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IBM IT workers planned a demonstration during the company’s annual shareholder meeting on Tuesday to protest changes in compensation structure that amount to a 15 percent pay cut for many employees.
In January of this year, IBM informed 7,600 employees in technical positions that their jobs were being reclassified to make them eligible for overtime.
This change in employee status was part of the after-effects of a $65 million overtime lawsuit IBM settled in Nov. 2006. Plaintiffs in the class-action lawsuit charged that IBM had unlawfully classified its Technical Services Professional and IT Specialist job categories as exempt from the overtime provisions of the Fair Labor Standards Act, denying them overtime.
In order to protect itself from “further litigation,” IBM restructured payrolls, changing the status of affected employees from salaried to hourly, changes which went into effect on Feb. 16 of this year. However, to compensate for expected overtime, IBM reduced the salaries of the reclassified employees by 15 percent.
“If you added overtime, that put these employees as making more for other people doing the same thing. So, we reduced their salary base,” an IBM spokesperson told eWEEK.
IBM insisted that that the salary reductions were “cost-neutral,” neither saving nor charging the company any money.
“Because almost all of them work overtime, their total compensation opportunity remains the same,” IBM explained.
The 7,600 technical employees– six percent of the company’s global workforce–begged to differ, and reacted to the plan with outrage. An online petition circulated in late January in opposition to the pay cuts amassed 1,530 signatures.
An anonymous Senior IT Specialist on an IBM employee board said he’s had no choice but to take home 85 percent pay.
“I am very angry, upset, and disappointed by IBM’s decision to take this action. I consider myself a hard-working, dedicated, loyal employee and have been with IBM for more than 20 years. I work in a group that offers no opportunity for overtime, so this action amounts to a 15 percent pay cut for me,” the IBM employee commented on the board.
The protest planned for the annual shareholders meeting in Charlotte April 29 was expected to stand in stark contrast with the ebullient mood at Big Blue after reporting on April 17 a 25 percent jump in profits in the first quarter of 2008, and with it’s stock at a near six-year high.
Alliance@IBM, a branch of the Communications Workers of America Local 1701 that has been seeking to unionize IBM employees for several years, said it planned to protest not only the pay reduction, but the offshoring of U.S.-based jobs, executive compensation and the union described as “shrinking retiree pensions.”
“While IBM employees face a decline in their standard of living and retirees see pension checks evaporate due to the lack of cost-of-living adjustments coupled with increases in medical retirement co-pay, our executives live the life of luxury. Executive greed and bloated compensation needs to be challenged,” said IBM employee and alliance vice president Earl Mongeon in a statement.