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I would agree that someone somewhere identified that the company was blatantly out of compliance. A predecessor (likely a bean counter) had the brilliant idea of ducking overtime pay by just making everyone salaried. Can't do that.
Used to be that salaried employees had to hold managerial or higher level professional roles. In other words you couldn't just put any old associate as a salaried employee unless they had people reporting to them or they were like an executive assistant. But then the law changed to allow more professions to be eligible for salaried.
Receptionists, call center workers, janitorial, etc. staff that are doing things for a specific period of time and often no more than that, should never be salaried employees, as a general rule.
What I would question is the mandatory overtime not being paid as overtime. They can compel overtime if they want, but as an hourly employee, you're entitled to overtime pay for the time above 40 hours / week. They can't say "you have to work 50 hours a week but you're not going to make any more money than you did before", unless your hourly rate is not equal to what the equivalent hourly was when you were salaried.
In other words, if you are salaried at $30k/year, figure that's around $14-15 an hour. If as an hourly employee they tell you you're going to make $12/hour with mandatory overtime, you effectively took a pay cut and you need to get out of there ASAP, but if the hourly is still around $14/15 an hour, you need to be getting overtime pay for that extra 10 hours, which should be slightly more money at least.
I would agree that someone somewhere identified that the company was blatantly out of compliance. A predecessor (likely a bean counter) had the brilliant idea of ducking overtime pay by just making everyone salaried. Can't do that.
Used to be that salaried employees had to hold managerial or higher level professional roles. In other words you couldn't just put any old associate as a salaried employee unless they had people reporting to them or they were like an executive assistant. But then the law changed to allow more professions to be eligible for salaried.
Receptionists, call center workers, janitorial, etc. staff that are doing things for a specific period of time and often no more than that, should never be salaried employees, as a general rule.
What I would question is the mandatory overtime not being paid as overtime. They can compel overtime if they want, but as an hourly employee, you're entitled to overtime pay for the time above 40 hours / week. They can't say "you have to work 50 hours a week but you're not going to make any more money than you did before", unless your hourly rate is not equal to what the equivalent hourly was when you were salaried.
In other words, if you are salaried at $30k/year, figure that's around $14-15 an hour. If as an hourly employee they tell you you're going to make $12/hour with mandatory overtime, you effectively took a pay cut and you need to get out of there ASAP, but if the hourly is still around $14/15 an hour, you need to be getting overtime pay for that extra 10 hours, which should be slightly more money at least.
They advertised the role with duties of salaried employees, which was another reason why they got away with it both on a compliance side and to keep us from leaving due to promises of a better future.
Regarding the mandatory overtime, the fact is that everyone in the company does 50+ anyways, which was their argument for that number. However it is still a pay cut. The management has the salaried employees convinced that we actually have the better deal since we could be making more than we currently do...if we slave away. During our meeting yesterday salaried employees even demanded OT!? I feel like my company is full of idiots. The way they did the math was dividing our salary by 55 to get the base hourly rate, which would equal our current salary with 40 hrs + 10 hrs overtime.
An employer can change the terms of employment at any time, they just can't do it retroactively. From what the OP has written they are trying to manage their payroll costs, which is legal so long as they comply with the law. Whether or not you want to work under those terms is for you to decide.
What is absolutely necessary is an accurate record of hours worked. In that way if they make a mistake it can be remedied.
I previously worked for a company that was audited by the labor dept( someone, not me sent a complaint in ) the employees that worked overtime without compensation were given a check by the company and paid and fine.
Start-ups are challenging. Some companies are innovators while others try to cut corners and take shortcuts with the hopes of gaining market share (most firms do some combination of both).
They advertised the role with duties of salaried employees, which was another reason why they got away with it both on a compliance side and to keep us from leaving due to promises of a better future.
I still say it's a violation. The company has to not only advertise to employees the duties that make it a salaried position, they have to maintain records that back that up. State law is often quite clear about what does and does not qualify in this regard; if you can prove that you did none of the duties that were specified, it's a clear violation.
Example:
If you worked a cash register at a retail store but your position advertised that you were managing employees yet you have/had no direct reports, it's open to question.
Quote:
Originally Posted by SevenLions
Regarding the mandatory overtime, the fact is that everyone in the company does 50+ anyways, which was their argument for that number. However it is still a pay cut. The management has the salaried employees convinced that we actually have the better deal since we could be making more than we currently do...if we slave away. During our meeting yesterday salaried employees even demanded OT!? I feel like my company is full of idiots. The way they did the math was dividing our salary by 55 to get the base hourly rate, which would equal our current salary with 40 hrs + 10 hrs overtime.
IN other words they not only did what I described, they gave you a raw deal by not even doing perfect division. Doesn't make sense.
If you make $6,000/month, that's $300/day, $72,000/year, which is right in the salaried range. If you divide any of those numbers into 55 you get an illogical figure. Dividing the daily figure by 55 results in something lower than minimum wage. So something's not adding up somewhere.
Normally, you do what I said you do, which is to derive the hourly from the current annual salaried, at a 40 hour work week. But if you're deriving from a 50 hour work week to get to the same place it results in a lower hourly BECAUSE overtime cannot by law be paid at a standard rate. That's the problem and it sounds like what they're describing. You can't do it. Anything over 40 hours must be paid at time and a half, even if it's mandatory.
If I were you, I'd contact the Department of Labor. Sounds like a wage law violation was replaced for another.
If you make $6,000/month, that's $300/day, $72,000/year, which is right in the salaried range. If you divide any of those numbers into 55 you get an illogical figure. Dividing the daily figure by 55 results in something lower than minimum wage. So something's not adding up somewhere.
Normally, you do what I said you do, which is to derive the hourly from the current annual salaried, at a 40 hour work week. But if you're deriving from a 50 hour work week to get to the same place it results in a lower hourly BECAUSE overtime cannot by law be paid at a standard rate. That's the problem and it sounds like what they're describing. You can't do it. Anything over 40 hours must be paid at time and a half, even if it's mandatory.
If I were you, I'd contact the Department of Labor. Sounds like a wage law violation was replaced for another.
I think you are misunderstanding what I described. The company calculated the hourly wage such that 10 hours of overtime pay would equal our current salary. So they are still paying time and a half over 40.
So using your example,
72k salary would be:
-6k/month
-At 40 hrs a week, $37.50/hr base wage.
If you want to make 72k through the new policy:
6k/month divided by 55 hour work week = $27.27/hr base wage.
($27.27 * 40 hrs a week) + (10 hrs of OT)(27.17 * 1.5) = 1090.80 + 409.05 = 1499.85/week
I think you are misunderstanding what I described. The company calculated the hourly wage such that 10 hours of overtime pay would equal our current salary. So they are still paying time and a half over 40.
So using your example,
72k salary would be:
-6k/month
-At 40 hrs a week, $37.50/hr base wage.
If you want to make 72k through the new policy:
6k/month divided by 55 hour work week = $27.27/hr base wage.
($27.27 * 40 hrs a week) + (10 hrs of OT)(27.17 * 1.5) = 1090.80 + 409.05 = 1499.85/week
1499.85 * 4 = 5999.40/month
You said "divide by 55". You didn't say what "55" represented.
But by your own math (assuming this is what they did), they're not paying you 5 hours of overtime at all. Which is a violation. That's the first problem.
The second problem is that the base hourly rate must be calculated on 40 hours, not 50, not 55, because the base is not overtime.
If they want to use 55 hours that's fine, but then the math should be:
72k salary would be:
-6k/month
-At 40 hrs a week, $37.50/hr base wage.
($37.50 * 40 hrs a week) + (10 hrs of OT)(37.50 * 1.5) = 1500 + 562.50 = 2062.50/week
2062.50 * 4 = 8250/month
Which results in nearly $3k that you're not getting that you should be, by law. UNLESS they want to drop the mandatory overtime requirement OR they advertise clearly that you are to be paid less money MINUS the overtime. In other words, you're now making just under $57,000, not $72,000. If they advertise that your annual pay is still the higher figure, they're in violation.
You said "divide by 55". You didn't say what "55" represented.
But by your own math (assuming this is what they did), they're not paying you 5 hours of overtime at all. Which is a violation. That's the first problem.
The second problem is that the base hourly rate must be calculated on 40 hours, not 50, not 55, because the base is not overtime.
If they want to use 55 hours that's fine, but then the math should be:
72k salary would be:
-6k/month
-At 40 hrs a week, $37.50/hr base wage.
($37.50 * 40 hrs a week) + (10 hrs of OT)(37.50 * 1.5) = 1500 + 562.50 = 2062.50/week
2062.50 * 4 = 8250/month
Which results in nearly $3k that you're not getting that you should be, by law. UNLESS they want to drop the mandatory overtime requirement OR they advertise clearly that you are to be paid less money MINUS the overtime. In other words, you're now making just under $57,000, not $72,000. If they advertise that your annual pay is still the higher figure, they're in violation.
You still aren't getting the math, slow down and take a look at my numbers. They are correct. Where are you seeing that they aren't paying for 5 hours of overtime? 15 is because 10*1.5 = 15. Dividing by 55 is getting 40 hours of base + 10 hours of overtime equalling current pay. Since OT is 1.5, they divide by 55.
They are NOT basing base wage on 40 hours a week. They are basing base wage on 55 non OT hours (which equals 40 hours + 10 OT hours) a week. Period. I've spelled it out as plainly as I can.
Overtime is NOT mandatory. If you want to make what you currently make, 10 hours of overtime is necessary. Otherwise, yes, there is a pay cut.
This policy has not been put in place yet. Will they need to create a new letter for terms of employment since the pay scale has changed? If so, and if they advertise the pay as equal to 40 hrs + 10 hrs overtime, then yes I will report it to the Dept of Labor.
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