Is overtime pay for contract workers negotiable?

Question

I know that programmers, IT workers, amongst other fields are exempt from receiving overtime pay and simply get paid for every hour worked (regardless of whether it is over 40hrs / week).

My question is, if the company is counting on their employee to provide a certain amount of value by working overtime and has the money for time and a half pay, is this negotiable?

In other words, can I still negotiate to receive time and half pay for overtime, even though the company is not 'required' to pay it?

The reason I'm asking is because payroll seems to have all the tax form data such as pay rate & tax deductions fixed in their system. Is it possible and is it common for the employee to negotiate, so the company handles normal pay & overtime pay (time and a half), even though it is not required to pay time and a half?

If this is negotiable, what would be a good way to negotiate this? I know my manager is expecting me to work overtime and is about to ask me about it and I want to be prepared to negotiate the negotiable.

Answer 1

Is it possible and is it common for the employee to negotiate, so the company handles normal pay & overtime pay (time and a half), even though it is not required to pay time and a half?

You can negotiate for anything you want. You could ask for a Ferrari if you wanted as part of your compensation package. Or free donuts every day.

Some things are more likely than others, however, obviously.

I know my manager is expecting me to work overtime and is about to ask me about it and I want to be prepared to negotiate the negotiable.

First, whether you are contract vs salaried makes a huge difference. If you are salaried (ie exempt in the USA) you are generally not paid overtime. If you are on a contract type employment where you receive pay per hour and record them, you either lie about your hours, work only 40 a week, or have some sort of compensation for overtime.

Second, a big factor here will be how the company has policies for overtime overall. If it's a small company or one which has no "real" need for overtime they may not even be able to do it in their system even if the manager wants to allow it. Some countries also have laws restricting hours for different positions (Germany for example).

My current company has a lot of salaried jobs tied to manufacturing shifts, which means there are very clear and defined processes for when paid overtime pay is applicable - even for salaried, exempt people such as myself. Some companies will have nothing close to this.

If this is negotiable, what would be a good way to negotiate this?

I would suggest asking something like:

• "What are the expected working hours? 9:00-5:30? 7:00-3:30? I also assume there will be times where additional hours are expected. How does this process work, is it paid as overtime?"

By asking about work hours as part of this you don't come across as simply asking "do you pay OT yes/no" but it naturally fits into the conversation about working hours regardless of whether yes/no.

Answer 2

In theory, sure, it's negotiable.

In practice, probably not unless you want to radically change your relationship with the company. As a practical matter, payroll systems are generally set up to differentiate between exempt and non-exempt workers and apply different rules to the different groups. It may be possible to customize your company's payroll system to allow some exempt workers (i.e. you) to receive overtime. But it is rather unlikely that it would be worth the time and effort to do that for just one person. That's also the sort of thing that is likely to come out eventually and cause morale issues for all the other employees that are working extra hours without overtime pay.

Potentially, you could radically revisit your relationship to the company. If you were a contractor rather than an employee, you could agree to whatever terms you would like with the company. You'd be responsible for generating the invoice, they would just have to pay the invoice which means that the payroll issues fall away. And the fairness issue of having very different policies for different employees doing the same task would dissipate. Of course, that would mean a great deal of other things about your compensation package would need to change (self-employment taxes, pensions, 401(k)'s, medical insurance, etc.)

Answer 3

There are two things: salaried and nonsalaried and exempt and nonexempt. You can be salaried exempt and salaried nonexempt (although this last category has become rare since some changes to the laws and regulations). The only difference between exempt and non-exempt is whether the employer is legally obligated to pay overtime. If you are classified as exempt the chances of getting overtime pay are very low. That's why they classified you that way after all so they would not have to pay overtime.

You can negotiate this at the time of hire, but it is risky. Most places that don't pay overtime to employees have no budget to pay overtime and they might even withdraw an offer on this issue. In hiring though, it is acceptable to try to get a feel for how much overtime is normally expected. If you think it is too much, then it is just as well to move on to another opportunity instead. After you have started a job is not the most effective time to try to negotiate on this issue.

The only time I have seen exempt employees paid for overtime (and it was in the form of a bonus not time and a half) was for a project that was critical to the financial success of the company (a multi-million dollar client), it was a long, complex project with a non-moveable deadline, and it was critical to retain certain people and their knowledge through the entire project. If your project doesn't meet these criteria, I would say your chances of getting paid overtime ar slim.

Answer 4

Salary vs. Hourly

It's not entirely true that no one in the fields you mentioned gets overtime pay. Generally a salaried (ie, "exempt" in the US) employee does not get overtime - the general expectation is that there's a certain number of core hours to be in attendance for, and a general minimum number of hours per day or week or month that the employee must meet. But there's also an assumption that some amount of overtime is part of the job, and not eligible for additional compensation. This generally falls into a loose assumption that engineers and other knowledge workers have enough autonomy and individual control over decisions that their jobs can't easily be gauged and budgeted to a perfect number of hours a week, and sometimes the employee picks up the slack with extra hours. In practice, this does get abused, and certain companies pick up a reputation for relying on those extra hours and way overbooking the workforce, making overtime a continuously mandatory thing.

Contractors, on the other hand, often do very similar work, but for an hourly rate. It cuts both ways - they may work fewer than the minimum in a week and get less pay. Or they may work more and the overtime can be more than just a flat rate, it's often time and a half. Different companies use contractors differently. A generally wise approach is not to put a contractor in a position where you can't live without them - if accountability in the long term is a must-have, hire a permanent employee. Contractors are usually considered "temporary" and in many US cases, they must be temporary or there can be legal ramifications to why they don't receive benefits.

For a company, the way the two types of employment are negotiated is part of the overall business plan. There's tons of nuances here and big companies generally have a defined strategy for these two roles. Smaller companies may be playing it more loosely.

There's cases, even, where employeed can negotiate an hourly setup for themselves, but this has it's drawbacks - generally hourly employees are not as highly ranked, and in a big company rank and salary vs. hourly are tightly connected. I've noticed questions here on TheWorkplace that suggests that there's no absolutes here - and that in some cases two employees with the same rank and job can have different pay setups, but I don't see that as the most normal case.

Negotiating

The easiest way to have this negotiation is before you sign on. Many companies will presume that when you signed on as salaried, you were OK with a certain amount of overtime. If the "certain amount" has gone beyond what's reasonable in your industry and location, then it may be another good time to restart the conversation.

The other trick is that most companies may not want to change a single employee's pay arrangement just to make one person happy. There can be a certain permissible unfairness in salary ranges, but when one employee gets overtime and the others don't this can cause a really big shift in how people behave. Realize that it's not just you - if they pay you more they may have to pay everyone more and that may be unsustainable. There can also be the issue of HR and how pay is organized from a paperwork perspective, but that's usually the lesser of the issues.

That said - another way to come at the negotiation is incentive pay. Many times, salaried employees are incentivized to get that extra overtime-requiring bit done. Incentive programs may be offered up front as part of a yearly program, or they may take the form of a post-success award. If you're new, it's worth asking around to see what is standard. If it's an after-effort award, it may not be so beneficial to go demanding money up front.

Incentives usually aren't connected to hours (ie, work 500 extra hours this year and get money...) - they are linked to performance and accomplishment of key milestones. It's worth it to ask about additional compensation for extra effort here... but try to put it in the most positive light - for example - "Wow, I see we have some big stuff coming up, and this is going to take a lot of extra work in terms of late nights and weekends. Can you explain what this success means for the company and the employees?" and if you're new "hey, I don't know how reward programs work around here? Can you explain>?" - to your boss or HR.

Other Thoughts

I've seen the case where in a really tight position for a given customer, a company can negotiate overtime for everyone. That happened a long while back on a high priority contract I was working. It was pretty easy to point to shifting requirements that led to tight schedules and overtime, and the contract was for a single customer. We were able to get a modification to the contract that let employees who'd worked 8 or more hours of overtime in a week get a bonus of a certain amount. This one is very much linked to the business - because there was a direct bill to the customer, the company managed to increase pay without taking a hit to profit.

I've also seen numerous cases of "work extra now, take time off later" policies. Most sane places will agree that you can push hard for a week or 3 but that people then need to catchup with family, health and home - so many companies may have comp time or extra vacation time in these cases.

Answer 5

Yes, I have a friend on a contract right now with a large company and gets paid time and a half for overtime. If you don't ask, you don't get. So bring it up and ask about overtime. If the answer is they expect you to work over time and get nothing for it, not even time off, then don't work any overtime. It's as simple as that.

Answer 6

Depends on a lot of factors, not least the country, industry and rate of pay.

If you work for the government in a poor country and are at the bottom of the pay scale then maybe.

However if you work in the US as a programmer, earn $100,000 and work with new technology than simply put, NO. More specifically:
Under current law, only workers earning $455 per week or less are eligible for overtime pay, though two states — California and New York — have independently raised their overtime minimums. Source: www.gpo.gov/fdsys/pkg/CHRG-108hhrg94134/html/CHRG-108hhrg94134.html

btw working unpaid over 40 hours is nearly always "unofficial" though it may be standard practice in many industries such as fast food. That is, the job descriptions will describe a 40 hour week but in reality people work much more.