Our thanks to the 334 readers who participated in Bob Brady’s survey on the vexing problems with overtime laws and high-end inside salespeople. Here’s a compilation of your responses. (Go here to see original column.)
In the January 9, 2009, column, I wrote about high-earning, “nonexempt” employees and their overtime eligibility. At BLR we have commissioned salespeople, particularly, who would like to work overtime, but we don’t allow it because it is cost-prohibitive. Their high overall pay (after commissions) makes paying them time and a half after 40 hours uneconomical. (Paying them time-and-a-half of their base pay wouldn’t be a problem. But the law does not allow that. You have to include their commissions. Someone earning, say, $75,000/year, would be getting almost $60/hour.)
Almost to a person, the employees involved resent the restriction. They are motivated by money and would happily put in the occasional (or regular) extra time to close deals they are working on. My feeling is that this is an example of liberalism run wild. Overtime restrictions were put in place to protect low-earning employees. They are out of place in this context.
In a survey that accompanied the article, we asked readers to let us know how prevalent the situation is, what kinds of employees are involved, and how employees feel about it.
The results of the survey indicate that almost half of high-earning “non-exempt” employees see the requirements as “career limiting.” See details, below. A total of 334 employers participated in the survey.
One-Quarter of Employers Have Highly Paid Nonexempts
Twenty-five percent of employers said they have employees earning $75,000 or more per year who are nonexempt. Of these, about 75% work overtime “occasionally” (54%) or “regularly” (20%).
What jobs do these employees have? |
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| Number | %* |
Sales | 30 | 36% |
Customer Service | 17 | 20% |
IT/Technical | 32 | 38% |
Production | 14 | 17% |
Other | 40 | 48% |
*Numbers add to more than 100% because of multiple replies |
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It is clear from this that most of the employees involved are in sales or IT. Both of these are made of highly skilled, self-motivated professionals. In my experience, at least, they resent being made to punch a time clock, feeling that it is demeaning and inconsistent with their self-image.
Employee View
Our anecdotal evidence of employee resentment was borne out in the survey. As the table below shows, 44% of the HR managers surveyed say that employees in their organizations see the regulations as “career limiting.”
How do employees view it? |
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Are indifferent | 15% |
No opinion or don’t know | 17% |
See it as career limiting | 44% |
Welcome it as an opportunity to make more money | 19% |
Do Employers Comply?
Some BLR employees have questioned our interpretation of the law, saying, “I’ve been in sales all my life and haven’t had to punch a clock.” Our response is that they were either in outside sales, which is exempt, or their former employers were violating the law. So, in the survey, we asked if employers comply with the laws.
Only 13% of respondents feel that most employers comply with all regulations, while 57% feel that most employers comply with the regulations when it comes to lower-paid people, but not higher-paid. The table below shows the results.
Do employers comply with overtime regulations? | Number | % |
Most comply when it comes to low-paid people, | 192 | 57% |
Few comply with any of the regulations | 46 | 14% |
Most comply with all the regulations | 43 | 13% |
No opinion or don’t know | 54 | 16% |
Total | 335 | 100% |
Large Organizations
The survey showed that large organizations are more likely to have high-earning nonexempt employees. Only 14% of employers with fewer than 50 employees do, contrasted with 43% of organizations with over 1,000 employees. The tables below show results by both size and type of employer.
Do you have employees earning more than $75,000/yr | ||
| Number | % |
Do not know | 21 | 6% |
No | 229 | 68% |
Yes | 84 | 25% |
Total | 335 | 100% |
| By Size of employer | Number of respondents | Percent | ||||||
| do not know | no | yes | Total | do not know | no | yes | ||
| Less than 50 | 4 | 82 | 14 | 100 | 4% | 82% | 14% | |
| 50-99 | 5 | 41 | 15 | 61 | 8% | 67% | 25% | |
| 100-499 | 5 | 69 | 29 | 103 | 5% | 67% | 28% | |
| 500-1,000 | 1 | 16 | 6 | 23 | 4% | 70% | 26% | |
| Over 1,000 | 6 | 20 | 20 | 46 | 13% | 43% | 43% | |
| Total | 21 | 228 | 84 | 333 | 6% | 68% | 25% | |
| By type of employer | ||||||||
| do not know | no | yes | do not know | no | yes | |||
| For-profit | 14 | 153 | 62 | 229 | 6% | 67% | 27% | |
| Government | 5 | 22 | 9 | 36 | 14% | 61% | 25% | |
| Not-for-profit | 1 | 52 | 12 | 65 | 2% | 80% | 18% | |
| Total | 20 | 227 | 83 | 330 | 6% | 69% | 25% | |
What Does It Mean?
Unfortunately, figuring out how to respond to all of this isn’t hard. Realistically, we’re stuck. We’re not going to get much changed in the law, which means that we don’t have any real choice other than to complain—and comply. If you feel otherwise, or have other comments, please e-mail me at Rbrady@blr.com.