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Is Overtime required in the following situation?
Benefits & Compensation
Is Overtime required in the following situation?
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I am a IT manager in TX. Our team consists of a mixture of salaried employees, and contractors who are W-2 hourly employees on our prime vendors payroll. Upper management has recently deci
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Forums » Topic Forums » Benefits & Compensation » Is Overtime required in the following situation?
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Is Overtime required in the following situation?
posted at 2/11/2013 2:35 PM EST
on Workforce Management
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Posts: 2
First: 2/11/2013 Last: 2/12/2013 |
I am a IT manager in TX. Our team consists of a mixture of salaried employees, and contractors who are W-2 hourly employees on our prime vendors payroll. Upper management has recently decided that in order to hold some of our costs down, we are to now inform the contractor staff that they are required to work 50 hours per week, but we will NOT sign a timecard that contains more than 40 hours. When I expressed concern that this might be a wage and labor violation in TX, and that my asking the contractors to do this could even violate the means test of what constitutes a contractor vs an employee, the reply I got was that any wage labor violation complaints that might be filed by the contractor staff would be against the vendor, and not our company. Our VP also stated that if the contractors really pushed back, we were to fire them and find contractors who would be willing to do this for us. Procurement was in the meeting with all of the IT management when our VP gave us this direction, and he concurred that legal had stated that we (as a company) would be in the clear and any complaints that the contractors might file would be against our vendor, and not our company. Is this legal? I don't want to be pulled into any investigation or lawsuit that could be filed by one of our contractors. Some of our contractor staff have worked off and on in our company for the past 4-5 years, and they are older, and NOT inclinded to be pushed around. Are there any recommendations on how I should handle this? |
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Re: Is Overtime required in the following situation?
posted at 2/11/2013 4:08 PM EST
on Workforce Management
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Posts: 222
First: 9/29/2011 Last: 5/15/2013 |
If your contractors are employees of a third party vendor (eg, a contracting/temporary labor vendor), then failure to pay overtime rates for employees who are eligible for such would indeed rest on the vendor. Your company's issue here would likely be a contractrual one between the company and the vendor. Whatever contract exists between vendor and your company needs to be reviewed pronto if in fact that hasn't already happened. By demanding that the contractors work 50 hours but the company will only sign off on timecards with a max of 40 hours, the company is effectively forcing a 20% revenue reduction on the vendor. If the vendor has ample work available for these contractors, I think you can expect to see these contractors taken out and sent elsewhere in short order. |
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Re: Is Overtime required in the following situation?
posted at 2/12/2013 9:44 AM EST
on Workforce Management
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Posts: 180
First: 9/21/2011 Last: 5/14/2013 |
It is going to depend on the relationship between your company and the vendor. I agree with Nork that the wage liability rests with the vendor. BUT I also can't imagine a vendor with a contract who would allow an 'End run" around it like this. Because they are still liable for every hour their employee works even if the contracting company doesn't pay them! But it is going to rest on what is in that contract. Is it a per hour bid or a project bid? I would not have them falsify their time worked. Because not only would that be an issue for a wage claim but also then you aren't being truthful accounting wise on what the project/staffing actually costs. |
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Re: Is Overtime required in the following situation?
posted at 2/12/2013 2:35 PM EST
on Workforce Management
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Posts: 40
First: 11/3/2011 Last: 4/26/2013 |
Thought #1: The vendor would be crazy to agree to any scheme that places them in violation of FLSA. And probably won't. They could also stand to lose talented employees, and the knowledge base for your company's project. (Which impacts your company) |
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Re: Is Overtime required in the following situation?
posted at 2/12/2013 3:46 PM EST
on Workforce Management
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Posts: 2
First: 2/11/2013 Last: 2/12/2013 |
My thanks to everyone for their input and advice. Regarding the contract provisions, neither I nor my other IT management peers know what the contract terms are between us and our prime vendor. At our level, we are not allowed to see or even know any details regarding the contract provisions (something about CBI). But since the Procurement Director was in the meeting, and stated that there was no liability to our company by refusing to sign timecards with more than 40 hours, we are assuming that there is nothing in the contract that the company lawyers are concerned with. Regarding the quality of the work - I did hold a meeting today with my contract resource team to let them know that I have now been directed to NOT sign any timecard that contains more than 40 hours per week. I indicated to them that it was my understanding from my executive management that there was now an agreement between their contracting firm and our company by which we could expect them to continue working up to 50 hours per week, but that the timecards could no longer reflect the actual hours worked. I told them I had no additional details regarding what agreement had been worked out, and that they needed to contact their vendor representative for more details. As I expected, several of the contractors stated that I would only get 40 hours per week of work from them, and when they hit 40, they would stop work until the next billing cycle. I expect most of my contractors to hit 40 hours sometime Thurs afternoon, so I will see if they truely walk off the job at that point in time. If they do, there is no way I can meet the target delivery dates my team has set with our external client. Regarding the cost savings to the company - the company is having financial difficulty, and this new VP recently replaced the previous VP who was walked out the door last week. So yes, the cost savings is very high, since most of these contractor resources are very Sr level technical resources, and the bill rates range between $100-160/hr from the vendor. Regarding where I now stand - since all of you have confirmed my concerns regarding whether this is legal or not, plus my own personal concerns regarding whether I want to be a party to this type of arrangement, I have started a new job search as of today. I'd been debating whether it was time to consider moving on, but the events of this week so far have confirmed that I need to move on as soon as possible. My thanks again to everyone for providing me with advice/input. |
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Re: Is Overtime required in the following situation?
posted at 2/12/2013 7:04 PM EST
on Workforce Management
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Posts: 222
First: 9/29/2011 Last: 5/15/2013 |
Good luck! Ida's suggestion that you start looking given the lack of ethics displayed by your company was a very wise one. Given a scarcity of good IT resources, I trust you'll find something rather soon. |
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Re: Is Overtime required in the following situation?
posted at 2/13/2013 1:49 PM EST
on Workforce Management
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Posts: 40
First: 11/3/2011 Last: 4/26/2013 |
When the company's number sdon't look good some mgrs will start looking for shortcuts to stay afloat. Ethics and legalities are often the first victims. A lot of us have been in that uncomfortable position before. Don't forget to document the issues carefully, you could be called to testify even after you leave. Also, think about how you'll characterize your departure to prospective employers. Good luck with the search |
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