No pay for non-billables

I work for an IT consulting company. Recently, the company changed its policy on compensation. It stated that any time that is not billable will not be compensated. This is tantamount to a huge pay cut for some if not most consultants at my company. Few consultants can be billable for 100% of the time they are employed. It is common for consultants to spend 2-4 weeks or more "on the bench". I know at-will employment means that the employers can change the compensation structure at will -- but an employer pay you nothing (save maybe benefits) for months at a time? How does this impact overtime and "exempt" status?

1 answer  |  asked Feb 20, 2003 2:48 PM [EST]  |  applies to New York

Answers (1)

David M. Lira
Employer Pay Scams

I am increasingly seeing employers relie more and more on various methods, that to me are really nothing more than scams, which aim to force employees to work longer and longer hours for less and less pay. Many of the scams are clearly illegal. The rest I think are highly questionable. Frankly, the scam you describe is a new one on me. It seems of questionable legality to me, but I would need to know a lot more.

Here are some of the other scams:

1- Making hourly employees salaried employees: Unless an employee is a manager or professional, or falls into a specific exception, such as for domestic workers or outside salespeople, under a federal law, the Fair Labor Standards Act (FLSA) which is particularly advantageous to employees, employers must generally pay employees on an hourly basis. Employers like paying employees on a salaried basis because they don't want to pay overtime. But, it is not up to the employer to decide who gets paid on a salaried basis.

2- Making employees independent contractors: There is a double advantage in making employees independent contractors. Employers don't have to pay overtime, and they don't have to pay for benefits, including benefits that may be required under state law, such as workers' compensation and unemployment compensation. Employers want to avoid the costs of having employees, but they want to retain the same level of control over the independent contractors as they did over the employees. This practice violates not only FLSA, but also may violate the Employee REtirement Income Security Act (ERISA), in that, unless the employer sets up the scam just right, the employer may be treating certain employees differently than similarly situated employees, granting some benefits but denying others those same benefits. This unequal treatment, which ERISA labels as a form of discrimination, is illegal under ERISA.

3- Covenants not to compete: Employers usually stick one of these under an employee's nose and tell the employee to sign it or lose the job. The employee usually signs. By signing it, the employee is essentially locking himself or herself into this one employer. Because the employee is locked in, the employer has a lot more freedom to take unfair advantage of the employee. In truth, courts disfavor these things, and will usually refuse to enforce them. But that is really little comfort to the employee, because the employer will still be able to put you to the expense of litigating the issue.

As I said, your situation seems new to me, but it also seems to violate both federal and state laws concerning wage and hours. These laws in essence create very important exceptions to the employment at will doctrine. You are right that because of the employment at will doctrine, an employer is free to lower or raise your rate of pay at any time. The employer can also lay you off at its discretion, but, in that case, you would be entitled to unemployment compensation. But, as I understand the law, an employer is not free to have (either salaried or hourly) employees put in the time, and then not pay the employee because the employer considers the time to be not "billable."

posted by David M. Lira  |  Feb 21, 2003 08:51 AM [EST]

Answer This Question

Sign In to Answer this Question

Related Questions with Answers

Have an Employment Law question?

Illinois Employment Lawyers

Michael J. Merrick Michael J. Merrick
Chicago, IL
Jared Staver Jared Staver
Staver Accident Injury Lawyers, P.C.
Chicago, IL
Matthew Custardo Matthew Custardo
Custardo Law, LLC
Lisle, IL
Kristin Case Kristin Case
The Case Law Firm, LLC
Chicago, IL
Cynthia Pietrucha Cynthia Pietrucha
Pietrucha Law Firm, LLC
Downers Grove, IL

more Illinois Employment Lawyers