The strategic use of titles to avoid overtime payments
nber.org
nber.org
This is about converting non-exempt workers who would normally be getting overtime pay of 1.5x to exempt workers through titles though the duties don't change... which is still against the letter and spirit of the law ( https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fs17... ) but many employees that this is targeting aren't aware of that.
To qualify for the administrative employee exemption, all of the following tests must be met:
The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $684* per week;
The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
There are similar tests for learned professional, creative professional, and computer, and outside sales.> The average personal income in the U.S. is $63,214.
> The median income in the U.S. is $44,225.
> The average American annual real wage was $67,521 in 2020.
> The average U.S. household income is $87,864.
> The median U.S. household income is $61,937
The problem is that the amount is not relative to CoL but a flat amount.
Not all major metros make building housing illegal. San Francisco and New York are not the only major metros in the US. You can build in Seattle and Houston at least.
Seattle has a much higher median cost of living than your comment.
Also the entire Bay Area has high cost of living, even when you can build in other areas other than SF.
It doesn't include mean data but the mean personal income in cities may very well be below the 55k/year cutoff.
This is why you can’t take nationwide averages because the USA is a giant country , and the cutoff might be fine for one region but not another.
The weekly salary cutoff is $684/wk. If a firm is employing software workers and using hourly-wage exemption at $27.63, they are probably not getting 40 hrs/week regularly.
> US GDP per capita (which is basically average earnings) is $69K a year.
GDP per capita could be considered a very loose estimate of average income including capital accumulation, but...that's not super relevant to a claim about major metro living wages or appropriateness as an FLSA exemption point.
On one side it meant that my employer would be very unhappy if I worked less 40 hours punched in. On the other hand, when punched in for 50 hours I had a nice bit more on the paycheck (the 40h one was $1100 before taxes; the 50h one was $1500 before taxes).
I'll also note that the median per capita income was about $25k/year and I was able to buy a house on a double lot (large fenced yard) for $60k.
"Absurdly low to be considered exempt"? That's not "privilege of the developer", that's "we shouldn't screw over employees who aren't getting adequately compensated.
This is one of those things that hasn't been updated in a long time. The original law was https://www.congress.gov/101/statute/STATUTE-104/STATUTE-104... from 1990:
> Not later than 90 days after the date of enactment of this Act, the Secretary of Labor shall promulgate regulations that permit computer systems analysts, computer programmers, software engineers, and other similarly skilled professional workers as defined in such regulations to qualify as exempt executive, administrative, or professional employees under section 13(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 213(a)(1)). Such regulations shall provide that if such employees are paid on an hourly basis they shall be exempt only if their hourly rate of pay is at least 6 1/2 times greater than the applicable minimum wage rate under section 6 of such Act (29 U.S.C. 206).
(note, there may be transcription errors above)
The federal minimum wage in 1990 was $3.80. In 1996, this value was frozen at $27.63 which was 6.5x the federal minimum wage of $4.25 at that time.
If it was not frozen, that value would be $47.13 today.
$27/hour comes to about $56,160 a year
According to HUD [0], that qualifies and individual as "very low income" in San Francisco, CA (threshhold $65,250)
For California overall, you would merely be "low income" (threshhold $56,450)
In Houston Texas, that would be "low income" for a family of 2. (Threshhold 56,700)
It might not be fun to live on, granted, but if more than 50% of the data points are lower, it's probably not reasonably described as "low".
Factor that by ten and I’ll consider taking salary. My personal time is nearly priceless and anyone giving theirs away for 684/wk needs to learn about our forefathers that died to earn us overtime.
They want 7 days of sick time per year. Sure, they get decent overtime, but if they get sick and miss a few shifts, or can’t get to their site within an hour of their call in 24/7/365, or have literally any life events then that money dries up real quick.
We shouldn’t have to demand reasonable working conditions but here we are. A proletarian being mocked by an anonymous green named capitalist belittling the severity of abuse salaried workers endure.
Slap a managerial title on someone, pay them a pittance and keep them around just as long as they’re profitable. Once they’re not toss them and laugh while they try to collect the absolutely gutted social services.
I’m not sure you deserve the downvotes, I think the way you phrased it might make people think you’re out of touch.
I help support my spouse and without my major contribution (almost 4x theirs) to our income pool (where they can only find part-time work), we'd be much worse off. So in some regards I am earning close to this rate as I help pay not for just myself, but my partner too (I have multiple pets but no kids, thank god). If that give you some idea of how much I make and they make.
To be clear, I am still paid hourly. I am not a developer either, so that kinda goes to my point (but I do work in IT). My company doesn't want us to go over 40 hours though, so if I reach it mid-day Friday, I leave early.
If it wasn't for paying _well below the average_ in the area we live at for rent, we'd have some struggle as we have high utility rates, car payments, insurance, 401k, medical bills, entertainment/social lives, etc, etc that everyone needs to balance and still avoid major anxiety over something ruining the routine financially. Inflation is the dark cloud over every horizon at the moment. I can't finance a home like I wanted to. I'll have to hold off a little longer.
The idea is that it's absurd that the Govt. has not increased this scale with CoL/inflation. To categorize someone exempt at such a low rate is a bit of a slap in the face.
EDIT: As for people much more educated, that's a similar but tangential argument. People who put in their time and money to be educated and become experts/pioneers in their field should be compensated appropriately. This is another societal failure that needs attention.
The exemption thresholds for computer workers in California are $53.80/hr or $9,338/mo on a salary basis, instead of the federal $27.63/hr or $684/wk on a salary basis.
Only half joking
Software Engineers that just write CRUD apps, Software Architects who just read docs, Systems Engineers who just follow guides, Support Engineers who just answer phone calls and tickets, etc.
Title inflation has been creeping up for many years. It's everywhere.
That being said, as someone with a software engineering degree, I can safely say that most companies don't need engineers and can get by just fine with programmers. Anyway, in this industry there are many architects working as handymen and vice versa.
Probably not, unless they used to actually do construction before becoming an architect.
> Can an architect actually put the pieces together?
Unclear what this means, but architects have plenty of training in doing "manual work". Building models requires a lot more precision than most things in construction.
> Do they know where to source materials?
That's part of their job description.
> Do they understand how to order and schedule the construction of a design?
Definitely part of their job description.
I have about a half-dozen friends as architects in the US, and only 1 of them could do any of the things I mentioned. All have been practising residential and commercial and government architects for > 30 years.
An "engineer" is someone who works in a technical profession with a governing body. Either the State, or an entity that might as well be the State.
An engineer is certified by that governing body, and given a license to practice the profession. An engineer can have their license suspended or rescinded, in the event of professional misconduct or malpractice.
Whether through law, or de facto through insurance company practices, employers face liability if they employ non-licensed engineers. So an engineer is someone who has the leverage to push back against employer pressure to commit malpractice.
Computer programmers / software developers have none of these things. Certifications are a joke, and meaningless beyond the entry level. We are pressured by employers to commit malpractice on a near-daily basis, and call it "tech debt" (management at my current company is pushing the even more euphemistic term "tech improvement opportunities").
Without a governing body and licensing, it is impossible for us to be "engineers" in any real sense of the professional term. With respect to Margaret Hamilton, we can only try to emulate an engineering profession as best we can, by evangelizing professional standards and pushing back on malpractice pressure where we can.
That's a bold statement.
Would you argue, for instance, that someone graduating from MIT EECS[0] or Stanford Engineering[1] isn't qualified to use the tittle of Engineer?
> An engineer is certified by that governing body, and given a license to practice the profession. An engineer can have their license suspended or rescinded, in the event of professional misconduct or malpractice.
I think you are confused with the PE regulations. [2]
[1] https://engineering.stanford.edu/students-academics/academic...
Note that even on your own Stanford and MIT links above, they reserve the term "engineering" for programs OTHER THAN "Computer Science" (e.g. "Chemical Engineering", "Electrical Engineering", etc). Show me a "Software Engineering" program at any accredited university.
There's no confusion, I am 100% talking about PE regulations. One requires a license to practice chemical engineering, electrical engineering, mechanical engineering, all but the most entry-level roles in aerospace engineering, etc. Employers effectively cannot hire non-licensed workers for those positions.
If that does not apply to your job, then you are an "engineer" only in the sense of LinkedIn puffery.
Mind you, this applies to all us (myself included) in the software development field. I'm not trying to be a gatekeeper. Rather, the complete absence of gatekeeping is the entire point here.
0: https://asuonline.asu.edu/online-degree-programs/undergradua...
I agree that the profession of "software engineering" could stand to have much more of the rigor of engineering. For example, it's painfully missing a sense of ethics about large scale surveillance systems. But your argument is biting off way too much.
I'd like to hear some opinions from people who have worked as both "an engineer" and "a software engineer" (maybe OP is such a person, idk) -- what kind of corner-cutting is there in (non-software) engineering fields? Is it at all comparable to tech debt? What kind of compromises in quality/design are made in the service of profit or career advancement? etc.
I think a lot of people end up with an impression that in e.g. civil engineering, everything is perfect and precise and elegant because it has to be (otherwise crumbling infrastructure, accidents, etc.). But understanding that humans in general are always looking to cut corners and be lazy, I wonder how realistic that impression really is... Wouldn't be surprised to hear about comical inefficiencies and poor practices that have become normalized over decades of designing/building physical stuff.
I did, as well as other courses on non-obvious adjacent topics. Not everyone knows the breadth of concerns that engineering brings to solving problems. It’s not as simple as a technical design.
Now, I see plenty of software people who use the same broad set of skills in problem solving, but it’s rare. It’s rare to see software people care about economics. Social impact is also a rare concern. As is governability. As is systemic thinking.
But, there are absolutely software engineers, just not as many as there are people with the title IMHO.
https://ij.org/press-release/oregon-engineer-wins-traffic-li...
The full court opinion (https://ij.org/wp-content/uploads/2017/04/Jarlstorm-opinion....) is a pretty good read if you're bored sometime.
That is what a programmer or developer does. Engineering implies a lot more than just cobbling together code blocks and libraries. Yet, that's what 99% of Software Engineers spend their days doing.
It would be akin to going out to a construction site and finding people doing rough-ins and roofing with Engineering titles. That is where the software world is currently - "Engineers" in the field doing rough-ins and roofing.
Ah, yes. There is the crux of the issue, isn't it?
People called themselves Engineers to advance their careers artificially (sounds really nice and impressive, etc).
Now, everyone is an Engineer, making the Engineer word have significantly less meaning. Today, a Software Engineer is largely a Software Developer of 10 years ago.
Just like economic inflation - title inflation devalues titles, which causes people to inflate their own titles further to stand out once again - which becomes a negative feedback loop.
He actually interviewed a number of people who transitioned from a licensed engineering discipline to software, and asked them how they felt about software as an engineering discipline. His insights are a lot more useful than the arguments between only-ever-software people on HN who have inflated perceptions of what "real" engineers do.
The whole series is worth a read, but here's the short version:
> Instead of asking how they felt about certain engineering topics, I just asked them point blank. “Do you consider software engineering actually engineering?”
> Of the 17 crossovers I talked to, 15 said yes.
> That’s not the answer I expected going in. I assumed we weren’t engineers, that we’re actually very far from being engineers. But then again, I was never a “real” engineer. I don’t know what it’s like to be a “real” engineer, and so can’t compare software engineering to other forms. I don’t have the experience. These people did, and they considered software engineering real engineering.
[0] https://www.hillelwayne.com/post/are-we-really-engineers/
Just today we looked at a performance problem. CPU/memory usage, DB queries, indexes and joins, size of data, frequency of requests, redundant work, caching, different parts slowing down others...
These things are so ingrained that I don’t think of then as applying math. In my inner eye I see pictures moving around. It’s all familiar and obvious. But thinking about it, there’s always math behind it all in some way. We don’t express it as such but it’s still there.
It’s not engineering but it’s engaging, good work.
I get what you’re trying to say. But it feels wrong to me personally to describe this work as you did.
I was a consultant at a big engineering organization. They used to huff and puff about the integrity of engineering process etc. but all of the work was done by “engineering technicians“ for 40% of the pay.
I don't understand your rant, but I do agree that the job titles are probably inappropriate. I've had all kinds of titles to describe what I do and don't really care as long as I get paid to enjoy solving problems.
I also think it's absurd to believe only engineers can understand their own work... wouldn't that just be bad engineering?
But did they graduate from Engineering school?
https://engineerscanada.ca/news-and-events/news/who-can-use-...
So "of course" a software engineer is a contradiction is terms (as an electrical engineer said here). How can one be a engineer if you didn't go to an engineering college? It doesn't matter if a engineer's career consisted of selling ice creams, that person is a poor engineer and thats that.
I actually met a "engineer" friend of my parents who designed the major parts of a traffic roundabout near my home. It is the worst designed roundabout I've seen and there is at least one car crash per day there. Every now and then people end up in ER. We chatted for a short bit, and touched on those crash reports. He just said dismissively: "people should just drive better". So that's engineering for you.
I think next step is to adjust time for some people so they think you have lived 100 years while they actually just lived 30.
I’m good but I’m nowhere near that good. Title inflation is silly and ten years in, I’m done paying attention to them at all. They tell me nothing.
(Staff) titling with a 4+ years of experience ask is incredibly confusing to me.
I wasn't a jerk about it in the interview, but I said something to the effect of "I know titles are different at all other companies, but here the expectations for PEs is that they're tasked on the most critical technical initiatives and are held to high standards for execution. You're also going to be expected to mentor not just Junior technical staff, but also mid and senior level engineers. Does this sound like a role you're interested in? It's fairly demanding."
Guy didn't flinch and said "Yeah, that's exactly what I'm looking for!" :|
(We did not hire)
From the candidate side, the only way to differentiate between "senior" "staff" "principle" "lead" or whatever between companies is the required years of experience on the job listing. Which is a terrible metric, but it's more informative than the title or job duties.
Sure, he is not the norm. But I'm sure there are plenty of people equally as talented as him who didn't take the entrepreneurship route and are now languishing in the corporate ladder. Any company can achieve wild success if they are able to identify such talents and place them immediately in high-impact roles.
It would be a matter of principle to point that out.
Essentially, it’s easier to make tons of exceptions than to fix the root cause.
But now imagine I'm full of myself with my new "Director" title, and go out to interview for real director-level jobs. Man, the previous company would have done me no favors as I go out there and get absolutely slaughtered in interviews.
If you have a SWE that you're worried about losing you can't just keep them in the same job title and give them a big raise. You have to give them a manager, senior manager, or director title in order to get them into the pay-band you need them to be in. So it really isn't about making the employee feel good about the title they have. It's about getting them into the right pay band.
On the flipside, I have a buddy who is one of the best Java devs in the DFW area who refused to become a manager and threatened to take his talent elsewhere. They carved out entire new levels for his software engineer job just to keep him happy. Before this, they had up to SDE IV. He was SDE VI when he left to join a consultancy when his salary became a concern. The consultancy ended up placing him back at the place he had already been working for because the company suddenly had a huge knowledge vacuum, and they eventually offered him a new position at SDE VII to get him back on the team.
Then a new manager gets the idea that we should be hourly. Why? My only reasonable guess is that he had some misguided idea that "salary" was for big-whigs like himself, and "hourly" is for the grunts under him. So now I have to punch a literal clock, like a fast-food worker or summat? Fine by me.
I made fucking bank at that job, as one might imagine. Oh, I worked my ass off, but I got paid for every minute of it (and more, with overtime). What I can't imagine is how much payroll went up, and how he got away with continuing it.
Is there any possibility that the manager thought "we work these people like dogs, we should treat them better, the least we can do is pay them overtime"?
[edit]
Also, what about Ensign?
I’m curious about how this works out for individuals. Do they get these titles, do the same thing as before and …just put in overtime for the same pay?
I don't doubt this happens in ways, but just title swapping seems like it would be kinda awkward and obvious.
If everyone else in your skill band is a Directory of Dipshittery, then if you're not a Directory of Doowopness, then it's an excuse to pay you less. They make more because they're "Directors", you're just a "Managing Associate".
Like how everyone here is concerned whether they're "Junior" or "Senior".
We've essentially stripped away all meaning from titles.
Not always because pay cuts come in many ways and even senior engineers do not see it, except after the fact or in the form of diffused pain they cant put a finger on.
- Example: Company says they still match 50% on 401k, but only on the first $3000 of contribution (basically, its 0.50 * 3/21). This is a hidden paycut.
- Example: Company offers new health plans with increased deductible/premium/copay/coinsurance. This is a hidden paycut.
- Example: Company says vacation days remain the same, but now need 3wks advanced approval, and then drag their feet in giving approval. This is a hidden paycut.
- Example: Company says they still reimburse for education/books/etc per offer letter, except require ever-greater detail/receipts and reject randomly for unknown reasons. This is a hidden paycut.
- Example: Company says they still reimburse for education/books/etc per offer letter, except reject randomly and then close out potential for reimbursement after 30days, forcing employees to eat the cost. This is a hidden paycut.
- Example (Actual one from Accenture): Company says worker in Manhattan should commute down to Trenton via train and then take a bus on NJ Transit daily. They will reimburse train, but not a rental car. Workers not wanting to spend 5-6hrs a day on the train pay for rental car out of pocket. This is a hidden paycut.
Comp tells me how much value you think I can deliver in your org.
If you wanna call me Senior while compensating me like someone who has cross team impact across 500 engineers, so be it, as long at the TC is there.
If you wanna call me Staff but only rate me on how many API endpoints I can craft in a sprint, I doubt you'll be able to compensate me enough to care about your JD.
Sure, but on the other side, if I have someone I want to hire, and the choice is give them an extra $XX thousand or let them pick their title, I'm going to pick the title.
Or, hell, both. Both is an option too. I don't particularly care what title they want as long as they can provide the value I'm looking for.*
*Sufficiently silly titles such as Chief Brace Sculptor, or nonsensical ones such as Head Monkey Spinner may require several weeks for me to stop giggling, but I'm willing to roll with it.
https://en.wikipedia.org/wiki/First_Lord_of_the_Admiralty https://en.wikipedia.org/wiki/First_Sea_Lord_and_Chief_of_th... https://en.wikipedia.org/wiki/Lord_High_Admiral_of_the_Unite...
The biggest type of theft in the United States is wage theft, which this is an example of. Ask yourself why the media so rarely covers that.
The changes were advertised as a way to help workers get paid more fairly for overtime, but legislation rarely changes economic realities. By expanding the requirement to pay overtime they made it much more expensive to staff entry level management positions. In one non-profit that I was familiar with at the time, the rules would have required payroll to increase by $100,000 - $200,000/year (maybe more, I can't quite remember the details).
As organizations do, they adapted by eliminating almost all of those entry level supervisory positions. People were moved down to hourly workers, with their hours severely constrained, moved up to more senior level management roles that avoided the overtime requirements, or the position was eliminated all together. I don't think anyone was happy with those changes within the organization but it was necessary to keep the organization fiscally viable given the new rules. It also made it much harder to move from an hourly position into management because the leap in capabilities and responsibilities was much greater.
Perversely, the changes were not implemented by the Obama administration due to lawsuits that prevented their implementation at the last minute. By that time, any affected organization had already made the structural changes though. (I don't think the regulatory changes ever occurred).
Anyway, this is a long way of saying the labor market always adjusts to regulatory constraints and TANSTAFL. The general economic principle that when costs increase, demand decreases isn't magically voided by legislation. Expensive labor leads to fewer jobs and makes it more difficult to absorb young people into the job market.
https://www.cnbc.com/2016/12/26/obamas-overtime-law-failed-b...
> A new labor law rule — kicked back by a federal judge last month — that would have made almost four million Americans eligible for overtime pay may still have resulted in higher wages for the workers it was intended to help.
> The new legislation would have significantly raised the salary cap under which employees were eligible to earn overtime. In response, some large companies, such as Walmart, gave raises to workers whose pay fell just under the new threshold, making them ineligible for overtime pay. Other companies reclassified salaried overtime-exempt workers as hourly employees, which would make them eligible to earn overtime for workweeks longer than 40 hours.
The article (from 2016) finishes with:
> “If someone can get a $5,000 or $7,000 raise by going down the street, why wouldn’t they?” Eisenbray said.
> “For companies that aren’t paying as much as their competitors, they’re going to see their best talent move,” Kropp predicted. “In this segment of the market, people will move for 50 cents or a dollar an hour difference.”
"Basic supply and demand" is almost always wrong for the labor market. You're a monopsony, they're also your customers, etc. Don't assume the obvious is going to happen without actually looking.
We’ll just have to agree to differ. Although I would be curious to hear about examples of this scenario where employers hire more people when the cost of labor goes up.
https://equitablegrowth.org/understanding-the-economics-of-m...
> listing of managerial positions such as “Directors of First Impression,” whose jobs are otherwise equivalent to non-managerial employees (in this case, a front desk assistant).
Wow, that's pretty brazen.
seems like they designed the law explicitly to encourage this.
And sure, all rules can be gamed, so right at the threshold we see nonsense like this. But to argue that this was the intent is ridiculous. The law wasn't for these employees at the threshold, it was for the folks farther down the org chart. And it quite clearly works as intended for them, since they're being paid overtime.
But they can "promote" you to customer service rep manager, raise your pay by a bit (but lower than your overtime pay would be), and have you continue to do the exact same job (maybe with some token manager duties thrown in) for the same or even more hours and not need to pay overtime.
Was that the intention of the law? Idk - given the priorities of the people who make laws maybe it is.
As an example every new safety technology like seat belts comes with complaints that it'll just encourage people to drive worse (fancy term "risk compensation") but in fact there's no evidence this happens.
https://www.sciencedaily.com/releases/2006/09/060911102200.h...
> While salary, pay frequency, and whether a position is a learned profession are typically externally verifiable, whether a position satisfies the executive or administrative duties criteria depends on the employer’s assessment of the position’s responsibilities and is difficult to verify externally. Often, the only piece of externally observable information suggestive of a position’s duties is the job’s title. Thus, employers can strategically choose job titles to imply that a position involves managerial duties, and as such exempt from mandatory overtime payments, although the actual responsibilities of the position do not satisfy the executive or administrative duties tests
>We find widespread evidence of firms appearing to avoid paying overtime wages by exploiting a federal law that allows them to do so for employees termed as “managers” and paid a salary above a pre-defined dollar threshold.
this is published by NBER, a very academic economics driven enterprise, so let me point out something they should have but didn't: TANSTAAFL. There Ain't No Such Thing As A Free Lunch. And I'm not talking about the employers getting a free lunch.
if you (tech workers) think you'll be able to convert your high-hourly-equivalent-wage into a higher-hourly-equivalent-wage-with-overtime-pay, no, not going to happen, at least not in the long term, unless of course your productivity were to climb by a commensurate amount.
The market (labor supply and labor demand) sets the wages and TANSTAAFL.
You might find a work-life balance that you personally like better (for instance no overtime pay, no overtime work) but that's not better for all people and after the payment system adjusts (for instance erode workers' base pay, then entice longer hours with larger overtime payments) it will settle into a new equilibrium which does not include free lunch.
This paper isn't about tech workers. It's about workers in general, and with an empahsis on workers in low-wage and high-hour industries like fast food and discount retail.
the same economics applies, it's sort of the whole point of economics, it's generalizable, it's not a collection of special circumstances, nor is it escapable. hiring takes place because wages for the work are worth it, and hiring will decline if not. It's not a value judgement or a moral judgment, it's the same way you spend your own money, only if it's worth it.
the audience here is tech workers so I used that to get the emotional resonance for the plight of the salaried worker.
you could make tests for it. A black belt should be able to 360 flip his desk with one hand.