The study reveals that companies avoid, on average, 13.5 percent of their overtime costs for each employee assigned a strategic "manager" title.
– Giving someone the title of manager just to avoid overtime payments seems like the wrong incentive for companies, says Umit Gurun, Stan Liebowitz Professor of Finance and Accounting at the University of Texas at Dallas.
No Additional Pay for Overtime Work
Umit Gurun explains that many companies take advantage of a loophole in U.S. federal law to avoid paying overtime wages. The law allows companies to exempt "managers" from overtime pay rules, as long as they earn a salary above a certain threshold.
– The only group of people who are exempt from this law are managers. If you happen to be a manager and you are receiving a certain amount of payment, even if you work overtime, you wont be entitled to that extra 50% pay, says Umit Gurun.
The results show that companies systematically advertise "manager" positions with salaries just above the federal threshold for overtime pay, even when the job responsibilities are essentially the same as non-managerial roles. One striking example is the title 'Director of First Impression', which, in reality, refers to a receptionist.
Watch Umit Gurun, the lead author of the study, explain more in the video above
Text: Simon Fredling Jack, communicator
