Overtime pay: A ticking time bomb
Jericho Mortgage owner Rod Cotner was shocked when his employees – including some with six-figure paychecks – filed a lawsuit seeking overtime compensation. What's your take on overtime pay?
From Dawn, Bridgewater, NJ An awakening article for both empolyess and employers.
In our free economy, each empolyee entitled by law the right of minimum wage for regular hours and 1.5 times of minimum wage for over time. Every additional payment dollar should be honored only by contract, which typically uses industrial average as reference.
If the total hours and the total payment are discussed and agreed, the payment should be by default partitioned for regular and over time. Otherwise, if all payment are considered for regular hours, then the more a employer pays, the more the empolyer owns (to overtime). How does that make sense?
From Anne Hayes Regarding the overtime article in the February 2008 issue, there is a mistake in the section on Comp Time (under "Wage and Hour Pitfalls" on page 21). In the example where an employee works 44 hours in a given week, the correct maximum number of hours in the other week of the two-week pay period would have to be 34 hours (not 36 hours as stated). This is because the 4 hours of overtime must be compensated at time and a half (i.e., 6 hours of pay for the 4 hours of overtime) so the compensating reduction in hours must be 6 hours, or a reduction to 34 hours in the other week.
For verification or further information, please contact your Regional Wage and Hour office in Philadelphia, Pennsylvania.
Sincerely,
Anne Hayes
From Alexandria K. Brown Thank you so much for publishing your article “The Overtime Bomb” in your February issue of Fortune Small Business. My business combines internet publishing and success coaching for women entrepreneurs — and I’ve been lucky enough to grow my revenues into the millions so far without a single fulltime employee. But I’m at the breaking point now, and in order to keep growing, hiring is a must.
I read your article on the day we began interviewing candidates. What perfect timing to alert me to the cautions you mentioned. I distributed your article to my entire team. You just may have saved me hundreds of thousands of dollars over the next few years!
From durandal "I have five guys in the kitchen, and one guy calls in sick, what do I
have to do to cover the shift?" says Paul Cohen, operator and co-founder of
Capital Restaurant Concepts, which operates 11 restaurants in the D.C. area.
"I'm going to have to hire extra people to fill in for that."
So he'd rather have his SICK employees spreading their illness to his
customers? This isn't a mail room or steel working plant, this is the FOOD
SERVICE INDUSTRY. Sick people shouldn't be working in the kitchens. I'll be
sure not to frequent his establishments.
From Brendan Donelon It is incorrect to state that the FLSA considers white collar employees
who make more than $100K per year as exempt from overtime. The highly
compensated regulation is not unequivical. An employer needs to show that
the employee regularly and routinely performs and non-exempt type job task.
There are other specific regulations, such as ones addressing financial
consultants, that clearly state if your job invovles selling financial
products, you are not exempt from overtime.
From Jill J. Weinberg Mina:
Great job on the article!
From Greg Gast The recent article on overtime issues (“The Overtime Bomb”, February, 2008) appeared to be more designed to provoke fear in business owners than provide solid solutions. Between lack of knowledge by business executives, union influences and Department of Labor administration, overtime issues have been a perennial challenge for organizations. The good news is that with a little work and analysis most businesses can accurately classify their positions, properly pay their employees and the owners can sleep at night (at least about this issue). The process starts with developing a thorough job description which captures the actual duties of the position, ignoring job titles (only the real work matters) and securing the services of a compensation analyst with expertise in the Fair Labor Standards Act (FLSA). In most cases, 70% – 80% of the positions will be quickly categorized as exempt or non-exempt. The final 20 – 30% may take some additional research and analysis, but a determination can be made and proper pay practices initiated. Then, unless the job duties or the laws change, you are done.
From RF, Hillsborough NJ Anyone who is not a top level decision maker should get overtime pay. Enough of this slave labor for so called managers, supervisors and professionals with "titles" who really aren't company executives.
From Bill, Pensacola,Florida The real crime is large manufacturers that that divide the pay week and work week in such a way that it is possible to work 7 days in a row, 8 hours a day with no overtime paid. Yes it is legal. We called it a 7 and 2, 7 days on and 2 days off. pay week mon thru sun, and work week wed thru wed. so you could work mon thru sun and because the pay period ended wed, the remaining days are in the next pay period, no overtime due. Corporate criminals are clever.
From Charles Fulp These laws are good, but they could be a real problem to the retiring baby boomers and the employer who will want to hire them. I am a good example: I am an electrical engineer, retired. I want to work. I want to work full and part-time. I am looking more for insurance coverage, not the big salary. I would like to have an extended vacation if I want it (3 weeks in Alaska). Do not mind working or traveling on weekend or holidays (except Christmas). I can lead, or follow, but I just do not want to roll-over a play dead at this time (if ever.) Have computer or slide rule, Will Travel!
From mackie sellers This article about overtime pay, just hit a nerve with my family. My wife works for a large national retail store. She is an area manager making 12.02(the first year she made approx 11.00 an hour). She is constantly badgered into coming in early and working late. I knew that she is paid overtime(anything over 40, but did not realize how much. Have you ever heard of Chiny overtime? This is what employees refer to overtime pay, because it isn't much. I didn't realize just how much it is, until we have logged on their website and looked at her paycheck,(she has her check automatically deposited in her bank account) . She had recently worked 17.5 hours overtime(in one week and it was 9 days before she had a day off) for 4.16 an hour. Yes, this huge retail store paid her 72.00 for that. She has tried to get an assistant manager to tell her in percentage as to what they pay for overtime, and he put her off 2 times and finally said she has to get in touch with the corporate office. She has worked for them approx. 1 1/2 years. The way other employees said that they get around paying this, is she is guaranteed pay for 40 hours, even if they work less than that. The only problem, is she never gets under 40 hours, because of continuing floor moves, markdowns, sales(almost every week)etc. We have decided to fight this huge business and it is very scary as to retaliation. We do not know if we should get an attorney or approach them about it. What do you suggest?
thanks,
Mackie Sellers
From joe catalano why were accounting firms not included? i have 2 children who work on average 60 hours per week and receive no additional compensation.
From atlanta, ga There is one group of people who gets hurt by the overtime law that people always forget. There are many unskilled workers work more that one job to keep up with living expenses. Many of these workers could be working one job for more than 40 hours a week at regualr pay, but their employers wouldn't let them, because of the overtime law. These workers waste time and money to go from job to job to earn regualr hourly wages that they could be earning at one job. Shouldn't there be some sort of provision in law that allows employer to pay regular wages for such employees?
From Been on both sides of the issue, San Diego CA It is going to be interesting when the FLSA's regulations become so stringent that using workers overseas or some form of outside consultant is the only way to reduce costs and compensate for the large risks involved in operating a business. Employees will lose their jobs and have no income at all. I wonder how those displaced will view the OT issue then? Of course, there are so many jobs available they can get employment at another company that will conform to the laws (at least as long as they can or until someone sues them for retaliation for a complaint or FMLA leave or whatever trumped up claim an employee can to dream up to to ensure they keep their job as long as THEY choose to be there).
Perhaps forcing all companies large or small to comply with ever increasing restrictions will ensure unilateral fairness to ALL employees OR maybe it will drive small and medium businesses to close their doors while large companies monopolize industries and outsource their work to other countries. I hope that the huge resulting unemployment and destruction of our economy along with the rapid increasing wealth for countries such as China will satisfy the "it's all about me" generation.
The USA is not the first society to believe themselves invincible just look at history. I'm sure the Roman Empire also thought they would always be the wealthy ruling class right up to the end.
For people to look at the country as a controlled contained environment operating apart from the rest of the world is at best shortsighted and at worst one step away from the end of our cushy lifestyle. We operate as a segment of the world which is controlled by the realities of supply and demand (if the supply is plentiful elsewhere and the cost and demands are less than other alternatives – well what would you choose to do???). Look at the big picture and try to strike a balance and not an individual victory and everyone will benefit.
From Merlyn Graves, Commerce City, Colorado The overtime "Issue" is simply one more example of people rejecting the "company man" work paradigm that has been the status quo in this country for decades. Employers have always expected employees to live breath and sleep the company. I am an IT geek myself, and have personally worked 30+ hour DAYS on occasion. In the IT industry, salary jobs have ALWAYS been an excuse for employers to expect 60 to 70 hour or longer weeks from it's best and brightest without the inconvenience of having to PAY for all that extra work- and we have always just accepted that, glad to have a decent job at all (especially in post dot-com IT). The new generation entering the work force from college is rejecting the "Careerist" mindset altogether and have the opinion that the company should be glad to have them, instead… and they fight back when they feel that they are being taken advantage of. Labor is now just like any other commodity- you get what you pay for. For the business owners reading this- would you expect vendors to be okay with you paying for 8 of some item and taking 12? No, you wouldn't. That would be theft wouldn't it? How is requiring your employees to work 12 hours and only paying them for 8 any different? The courts are punishing business-owning thieves, and the thieves are upset. Imagine that.
From Eldon, Moyock, NC Compensation is compensation. When an employee takes a job for whatever compensation is agreed upon, the employer and the employee have a contract that should only be between them. If the compensation is not adequate for the time you spend on the job, get another job! The employer will either let you go or offer more to keep you. There's too much government in every thing we do. We're all adults and can make decisions for ourselves. Why do we need others to tell us if we're properly compensated or not??
From George Welch, Sixes, OR Based on the comments posted on this board, I believe more employers need to export as many jobs overseas as possible.Every day that the employee leaves work the employer/employee should be even. Neither owes the other anything.If either side doesn't believe this, they need to find another way to make a living.
From Bob, Dayton OHIO Businesses need to learn that "Stealing Is Wrong," whether it's the EMPLOYEES Wife, Daughter, or TIME. Just because they can Collectively, buy off the Law Making Process, Doesn't make it right.
From K. G. Philadelphia, PA This is ridiculous. Not everyone that starts a business is born with a silver spoon in his mouth. I am all for paying a fair wage. However, if these overtime laws are so extreme, you will see more and more employers use independent contractors. Therefore, possible employees will not have health care, personal leave, etc. In response to the person that indicated that the employer should have just granted the employee the 1/2 hour off. Would the employee want the time off for no pay. What about other employees that would want the same consideration? What happens when the employer closes the the doors because no one is working?
From Michael, Lancaster Ca I think we need to be happy with the way things are. I remember when my bosses would change your overtime pay to straight pay just to satisfy the hire-ups. Nowadays you don't see that anymore. I think people are sue happy but I think the law suits have woken up alot of employers to do the right thing. Some states though are more out to catch an employer breaking the laws of the state and the FLSA. They need to look at thier own employees who have a hand in the payroll of state employees.
From Flynn, Fort Wayne, IN I don't think that excluding those people who work on computers – programming, testing, creating specifications is fair. No 'Group' or occupation should be excluded like this. Working on computers for 'as many hours as it takes' without being compensated for the strain on eyes and body should be reviewed. We should be entitled to overtime just like laborers are.
From John, Atlanta, Georgia Many large companies finance operations or executive bonuses by failing to pay employees what the law requires. Why not report on mandatory overtime, working most weekends, etc. just because the HR department can't figure out FLSA.
From gaurav, la , ca You got to be kidding urself. Companies especially video gaming companies have made a living on the basis of making programmers and artists work extra long hours and then giving them a boot. I think the overtime laws should be stricter infact the same laws should apply when the firm employs people outside.
From Mike, San Jose, CA Your article correctly states that the FLSA is protection for workers. Overtime laws need to be strengthened, not relaxed. Say an employer has a critical need an employee to pull a double shift. The employee gets 8hrs of OT, right? Maybe not. Say the employee becomes over exhausted and becomes ill for 1 day. No overtime pay. Say the employer wants to pinch some pennies and tells the employee to take Friday off. No overtime.
Now, let's take the example of the employer that wouldn't let his employee off an hour early to see his son's ballgame. He's hiding behind the law as an excuse to say no. He can just give the employee the 1/2 hour off.
Too many employers are not very good business people. They claim they can
only survive on cheap labor. They must have serious weaknesses in their
business plans.
I don't see why so many employees are exempt, that just seems incredibly stupid. Sure, the owner can work as hard as he wants, but others should be compensated with overtime.
A company can always use consultants for independent sorts of tasks, but consultants are precisely the owners of their own businesses, making their own decisions, and their loyalty can only be bought for considerably more than normal employees.
Of course, nationalized health care will greatly help small business owners, those who work as consultants, etc.