Arbitrary change to hourly rate.

[The Captain]

I have a friend who works tech support for a company.  For two years they've received a paycheck which listed an hourly rate which worked out to the annual salary from the initial job offer.

The company is now requiring the techs to work mandatory OT.  Suddenly the hourly rates were dropped by 20% and they were told the original presumption was a 50 hour work week.  They were required to be on overnight on-call in the past but got the next day off.  That is no longer the case which is why the company is paying OT because it's now mandatory to work the extra hours and come in the next day.

I'm not sure this is a legal practise.  Based on my knowledge of tax regualtions these people would be considered non-exempt.

Anyone else have specific knowledge in this area? 

[Pants]

Are they paid hourly or salary?

[mollyanna58]

So have they been working 40 hour weeks, with overnight on-call, and now they'll be required to work 50 hour weeks, with overnight on-call, for the same annual salary?  If they only work 40 hours, will they be paid less?

[kent]

Feb 14, 2014 11:48:07 GMT -5 The Captain said:

I have a friend who works tech support for a company.  For two years they've received a paycheck which listed an hourly rate which worked out to the annual salary from the initial job offer.

The company is now requiring the techs to work mandatory OT.  Suddenly the hourly rates were dropped by 20% and they were told the original presumption was a 50 hour work week.  They were required to be on overnight on-call in the past but got the next day off.  That is no longer the case which is why the company is paying OT because it's now mandatory to work the extra hours and come in the next day.

I'm not sure this is a legal practise.  Based on my knowledge of tax regualtions these people would be considered non-exempt.

Anyone else have specific knowledge in this area? 

FWIW.  This is a Fair Labor Standards (FLSA) issue.  If they are "treated" like non-exempt employees (hourly rate on pay stub), they are, under the law, considered non-exempt.  It's been awhile since I've had to deal with this but, in the past, this kind of stuff can be a mine field.  Paystubs showing an hourly rate support they are non-exempt and entitled to OT for hours in excess of 40 per week.  If you add in the company position that the "original" presumption was a 50 hour week, you have a real problem - you can't be exempt AND non-exempt at the SAME time.  Further, if an employee worked OT and was given compensatory time off in exchange (the day after routine) the compensatory time off had to be at the OT rate - e.g., work 8 hours of OT normally paid at 1-1/2 times pay, you should get 12 hours of compensatory time off.

Bottom line.  There is NO WAY I'd want to be in the position of defending the company on this one.

[justme]

I found a website that spells it out pretty clearly, assuming it's correct. I found other sites that discuss it but not as clear as this one.

With few exceptions, to be exempt an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor). Most employees must meet all three "tests" to be exempt.

www.flsa.com/coverage.html

The website then goes on to list what exempt job duties are.

jobsearch.about.com/od/jobsearchglossary/g/exemptemployee.htm That website says "certain computer employees are exempt" but doesn't say which ones.

Oooh! Pay dirt. www.dol.gov/whd/regs/compliance/fairpay/fs17e_computer.pdf

The employee’s primary duty must consist of:
1) The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications;
2) The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3) The design, documentation, testing, creation or modification of computer programs related to machine operating systems; or 4) A combination of the aforementioned duties, the performance of which requires the same level of skills.

[bookkeeper]

You need to pose the question to the department of labor in the state where the workplace is. They will have the final say anyway.

[workpublic]

IT workers are always allowed to be spit on theses days it seems.

way specific rules for IT?

we need an IT workers union.

[The Captain]

Good suggestions all.  The company my friend works for is going through growing pains and I'd like to give them the benefit of the doubt.  Based on other stuff I've heard their HR department is way out of their league.

With the new "hours/OT" structure they will have to be physically present for 40 hours, and get paid 1/2 time for the on-call (at home) for the 15 hours they are on call.  So they will actually get paid for say 48 hours but their total pay will be $11 hr for a net 8 extra hours over the old paycheck.

In other words, they are getting paid an extra $90 to give up the day off after an on-call.  that's where I came up with the $11/hr.

ALSO - if they are REALLY considered hourly employees the employer could be on the hook for major OT/backpay because there was also mandatory on call weekends (still are) that paid a pittance (like one or two hundred dollars, far below OT rates and even minimum wage).

Personally I wouldn't want to work for a company that hoses it's employees like this, but this job is close to her home and she has childcare issues. 

[Deleted]

Feb 14, 2014 12:07:17 GMT -5 kent said:

Bottom line.  There is NO WAY I'd want to be in the position of defending the company on this one.

I agree- I used to work for a small consulting firm and we were salaried. When the head of the firm started talking about a "target" of 50 hours of work per week, the guy in charge of Payroll shut him up fast. You get too specific about how salaried workers are to perform their jobs, they become non-exempt and subject to OT pay.

[alabamagal]

Well the FLSA stuff applies and he is an hourly employee.

Unless there is a contract, an employer is allowed to cut pay, as long as it it above minimum wage and applies to all fairly.

The only thing that I see that might be a little sketchy is the "on-call" pay, where he is paid half time.  I assume this is just answering calls over the phone?  So is his time spent on the phone more than 1/2 of the time he is on-call.  If that, then might be ok, but what if he has a long night with lots of calls.

A lot of people are required to be on call, and ony get paid for the time they actually work.