather than hourly status, the political clout of unions and trial lawyers has stymied efforts at legislative reform in the past. (Paul McDougall, Information Week/EETimes.com, Jan. 23).
10 Comments
I am one of those affected. I work as an information security analyst (MS, BS, BBA, and CISSP to my credit) and not one bit of my job is repetitive or something that can be outsourced to India. IBM charges the customer $110/hr for my time and
pays me $69K (~$35/hr) a year with no 401K (bc I’ve been there less than a year) and benefits that I could certainly do without. I work at a client’s sight where the client pays all the overhead cost. IBM’s cut is over 70% and they don’t do squat. Now they are trying to reduce my salary 15%. I am already working 43hr weeks on average which is the max they will let me, and this year I stand to lose 6% in
pay. I have a coworker who can only work at max 40 hours and he stands to lose $12,000 each year. I personally had offers on the
table from Lockheed Martin (along with Booz, Grant Thornton, Feds) and I went with IBM because they sold me they were a good company and their offer was slightly better. In hindsight this was a terrible move. I will now be making $5,350 less working for them as I would be working for Lockheed and Lockheed was also offering a signing bonus and a Secret Clearance. I have an upcoming wedding and I am I have a single income family. I was not a part of any class action suit regarding overtime. I signed a contract and now IBM is renigging.
There is an IBM Employees Union, called Alliance at IBM at http://www.allianceibm.org. A petition has been started that is gathering signatures that will support an action case against IBM for instituting these pay cuts. The link is below:
http://www.petitiononline.com/mod_perl/signed.cgi?ibm1701&1
For those capped at 40hr (which AP Reporter Brian Bergstein reports is true of 30% of the affected employees), this will be a 15% pay cut likely bringing your pay down about $10K or so. For those capped around the 43 hour average workweek most IBM consultants like myself work, this will be about a 6% pay cut when you factor in less bonus money and 401K and the fact that for the 5.4 weeks you log vacation/holiday leave, you will be making 85% of your previous salary.
For those working in excess of 46 hours (which is approximately the breakeven point for total compensation to be equal), your chance for overtime will likely diminish and so will your overall pay as more managers look after their own financials rather than their employees compensation.
The bottom line is that we signed a contract, but apparently there is nothing stopping corporate from breaching this contract since our union does not have the support that it needs. Please add your support even if you are not one of the reported 7,600 IT Specialists (bands 6-8) that are affected. Also, please pass this on to your friends and fellow colleagues.
I feel for you Rob.
But, this is the Government’s fault.
They are forcing IBM to change the agreement-I will let those more versed in these laws to discuss the legality of such.
There is no denying that the agreement is changing, but the entire thing changes when IBM is forced to change your staus.
To me they have every right to discard the old agreement when “Big Gov” tells them to.
I don’t know what would have happened at Lockheed, but if they are set up close to the same, it could have happened there.
Rob, you haven’t a prayer. B/C of the greedy unions and plaintiffs attorneys, employers have little choice but to declare workers even close to the exempt/non-exempt line as non-exempt. They will be paid hourly and as a result will make less money…..all to benefit the employee, right?
With the new IBM REMIX (This is the new terminology they use) I make less than I did when I started with IBM.
IBM=I’ve Been Molested
Rob, of that $110 you bill out for it is no surprise that you get 30% or so. That other 70% covers benefits (which, regardless of your claim, you do need), 401k that you will get eventually, your training, management, payroll taxes, support staff, advertising, sales commissions (someone scored that contract to get you in there) and a dozen other cost. I would challenge you to go self-employed and match your same yearly salary if you think they are really cheating you.
You’ve been molested, alright… by the union and its lawyers. Sorry, man – it sucks.
The union flexes its power, the lawyers make some money.
IBM and its employees BOTH lose out (that is, I seriously doubt IBM is coming out ahead on this).
I agree with Rob that he’s getting the short end of the stick. Fortunately I work for a company that took the hit and changed many of us SW developers to hourly, but without any cut in pay. For me, it’s definitely worked out to my benefit, especially since we are in serious crunch mode right now and for at least the next few months, overtime is pretty much blanket approved up to 60 hours a week. (I have a family and I’m not a workaholic, so I won’t be going anywhere near that amount of time.)
I do wonder, though, if Rob really signed a contract with IBM. Almost all professional employment such as ours is done through “employment at will” deals, so even if he signed a contract, it still means that they or we can terminate at any time, for any reason (illegal discrimination excepted, of course). So in order to implement the 15% pay cut, can’t they just terminate you, then offer you a new job with an effective 15% pay cut, but at the equivalent hourly rate? I highly doubt there is any legal remedy for you here. Obviously IANAL.
Rob, I am sorry for you, but I think you should blame the lawyers and the union. I agree with Deoxy, I don’t think IBM is making money on this – it’ll end up paying overtime, will need to have extra bureacracy to track how many hours who worked, re-introduce time cards. I remember when IBM cancelled timecards in early 90s, the main reason cited was that the processing cost money.
I am a software engineer, and not affected by this. But I’d be mad as hell if someone tried to change my status to non-exempt even without pay cut. There is a flip side to not being paid overtime: you can take time off for “personal business” without even telling anybody, nobody cares when you come and go, only that job is done. I like it. I’d rather work on a weekend for free, but be able to take time off when I need to e.g. to go to a doctor.
It’s been over 10 years now that my contract was unilaterally changed by the company from a 40 hour work week to a 37.5 hr one.
Except the hourly rate was the same.
And it was expected that 5.5 hours of unpaid overtime would be worked each and every week.
Time Off In Lieu was offered for hours after that, but to be taken only when the company agreed to it. They never did. I had 800 hours accumulated when I was fired – and had to work out my 3 month notice. I got the pink slip 3 days after being posted overseas for 3 months too. The customer overseas desperately wanted me to stay longer, but the company said no.
They gave me a pay rise though in the last month – just enough so I would have had to take it to the expensive ($200k++)High Court rather than cheap ($5k) arbitration.
I’m glad I don’t work for them any more, it was worth the financial hit.
You have only the lawsuit and the plaintiff lawyers to blame for this. The plaintiffs should have done their homework to see that there will always be a compromise. Also, if the issue is labor laws, etc..I do not think a civil suit is the best option. Unfortunately, the proper path would have been to file a complaint with the UD Dept. of Labor, see IBM pay a fine, and then perhaps change in a manner beneficial to all. I hate to say it, but if you were marked for the decrease in salary, it basically is IBM’s way of telling you that you are expendable. I would hope that hint is taken and those affected seek other opportunities outside the company.