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Wage Wars: The Fight for Overtime Pay Print E-mail
Over the last few years, U.S. companies have collectively paid out more than US$1 Billion annually to resolve claims under the "wage and hour" rules. This estimate is noted in the cover story ("Wage Wars") of Business Week (1 October 2007). According to the article, suits under the "wage and hours" rules typically claim that their employers failed to pay overtime to workers who deserve it. The controversy revolves around what classes of emplyees or workers are covered by overtime laws in the U.S.

Overtime pay is basically the amount paid for work performed by covered employees in excess of the eight hours a day. The rationale of the overtime pay, according to the Supreme Court, is that the employee or worker is made to work longer than what is commensurate with his agreed compensation for the statutorily fixed or voluntarily agreed hours of labor he is supposed to do. When he thus spends additional time to his work, the effect upon him is multi-faceted: he puts in more effort, physical and/or mental; he is delayed in going home to his family to enjoy the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss important pre-arranged  engagements. It is thus the additional work, labor or service employed and the adverse effects just mentioned of his longer stay in his place of work that justify and is the real reason for the extra compensation that he called overtime pay.

The method of computing overtime pay is this:
1. For work in excess of eight hours performed on ordinary working days, an additional amount of 25%of the hourly rate.
2. For work in excess of eight hours performed on a scheduled rest day, a special day and a regular holiday, an additional amount of 30% of the hourly rate on said days.

Overtime pay is, of course, distinct from premium pay, which refers to the additional compensation required by law for work performed within eight hours on nonworking days, such as rest days and special days.

As mentioned above, the controversy in the U.S. stems from the blurring of the lines distinguishing  what classes of workers are entitled to separation pay. In the Philippines, overtime pay under the Labor Code are not applicable to the following:
1.  Government employees.
2. Managerial employees and officers or members of the managerial staff.
3. Domestic servants and persons in the personal service of another.
4. Nonagricultural field personnel if they regularly perform their duties away from the principal or branch office or place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.
Take for example the members of the managerial staff. These workers are not entitled to overtime pay if they perform the following duties and responsibilities:
1. The primary duty consists of the performance of work directly related to management policies of their employer;
2. Customarily and regularly exercise discretion and independent judgment; and
3. (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute, under general supervision, special assignments and tasks; and
4. Who do not devote more than 20 percent of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above. 
Of course, you could always argue that a particular position, even if classified by management as part of the managerial staff, belongs to the rank-and-file, considering that the nature of work performed doesn't fall under the foregoing criteria. Whether this argument will convince the Philippine Labor Arbiter - in contrast to the U.S. jury - is something we will find out. 
 
Published in : Topics, HR, Labor and Office

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