Posted on 01/23/2008 9:42:02 AM PST by decimon
IBM Riles Employees With Base Pay Cuts By BRIAN BERGSTEIN (AP Technology Writer) From Associated Press January 23, 2008 10:58 AM EST
BOSTON - Even as IBM Corp. reports record profits, thousands of its U.S. employees are staring at pay cuts.
It's the result of IBM's response to a lawsuit in which the company was accused of illegally withholding overtime pay from some technical employees. IBM settled the case for $65 million in 2006 and has now decided that it needs to reclassify 7,600 technical-support workers as eligible for overtime.
But their underlying salary - the base pay they earn for their first 40 hours of work each week - will be cut 15 percent to compensate.
IBM spokesman Fred McNeese said the move would not save the company any money, because the affected employees generally should find that overtime pay makes up for the salary cut.
However, internal documents obtained by The Associated Press indicate that many workers will lose money.
These documents, prepared for managers who have had to break the news to their underlings, say that one-third of the affected workers - more than 2,500 people - generally do not work enough hours to make up for the 15 percent cut in base pay. IBM is offering a one-time "transition payment" to reimburse affected workers for the losses they suffer in the first three months.
One slide presentation says managers should try to spread assignments around so that more employees work enough to pass the threshold - 5 hours of overtime per week - at which their new time-and-a-half pay would make up for the reduction in base salary. But the document also acknowledges that "hot skills and customer commitments may limit (the) opportunity to redistribute overtime."
IBM's McNeese would not comment on the documents' specific points. He said IBM had been paying these technical-support people at "market rates," and to grant them overtime without a corresponding reduction in base pay would make them too expensive.
One document, labeled a confidential "Q&A for customers," lists this sample question that an IBM client might ask: "What has been the reaction of employees who are being reclassified?"
The suggested response for managers: "They understand this is something we must do under current interpretations of the law and to remain competitive within our industry."
It is clear, however, that many employees are furious.
They worry that opportunities to work more than 40 hours per week - the point at which federal law requires overtime pay for eligible workers - will be reduced now that IBM has an incentive to trim employees' time on the clock.
One 20-year IBM veteran who usually works 50 to 52 hours a week - enough to come out ahead now that she can get paid overtime - expects to see her hours reduced.
"Anybody who's been in IBM knows that when they look to cut costs, that's where they're going to cut it," said the employee, who spoke to the AP on condition of anonymity because she fears reprisals from the company.
Even if they make enough overtime to compensate for the lower base pay, the IBM workers' now-reduced salaries will carry corresponding reductions in what they are eligible for in life insurance benefits and vacation or sick pay.
"I was so angry I could hardly speak, and it takes a lot to make me angry," the longtime employee said. "I just don't know how IBM expects us to take this and just run with it."
Most of the affected workers make less than $100,000, according to Lee Conrad, national coordinator for the Alliance at IBM, a Communications Workers of America union local that represents a small percentage of IBM employees. The group is considering pickets at IBM sites to protest.
On the surface, it would seem a surprising time for any IBM employees to find their compensation going down. The Armonk, N.Y.-based technology company earned $10.4 billion in 2007 and just raised its profit targets for 2008.
But more and more, IBM is depending on workers other than the ones hit by this change. IBM owes much of its current success to its increasing emphasis on international markets and on cheaper overseas labor. IBM's U.S. work force has remained around 125,000 in recent years, even as the company's overall head count has risen with international hires.
The decision on overtime stems from the settlement of a federal class-action lawsuit in San Francisco in which 32,000 technical workers accused IBM of illegally withholding overtime pay.
IBM had considered the employees highly skilled professionals exempt from overtime rules as defined in the Fair Labor Standards Act. The plaintiffs alleged that they were not executive decision-makers or creative types who can be ineligible for overtime.
Though that case was settled late in 2006, McNeese said IBM needed until now to determine how to comply with federal overtime laws. "We still think it's ambiguous," he said.
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On the Net:
Comments on union page about the cuts:
http://www.allianceibm.org/salarycomments.php
We had people called Project Leaders. Project Leaders were programmers who could not program. They would attend the meetings. Some of them would drag their whole staff to the meetings just in case a question was asked. The PL’s were too incompetent to answer the question and too cowardly to show it. We rebeled against that time waster. Eventually I was designated as a trouble maker and sent off to consulting Siberia to do a year long project converting a Client Server system back to the mainframe. It was me and three Indian guys on 3270 terminals. We finished the project in 3 months despite one of the Indian guys disappearing. We literally begged for work to do because we were so bored. We all got job offers from the company. Luckily I left town before I had to decide on whether to take the job.
“Oh they will get large deferred compensation amounts and stock options out the wazoo.....you know....to stay competitive with the corporate market pay range.....so they don’t suffer a talent drain.......(can you tell I’ve heard that one before?)”
Yeah, I heard that one recently from the CEO of Best Buy, IIRC - or was it Circuit City? Said that it had taken him a long time to hire his crack team of executives and he wouldn’t want to lose them. This would be the crack team of executives who presided over several years of successively higher losses, with no end in sight.
North American business culture is horribly broken, and it will drag us all down with it yet.
Thank you, Madame D. I’ve been reasonably successful and have the lowest rate of staff turnover among my 30+ peers (countrywide)...although the higher powers have sometimes made that more of a challenge than it has to be (and of course they’ve paid for it with succesful lawsuits for unpaid OT, threats of unionization, etc.)
“The regularly expressed attitude of just find another job if you dont like whats going on is simply not in the best interests of the employer (not to mention the employee).”
Unfortunately, the management of many companies doesn’t care about that - only making the bottom line look as good as possible at the end of the quarter, even if it kills the company in the longer term. In such an environment, what else can an employee do but move on?
Yeah, I did that math.
I worked for IBM in the 80s, and worked on contracts that often involved a lot of travel overseas. While overseas, we often worked 70+ hours a week since there was a certain amount of work to get done and we all know if you say a tech job takes x hours, the real number is usually x times 2.
I would have made out like a bandit if i could have been reclassified.
I couldn’t agree more re hiring time consultants, efficiency experts, staffing consultants, etc...especially when (as I have personally experienced) senior mgmt. already has its mind made up about what they will and won’t change. Makes you wonder why they hired them in the first place (can you say “reciprocal agreement”?)
Of the countless meetings I’ve endured, a few have actually been productive...but only when the group was small, the subject matter narrowly focused, the agenda carefully followed, and the clock was closely watched. The rest were black holes where time and enthusiasm go to die.
IBM is one of the worst companies, IMO. This is just another example to add to the list.
Good for IBM.
Courts forced their hand on this.
Ah - because they get bonuses, stock options and the like, supposedly based on performance. Their pay already factors in a certain number of hours per week and the bonuses reward behavior that contributed to company profits.
As I see it, the lower-level folks weren’t getting overtime and probably not bonuses either, and they wanted to see a return on all the hours they worked every week over 40.
The simple answer to that question is apparent from reading the article. The CEO and the VPs are not eligible for overtime pay. Therefore, they will not see a cut in their base pay. Nor will they be receiving pay for overtime.
The article states that the base cuts are for 'some technical employees' who are being reclassified as eligible for overtime. IBM's corporate management is not eligible for overtime pay. Therefore there is no reason for them to take a pay cut.
“In such an environment, what else can an employee do but move on?”
-YYZ- I hear ya...what I was referring to was the almost-gleeful way some folks around here say that to anyone who complains about inequitable treatment by an employer.
“In such an environment, what else can an employee do but move on?”
-YYZ- I hear ya...what I was referring to was the almost-gleeful way some folks around here say that to anyone who complains about inequitable treatment by an employer.
And the dollar is worth less.
I wonder if you’ve worked in the computer business. I work in Silicon Valley as a design engineer. With the schedules that get imposed by the realities of this business - working longer hours comes with the territory.
You have to do more with less - this is a cut-throat business. No other industry in the world has reduced prices on a consistent basis over decades like the electronics industry. The way that has been achieved is by constant innovation and bloody hard work by ALL involved at all levels of the food chain.
I’ve had points in my career where I’ve had to work 50-60 hours a week for months at a time, and even a month or two at 90 hours a week because the “team” had to overcome technical problems. Nothing to do with ANYONE being incompetent or lazy. Hard problems that took time to solve.
So I take offense when you apply this wide-swath claim that anyone who works overtime must be incompetent or goofing off.
Exactly.
Middle management are usually the people I see putting in the most pointless OT, everybody knows middle management are expendable so they make themselves appear indispensable. Of course that’s a mistake because it also makes them unpromotable.
People pulling the major hours because of understaffing and management incompetence fall into my category 1: suckers. Putting in those hours does nothing other than allow the manager to succeed inspite of his stupidity, nothing will change then. Goal #1 in that situation needs to be to get out.
I am heavily addicted to the 40 hour work week, and I’ll do some serious grinding to keep it to that. Which of course irritates the hell out of my “showoff OT” coworkers as I go home before them and ahead of schedule while they’re behind. But that’s OK, I don’t respect them anyway.
“Bring lawsuit, get burned. If they don’t like their job, maybe they should find a new one instead of screwing it up for everyone else.”
These people were cheated by IBM. IBM is not the company it used to be. They lie about H1b’s, overtime, and age discrimination. I’ve seen them lay off whole departments and then hire Indian H1b’s to replace them, saying the whole time that they couldn’t find any American workers. The layoffs they are so fond of consist to a large part of over 50’s and folks getting near retirement. The end game is to have nothing left in the U.S. but sales and management. Sam Palmisano seems to specialize in selling off parts of the company to keep profits up.
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