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Friday, April 8, 2016

Agency Overtime Woes?

A week ago, April 1st, THE WALL STREET JOURNAL published an article discussing the new policy set to be released by the Labor Department that would require businesses to pay overtime to any workers time over 40 hours/week if their salaries were less than $50,440 per year. It was hoped that the change would go in to effect in July.

The current limit is $23,660 per year. According to the American Association of Advertising Agencies some 25% of ad agency employees make less than $50,400 per year. That got my attention. So, I sent out an e-mail on the 2nd to a number of small and mid-sized agency principals asking for their reaction to the proposed change. Several of them forwarded both the Journal article and my question to friends or associates who also ran shops.

The results were striking and, with their permission under the cloak of anonymity, here are some selected comments:

1) “It is bad enough that Bernie Sanders is running around the US calling for an immediate $15 per hour wage for all employees. He does not realize that some small businesses simply cannot do it. If McDonald’s does it, they would have to tack on much higher prices. At least others who favor a minimum wage hike want to do it gradually. I am all for helping lower paid employees. To go from pay overtime to those earning less than $23,660 up to those under $50,400 in one step is something that we cannot adjust to overnight. Phase it in over several years and we can live with it.”

2) “Our CFO said ignore it until someone calls us on it. That is crazy. We cannot ignore a federal dictate. I am sorting through how we could manage it. It is very tricky.”

3) “Don, you and I have talked for years about how agencies pay starvation wages at first, work people like hell, and then reward them after a few years. We all know that roughly one third of newcomers quit and go in to another industry, one third are not up to it and we ask/tell them to leave, and one third love it and make a career of it. Why do I have to pay extra to people who will not stay with us?

4) “We have a young creative who seems to have that spark that we love to see in spades. His problem is that he is B.S. artist par excellence. He is new to town (a mid-sized one), knows no one so his whole life revolves around the shop. Each day he bounces around and talks to almost everyone in the agency. Around 3-4 pm, he settles down and gets to work. Often he stays to 8-9 pm. Our creative chief finds him annoying but he does appear to have real talent. I am paying him $36,000 now. If this guideline goes in to effect, I do not want to jump him to $50,000 immediately. Maybe take him up to $40,000. Yet he will claim that he is putting in 15 or more overtime hours per week. What he needs is a girlfriend. :)

5) “A young lady on our team is very accurate in all she does. The issue is that she works at a snail’s pace. She never leaves at 5:30. Most nights she is there an extra two hours. When our management comes in on weekends to work on new business, she is often there for a few more hours. It is not that she lacks intelligence. She just does EVERYTHING very deliberately. Candidly, she is not worth $50,000+ at this time. Were we to pay her overtime, she might make $60,000. I am not sure how to deal with this”.

Others used pretty strong language to say that people would work slowly or play on their computers a bit to earn the overtime. One mentioned that “clubhouse lawyers” (every firm has at least one) will tell people to pad their hours to earn more.

What do you think? Working at an ad agency IS different from most types of businesses. I recall witnessing creatives who appeared to look out the window all day deliver breakthrough executions time after time. It is not the same thing as working behind a fast food counter or any type of retail or industrial operation.

What do you think?

If you would like to respond directly, you may post a message on the blog or e-mail me at doncolemedia@gmail.com

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