Woodland Hills, CAA second class action suit has been filed against information technology giant
IBM for refusing to compensate
California computer professionals for
overtime. The suit is headed by Loren Teegs* (not his real name), a Systems Operations IT Specialist who claims that his employer reclassified certain categories of support workers across the country, coding them as exempt, which has resulted in thousands being denied their due overtime.
Teegs launched the suit on April 17 for violation of the Fair Labor Standards Act, the Employee Retirement Income Security Act (ERISA) and California state labor law. The action applies to IBM employees in California, and nationwide, who were employed in job band positions six, seven and eight (from new college hires at 6 to PhD at 8) and classified as exempt anytime between July 12, 2007 and February 16, 2008, then subsequently reclassified as nonexempt.
California legislation regulating exemption in the IT field specifies that a computer professional has to spend more than 50 percent of his time performing designated 'exempt' activities, such as coding, as opposed to managerial tasks. He must also be proficient in theoretical and practical applications of systems analysis, software engineering and programming. Teegs' primary responsibilities are to install, maintain, and/or support computer hardware and software.
According the lawsuit filed, IBM failed to keep records of hours worked, which could result in inaccurate accounting for which Pension and Savings Plan benefits may be due. Also under California law, Teegs claims that the company did not honor legal meal time allowances nor provide regular wage statements.
This lawsuit comes as the most recent episode in the overtime battle between IBM and its employees. In late 2006 IBM agreed to pay $65m to settle a class action suit brought on by 32,000 IT specialists and tech employees claiming overtime rights. The company struck back in January 2008, with a 15 percent cut to the base pay of 7,600 of these employees to compensate for their reclassification as exempt. The cut to the first 40 hours, IBM said, will allow the company to break even on any overtime accrued.
Reaction was outraged, as expected. One commenter to the Wall Street Journal blog, said, "I work for IBM and will be part of the 15 percent pay cut...However I am not part of the class action suit for Overtime. IBM preaches Work-Life Balance, but how can you be so if you now have to work 50 hours to make up for the pay cut." He went on to say the company would prevent employees from putting in extra hours unless the customer took on the overtime cost.
IBM characterized the cut as a 'pay mix', stating that the company wouldn't save any money since most employees would make up in overtime what they lost in base pay. But employees, who are protesting online in large numbers, beg to differ. The cuts went into effect February 1, and several elements contribute to the uncertainty of maintaining their pay level--pre-approval by management of overtime hours and availability of extra hours dependant on business levels. Also, a cut in the base pay will affect areas that are calculated on base salary along, such as disability, insurance, pension and savings plans.
Company spokesperson, Fred McNeese, says that if IBM were to pay overtime on top of already competitive salaries the outcome would "produce costs that exceed competitive levels".
Lee Conrad, a former IBM employee and now national coordinator for Alliance@IBM, authored an online No Pay Cuts! petition that attracted 1,200 protesters in its first month. He calculated that the average affected worker earned $80,000 annually before the cut, and $68,000 after, which would take five or six overtime hours to compensate. An AP source adds that one-third of those workers don't work enough to make up for the cut.
IBM closed out last year $10.4bn in the black, and reportedly expects earnings per share in 2008 to grow 15 percent. The company has expanded its operations in low-cost centers such as Brazil, Argentina, China, India and Russia. Some analysts have gone as far as to venture that the Big Blue is creating unfavorable conditions in North America to avoid messy layoffs.
Whether you are fighting to recover unpaid overtime wages at a major company or a five-employee shop, seeking legal advice is a first step.