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Proposed limits to overtime pay for IT workers could hamstring CIOs

A new bill limiting overtime pay for IT workers has provoked vehement opposition from rank-and-file IT workers -- and could pose problems for CIOs.

A bill before the U.S. Senate Committee on Health, Education, Labor and Pensions that limits overtime pay for many computer professionals has been called out by some in the IT industry as another example of politicians putting corporate interests ahead of individual workers.

If passed, the Computer Professionals Update Act (CPU) would curtail overtime benefits for a large portion of IT employees currently covered under the Fair Labor Standards Act (FLSA). Opponents say it could also potentially hamstring those CIOs who face a shortage of qualified IT workers.

Limiting overtime pay could increase IT labor costs if companies adopt a no-overtime policy for hourly workers who fit the bill's criteria, worries John Lauderbach, CIO of Roche Bros. Supermarkets Inc.

"I could see base pay being raised to accommodate the times overtime is required but not specifically compensated," Lauderbach said.

The bill "reeks of the sweatshop mentality of the 1800s, which of course led to the union movement,"  said David Foote, CEO at Foote Partners LLC, a Vero Beach, Fla.- based independent IT research firm that tracks IT employment.

The bill was introduced in October by Sen. Kay Hagan (D-N.C.), whose district includes the “Research Triangle," an eight-county Raleigh-Durham area that’s home to many high-tech companies and research institutions. The bill has four co-sponsors: Sen. Michael Bennet (D-Colo.), Sen. Scott Brown (R-Mass.), Sen. Michael Enzi (R-Wyo.) and Sen. John Isakson (R-Ga.). Sen. Hagan's office has characterized the Computer Professionals Update Act as a much-needed update of antiquated federal job classifications for the IT workforce. Calls to Sen. Hagan's office on the intent of the bill were not returned.

The amended language in CPU preserves the minimum hourly wage of $26.73 that IT workers must earn to be excluded from overtime pay stipulated in the FLSA. (Salaried computer workers paid at a salary level set by the U.S. Department of Labor are also exempt from overtime.) In addition, the bill does not preclude companies from paying overtime; rather, companies will no longer be legally obliged to pay overtime to a much larger group of computer professionals than specified under the current FLSA.

Adding substantially to the existing FLSA's exemption for overtime benefits -- "computer systems analyst, computer programmer, software engineer, or other similarly skilled worker" -- the new bill specifies job classes "including but not limited to: work related to computers, information systems, components networks, software, hardware, databases, security, internet, intranet or websites … [such] as an analyst, programmer, engineer, designer, administrator, or other similarly skilled worker."

Targets "vast majority" of computer professionals

The bill has provoked vehement opposition on the nonpartisan, nonprofit website, with more than 50 letters filed to the site in opposition. Many letter writers argue, as Colorado resident Drew Zarn does, that the bill targets workers who are often required to work overtime hours as part of their job duties. The overly broad definition of IT worker as performing work "related to computers" covers virtually every individual in the U.S., cautioned Keith Greene of Nevada. Another writer points out that in the absence of raises for many years, the 30% of his income accounted for by overtime pay has meant the difference between survival and financial ruin.

IT staffs at many organizations were cut during the recession, Foote said, resulting in heavier workloads for remaining employees. He contends the bill is intended to "close the loopholes, current and future," that require employers to pay more money to the people "lucky enough to have kept their jobs."

"With labor unions for IT workers having been largely neutralized, why not go after any federal laws that have vestiges of union principles of fair wages for a fair day's labor -- or in this case, a fair day and then some," he added. "There is certainly a whiff of electioneering here, given this bill has bipartisan support and elections are approaching."

Limiting overtime benefits "could raise base pay"

Overtime can give CIOs more, not less, control over IT compensation, according to Lauderbach. "So, if you have short projects, overtime is OK. If you are always paying a higher wage, that will become the baseline for 40 hours," he said.

I could see base pay being raised to accommodate the times overtime is required but not specifically compensated.

John Lauderbach, CIO, Roche Bros. Supermarkets Inc.

With 18 stores and 4,000 employees, Wellesley, Mass.-based Roche Bros. needs the same sophisticated IT skills required of big supermarket chains, but finding skilled people has been difficult. In recent years, Lauderbach has outsourced most of his IT operations, retaining an internal crew of four. While the proposed legislation will not affect his labor strategy on "a micro level," he said the effect could increase market wages that force everyone to pay a higher wage. "It may spur more outsourcing," he said.

Not everyone believes the bill would substantively change IT hiring practices of CIOs. "I never paid anybody overtime anyway," said Bruce Barnes, a former CIO in the insurance and financial services industry and president of Dublin, Ohio-based consulting firm Bold Vision LLC. "I always looked at it that anybody that was working on a project, at the professional level, was seemingly no different from any other professional on 24-hour-a-day duty. We're outcome-focused and the idea is to do whatever is necessary to get the job done."

That said, Barnes adamantly supports overtime pay for shift workers earning less than the minimum $26.73 per hour pay, who are required to work outside of normal scheduled hours due to an unforeseen event. "If, in fact, there is something cataclysmic that really requires an all-hands-on-deck effort, I don't have a problem paying them overtime if that is necessary."

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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