cross-posted from: https://lemmy.ml/post/723015
A new study shows that firms of all types are giving workers phony managerial titles in order to avoid paying them overtime a new study shows that firms of all types and sizes are giving workers phony managerial titles in order to avoid paying them overtime in what researchers see as an exploitation of federal labor laws. “If you are a manager and you’re paid over a certain amount, in fact, that lifts the burden of firms having to pay you overtime,” said Lauren Cohen, a professor at Harvard Business School and one of the paper’s authors.
The logic at the time of the law’s creation was that managers are a special class of employee with a particular stake in the company’s future success. But today, many such workers are managers in name only, and the national threshold is only $455 a week, or under $24,000 a year. Cohen and his fellow researchers scoured job listings in the 2010s and discovered that right above that weekly $455 threshold, there was a 485 percent increase in the number of salaried positions with fancy-sounding managerial titles. Companies, it seemed, were often doling out fancy-sounding titles to salaried employees and then paying them just enough to legally shirk overtime rules. “We find widespread evidence of firms appearing to avoid paying overtime wages by exploiting a federal law,” the researchers state in their paper, which was recently published as a working paper by the National Bureau of Economic Research. https://www.nber.org/papers/w30826 On average, the strategy appears to save companies significant amounts of money (and costs workers just as much). The researchers estimate that firms pocket 13.5 percent in overtime payments for each bullshit manager title they hand out.
The overtime-evasion trick held across industries and around the country, according to the data, but was most obvious within industries and states where workers had fewer rights and less bargaining power, as well as in low-wage industries that are more often dinged for overtime violations, like retail and food and drink services.
Why do managers have different overtime laws in the first place?
Sounds like ‘manager’ in the US needs to be defined as ‘employee’ is defined in some countries: the job title is only one factor; what matters is the company’s degree of control over the employee.
If someone is ‘self-employed’ but has to turn up at the same time every day for one company, and has non or little right to refuse tasks, they’re likely an employee regardless of the paperwork.
This is also open to abuse, and results in people being sacked in cycles so that their association with the company is only temporary, but it is better than fixing the definition according to the title, as with the ‘managers’ discussed in the OP.
For example, if someone is a ‘manager’ but has no control over others or has no say in meetings ‘above their head’, they are not a manager but an ordinary employee. The problem is that this solution requires mildly reasonable legislators and judges. Even then, it only protects those who can litigate for their rights, such as unionised workers and wealthy labour aristocrats (who won’t have this problem, anyway).
