In another move to cut costs, Boeing told white-collar, salaried employees across the company that overtime pay will in the future be severely limited.
In another move to cut costs, Boeing told white-collar, salaried employees across the company on Tuesday that starting next month overtime pay will be severely limited.
Citing “Boeing’s highly competitive market,” an internal memo says the company will “discontinue” paid overtime for U.S.-based salaried employees “except in the case of preapproved production- or mission-critical work.”
The new policy, effective Oct. 14, includes both nonunion salaried employees and some groups of unionized employees — including engineers. It covers about 80,000 employees, the company said.
The policy is generating a lot of buzz among white-collar staff, said one Commercial Airplanes nonunion employee, who asked not to be identified when speaking without company permission.
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“For many, this is a pay cut,” the employee said.
Boeing has been on a cost-cutting binge all year. Commercial Airplanes boss Ray Conner warned in February that Boeing was being “pushed to the wall” under pressure from Airbus and that jobs would have to be cut.
So far this year, Boeing has shed just shy of 4,000 jobs in Washington state.
The company has also curtailed business travel, reduced purchases of advertising and squeezed out supplier costs.
In the memo that went out to managers Tuesday, company executives emphasized that employees are expected to get their work done without paid overtime.
Joelle Denney, vice president of human resources at Boeing Commercial Airplanes, said “nonunion employees are paid an annual salary to cover the roles and work assigned them, including the need to work more than 40 hours in a week without extra pay when their job requires it.”
Scott Drach, vice president of Human Resources in Boeing’s Defense and Space unit, said “this new policy helps us change the focus from paying for hours worked to paying for business results.”
If critical overtime work is necessary, overtime will be paid only when approved in advance by the employee’s direct manager, says the memo.
“On the rare exception that it is required, review overtime requests with each employee to validate that there are no other options,” the memo directs managers.
Federal law requires employers to pay overtime above a 40-hour week at a rate of time-and-a-half unless an employment agreement or collective-bargaining contract mandates otherwise.
Salaried workers are generally exempt from this federal law and are not automatically entitled to overtime pay. However, Boeing has offered an “extended workweek” policy to this exempt group of employees that pays for overtime at the employee’s regular rate plus $6.50 per hour.
It is this extended-workweek policy that is being discontinued except for critically needed work.
Engineers represented by the Society of Professional Engineering Employees in Aerospace (SPEEA), who are salaried, are among those exempt from the federal overtime standard.
Engineers will be affected by the new policy in that the amount of overtime available will be curtailed. However, under the SPEEA contract, any overtime they are granted must still be paid at the extra $6.50 per hour on top of their standard pay rate.
Rich Plunkett, SPEEA’s director of strategic development, said in an interview Wednesday that many engineers are required to work mandatory overtime.
He said the new policy suggests that might come to an end, “meaning that work won’t get done.”
Plunkett added that the pressure on managers to justify any approval of overtime, and to do so only rarely, will inevitably drive managers to ask people to work extra hours without charging it to the company.
The clampdown on overtime comes as Boeing engineers are scrambling to ramp up output, complete the designs of the 787-10 and 777X, and fix various production issues, including the new robotic system for 777 fuselage assembly.
The memo states that nonunion employees will be paid for any overtime that is granted only if they work more than 44 hours in a week.
There are no changes to overtime-pay policy for nonexempt employees such as the Machinists.
Explaining the reason for the policy shift, Heidi Capozzi, Boeing’s senior vice president of human resources, said in the memo that “it really is a competitiveness issue.”
“Today’s business environment requires us to become more efficient,” she wrote.