The overtime stigma

Plenty of tech workers could rightfully demand fatter paychecks, but fear that asking for overtime could be a costly faux pas.

Published July 12, 1999 4:00PM (EDT)

Every day Silicon Valley career counselor Patricia Wilson hears her clients at the Career Action Center complain about one subject: "It's the long hours they work," she says. Overtime in high tech can easily burn up 20, 30, sometimes 40 hours a week, precluding leisure -- and often sleep.

"I had one job where I was paged by the system when it was working properly at 10 p.m., midnight and 3 a.m.," says Doris Beers, a systems administrator at Janus Associates. "I got to where I could tell in my sleep whether it was an 'everything is working fine' page or a 'problem' page."

Beers is one of an army of tech industry workers who have grown used to being available to their jobs 24 hours a day, seven days a week. The reward for such sacrifice can be mega-wealth, if the company's stock soars and the employee has lots of options vested. But if the business isn't one of the few to make it big or the employee doesn't own a chunk of shares, the long hours don't add up to much more than stress and exhaustion.

The majority of tech workers take home no overtime pay for their round-the-clock efforts. Why not? Many are entitled to it, but they don't know the law or, bizarre as it sounds, they care less about the extra money than their reputation. They want to be perceived as professionals, not low-level, hourly wage hounds.

Contrary to popular belief, overtime earnings have nothing to do with job title or salary status; many salaried workers are eligible for overtime. In general, overtime eligibility is determined by the duties and responsibilities of the job. A lot of tech workers could see a sweet increase in their paychecks if they just knew the rules and demanded that their employers followed them.

The "rules," however, are rather arcane. The federal legislation that governs overtime eligibility is the Fair Labor Standards Act (FLSA), a relatively archaic and terribly complicated statute written in 1938. Rather than specify who is eligible for overtime benefits, the FLSA states who isn't eligible -- "executives," "administrators" and "professionals."

It's the job of the Department of Labor to interpret these broad categories. It has ruled that "executives" manage other employees, "administrators" spend more than 50 percent of their time making policy decision and "professionals" have completed an advanced education, like medical school. But even such sweeping exemptions leave a lot of employees eligible for overtime.

To cut down on overtime costs, lobbyists for various industries have leaned on Congress during the six decades that the act has been in place. They have managed to create 20 pages of exemptions to the FSLA, including one -- added three years ago -- specifically aimed at tech workers. Section 13[a][17] denies overtime benefits to systems analysts, programmers, engineers or other "similarly skilled workers." But it doesn't include trainees or most entry-level employees at high-tech companies -- and it doesn't mean all tech workers are out of luck when it comes to overtime pay.

The state of California, home to hundreds of thousands of high-tech workers, doesn't recognize the federal exemption at all. California has its own labor law, and federal law only takes precedence when it demands greater employee benefits and job protection than the state law. In other words, your average geek could be billing big time for pulling all-nighters.

Plenty of employers know about California's labor code, and California Labor Commissioner Marcy Saunders says that the computer industry regularly lobbies the Legislature to recognize the federal exemption for tech professionals. Saunders says she thinks it's unlikely that the state will completely abandon its employee-protective position, but as tech firms increase their political savvy and clout, there's no telling what might happen.

In fact, a bill to revise California's overtime law is wending its way through the Legislature right now. Assembly Bill 60 was written to reinstate the provision that employees are due overtime pay any time they work more than eight hours a day  rather than after they reach 40 hours a week. But the Assembly tacked a number of amendments on the bill before passing it to the Senate, and Saunders says that any number of amendments could be added before the law is passed.

Still, a new law can't deny workers rights already granted by the FSLA. So, even if California decides to recognize the exemption, many high-tech workers -- including trainees and entry-level employees -- could successfully sue employers for up to three years of overtime back pay. And labor lawyers, of course, are just waiting to help.

"The legal industry is just licking its chops -- both plaintiffs and defense attorneys for the companies," says labor attorney Aaron Kaufmann. He thinks wage and hour complaints pose the biggest opportunity for employment lawsuits since the early days of work-related discrimination and harassment suits.

In Kaufmann's mind it's just a matter of time before workers file a class-action suit against one of Silicon Valley's biggest players, like Oracle or Sun Microsystems. Just a few disgruntled employees could send changes rippling through the industry. So what's keeping Silicon Valley workers from flooding their local labor boards with complaints?

In the valley, asking for overtime is a faux pas. The get-rich-quick hype has convinced some of the region's most valuable employees to bet on stock options over cash. The start-up culture has taught many to think of work as a hierarchy-free team effort with distributed ownership -- even if most employees hold a tiny fraction of the shares held by the company's founders and investors. And since overtime is perceived as a benefit that only applies to low-level employees, many workers aspiring to executive status just don't want it.

One research technician at the University of California at Berkeley says she felt she had been demoted when her employer reclassified her as overtime-entitled without her consent. "It did leave me with a feeling of stigma," says Sue (not her real name), "as if I had been bumped from so-called professional to so-called working class."

Brigitte Eaton, a designer for, agrees that overtime pay can diminish a worker's status: "When someone on staff says they worked 80 hours to get a project done," she says, "I'm impressed at their dedication to the project and company. When someone who gets paid overtime says they worked 80 hours, I think, I bet they made good money from doing that.'"

The overtime stigma is obviously great for employers. At one and a half times a worker's hourly wage (or equivalent if salaried), overtime pay can be prohibitively expensive.

If employees began demanding overtime pay, cash-poor companies might find themselves having to beg their staff to cut back on the hours. That could create a monumental shift in the valley's whole race-to-market culture. The balance of power currently favors the small, nimble company whose employees will work ceaselessly to be first out the door with a new product, in hopes of being rewarded by the stock market. But if start-ups couldn't afford to pay for those long hours, would the scales could tip in favor of larger, wealthier companies?

Not necessarily, says Howard Rubin, a research fellow at Meta Group, who says that start-ups might survive overtime just fine. "The people who are putting money into high tech are looking at time to reward and size of reward," he says. If start-up investors had to come up with more money to cover overtime, they probably would, to ensure that their products get out quickly. "Venture funders would just look for a bigger piece of the pie," he says. But if overtime costs really skyrocketed, the funders might switch fields -- go to biotechnology or alternative energy, he says.

But Ethan Winning, a management consultant in Walnut Creek, Calif., says he thinks it's doubtful that state and federal governments would let high-tech entrepreneurship disappear; the tech sector is responsible for too great a piece of the booming economy to be cast adrift. If overtime pay really hit venture capitalists in their pockets -- and threatened to drive them from the tech sector -- legislators would surely uphold all high-tech exemptions to overtime laws. The industry and the Labor Department will come to an agreement, Winning says.

But today, the biggest threat to overtime pay in the tech sector isn't the financial or cultural implications for employers -- it's the lack of interest on the part of employees. If anyone's interested, overtime pay is there for the asking -- at least until the high-tech lobby finds a way to do away with it.

By Alicia Neumann

Alicia Neumann is a San Francisco writer.

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