Feeds

IBM hits back against over-timers with pay cut

'These people' get what they deserve

The Power of One Infographic

IBM's technical support grunts may have won the battle for overtime pay, but the company has cooked a major catch to its peace agreement.

Big Blue is now conceding that about 7,600 IT specialists and tech support workers (about 6 per cent of its US workforce) need to be reclassified as being eligible for overtime wages. But the company is simultaneously slashing the base pay of those employees by 15 per cent to compensate.

The salary cut is a result of a two-year-old dispute between the company and its techies about overtime wages. In late 2006, IBM payed $65m to settle a class-action lawsuit in which 32,000 current and former technical support employees accused the company of illegally withholding overtime.

IBM says it wants to comply with US labor law, even though it thinks overtime qualifications are ambiguous. Under the US Fair Labor Standards Act, some "highly skilled" white collar workers such as executives, administrative, professional and certain IT employees are exempt from overtime pay. IBM techies argued the company unjustly lumped its support staff into that category .

With the wage cut, IBM claims that because its tech grunts regularly work overtime anyway, paying less for the first 40 hours will let the company, and the employees, break even.

"Up until now, these people have been paid a competitive rate based on their skills," IBM spokesman Fred McNeese told us. "If we kept them at that salary, and you add the overtime to it, they would be paid an excess of competitive rates."

McNeese said without the change the overtime wage hike would fall on IBM customers.

The company asserts that this "changing the mix" will be cost neutral to IBM. Affected employees will "basically be making roughly the same before the change."

"That's a bogus claim they're making," said Lee Conrad, national coordinator for Alliance@IBM, a union that represents a small number of IBM employees. "They aren't going to be able to make it up."

Conrad said the company has recently been pushing back on the amount of OT allowed.

IBM said it won't discuss specific wages or the amount of overtime required for workers to compensate for the base pay cut. According to Conrad, the average affected worker made about $80,000 a year before the cut. With a 15 per cent reduction, their wages will fall to $68,000. That lands at around 5-6 hours of overtime needed per week.

Internal documents obtained by The Associated Press also indicate that one-third of affected workers don't work enough hours to make up for the cut. The AP's papers, however, also ask IBM managers to spread assignments around so more employees will make up for the wage reduction.

Conrad argues that the wage cut is unnecessary since IBM has been flourishing, even in a declining economy. The company earned $10.4bn in 2007 and expects earning per share growth to hit at least 15 per cent during 2008.

The company, however, has relied on workers in low-cost centers such as Argentina, Brazil, China, India and Russia to achieve such results. Some analyst have even speculated that IBM conspires to squeeze out US employees through unfavorable conditions, rather than rely on massive layoffs. Idle conjecture, of course.

The wage change will start on February 1, and will show up in IBM employee paychecks around the middle of that month.

Alliance@IBM is currently hosting a petition at their website and plans to picket in the near future. ®

Boost IT visibility and business value

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple ran off to IBM
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.