🎁'Tis the season to support public service journalism Donate Now

Workers’ new worry: ‘Reclassification’

Lisa Napoli Apr 28, 2008

Workers’ new worry: ‘Reclassification’

Lisa Napoli Apr 28, 2008


KAI RYSSDAL: It should be a pretty good time at IBM’s annual shareholder meeting in Charlotte, N.C. tomorrow. After Big Blue reported a 25 percent jump in profits a couple of weeks ago the stock is near a six-year high. But employees aren’t feeling any of that love. Workers are planning to protest the meeting over something called “reclassification.” The word’s getting a lot of play in corporate America these days. And in the courts, too. As Marketplace’s Lisa Napoli explains.

LISA NAPOLI: It was just another workday for David Canizares, a network administrator for IBM. Then his boss called him and gave him the news.

David Canizares: They said they wanted to be more compliant with federal regulations, so they were going to take us from exempt status to non-exempt status.

That was a fancy way of telling Canizares he still had a full-time job with benefits, but he’d no longer be classified as a salaried worker. He would be paid by the hour. And that wasn’t the biggest change.

Canizares: They had to cut our pay 15 percent.

IBM said the cut was necessary because the reclassified workers would now get to earn overtime. In fact, to make the same pay as before, those workers would have to put in extra hours. But for a third of the reclassified employees at IBM, working overtime isn’t a possibility. So they’re taking home less money.

Christopher David Ruiz Cameron: It’s about the bottom line.

Christopher David Ruiz Cameron teaches labor law at Southwestern Law School in Los Angeles. Welcome, he says, to the modern workplace.

Cameron: Every manager’s job is to figure out how to get as few employees to do the most work for as little money as possible. There’s nothing evil about that. That’s just how that works.

But as more companies have cut costs by reclassifying workers, the lawsuits just keep coming.

CAMERON: There’s a reason why they call wage and hour litigation the plaintiff lawyer’s full-employment act.

One case that’s dragged on for years has to do with agents at insurance company Allstate. They filed a class action against the company after being reclassified as independent contractors back in 1999, and being told they couldn’t collect overtime. In some cases, courts have found workers haven’t been fairly compensated.

CAMERON: In the last 10 to 15 years, major settlements for millions of dollars to settle wage and hour claims for unpaid overtime and rest breaks and meal breaks has been paid out by Starbucks, by Microsoft . . .

Then there’s the ongoing case of FedEx. A federal judge ruled in late March that class-action suits can proceed in 19 states against the company over how some of its drivers are classified. The company calls many of them independent contractors, while the workers say they’re expected to perform like staffers — without the associated benefits.
So far they’ve had little choice but to like it, or leave it:

LEE CONRAD: Do we always need that kind of tension, whether it’s picking between having a pay cut or having a job?

That’s Lee Conrad of the Alliance at IBM. He’s been trying to organize workers at the computer giant to protect not just their pay but their jobs. He says in an age of globalization and cheap labor, workers know they can easily be replaced.

CONRAD: Anybody that works behind a computer can see their jobs outsourced to India, China or South America.

IBM workers upset over their new hourly status and the pay cut that comes with it have been circulating an online petition since February. They want their pay to be restored. They’ve also filed a class-action suit demanding overtime.

And there’s the protest tomorrow at the shareholder meeting at Charlotte, N.C. Their voices may be heard, but no one is holding out much hope that the situation will change anytime soon.

In Los Angeles, I’m Lisa Napoli for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.