President Barack Obama this week will propose a plan to extend overtime pay to 5 million American workers who are currently excluded under federal law, according to sources.
The president will recommend updating overtime rules so that salaried workers who earn less than roughly $50,400 per year would be guaranteed time-and-a-half pay when they work more than 40 hours in a week.
If this goes through, it will be a big deal to entry-level architects who typically make far less than $50,400 per year but who are nonetheless considered "managerial" and thus expected to work long hours of unpaid overtime.
quizzical
Jun 29, 15 10:16 pm
David,
I don't wish to be argumentative, but the rule that applies to graduate architects is not tied to the concept of "managerial" but to being a "professional" -- meaning, workers who "require specialized academic training for entry into a professional field".
Having said that, I personally support the idea of paid overtime for all unlicensed graduate architects ... and my firm always has paid such overtime.
David Cole, AIA
Jun 29, 15 10:36 pm
To my knowledge, federal overtime rules don't make any distinction between "managerial" or "professional", and neither the HuffPo article I linked nor this NY Times article mentions such a distinction.
The NYT article, however, does raise a possible scenario in which employers drastically reduce starting salaries in order to compensate for the overtime rule. I could also see the possibility of lots of employees (especially in more expensive cities where starting salaries are already hovering around $50k) get their salaries bumped up just enough to put them beyond the threshold.
David Cole, AIA
Jun 29, 15 10:44 pm
I agree with your second paragraph, though... If you're not yet licensed, then by definition you're not really an exempt employee. I've heard anecdotally that in the rare cases that it's gone to court, judges have agreed that licensure is the standard by which an employee should be considered exempt or not.
Jun 29, 15 10:47 pm
This would be good and would put the hammer down on those who over work employees for so little pay.
However, do keep in mind the mere raising the $23,000 level to $50,400 applies would likely apply across the board. As the current $23,000 level applies to all workers exempted be it managerial or professional which would apply to building designers businesses as it would architects because from the perspective of FLSA rules, they don't make distinction of building designers (building designers not drafters) from that of Architects.
So we should hold building designer businesses with employees to the same rules as licensed architects as far as these rules are concern.
I think the $50,400 level would be apply to all those white-collar exemption. for overtime.
It means we would be paid still over $12/hr. even if working at $50,500 a year working 80 hrs a week. This is better than be driven to work effectively below minimum wage. Personally, it should be raised to $75,000 so it would be virtually impossible to work below minimum wage as an employee.
Jun 29, 15 10:58 pm
Dave Cole:
Technically, FLSA rules applies regardless of licensure status. It can apply even under creative professionals. It depends a little on what your job duties are.
Federal government and Federal DOL doesn't make distinction between unlicensed building designers and architects. When the duties are essentially the same, the same rules applies. So we should apply the rule and I believe it already does and so the exemption would still apply but raising the $23,000 to $50,400 should be done and that would be good.
We probably won't be effecting building designers as much due to the fact they are most often sole-practitioners but those with employees, it should apply. Typically, drafters will fall into the exemption either as professional or creative professionals. But the $50,400 raise before the exemption rule becomes applicable would be good for the business of architecture/building designers and means we would be having the charge more for our services which is good for the profession as a whole.
If we can, we can use this as a good excuse to charge more money for our services.
empea
Jun 30, 15 12:39 am
Where I work the policy is that as soon as you have the title "senior" or above you're exempt. There is a quite systemic overtime culture and the salary jumps between levels are not astronomical. This has led to me making less in effect than the people who work for me over extended periods of time putting in the same hours. Granted the mere existence of OT pay is better than most places. All the same in my view the biggest fallacy of the whole overtime discussion is the idea that just because you have someone under you, you are automatically "in control" of your own time.
Jun 30, 15 12:46 am
Well you kinda of if you are an owner of the firm. But of course you have to invest the time needed to get work done in the firm.
empea
Jun 30, 15 1:21 am
And by that I mean all the ways in which you can have someone underneath you without being anywhere close to being a partner or owner.
TIQM
Jun 30, 15 1:57 am
Just went through this discussion at our office. We have many middle to senior level staff members who are not licensed, yet they are clearly professionals who are in charge of delegating to others and in charge of their own workload. We consider them exempt by the definition of the state.
midlander
Jun 30, 15 3:42 am
If the standard for exempt employees is judged based on licensure, that would seem to provide a perverse incentive for lower-mid level employees to avoid getting licensed too soon. They'd do better to wait until it was absolutely necessary, or their position was unambiguously managerial.
geezertect
Jun 30, 15 7:37 am
Does anybody really think this proposal will go anywhere? It is just a political marker for the upcoming election year.
The bottom line is that there is no legislative fix for the pathetic compensation in this profession. Too many architects for too little work equals poor pay. Plain and simple.
David Cole, AIA
Jun 30, 15 7:49 am
The proposal goes into effect next year and does not require congressional approval.
Jun 30, 15 12:46 pm
geezertect,
The general rule of FLSA and even the states labor divisions do not look at licensure as a requirement to be exempt. If you are unlicensed and do work like designing houses and other buildings exempt under architect law, then from federal perspective, you're essentially an architect. From the state, they see you doing essentially the same thing from the perspective and intent of labor wage laws. A possessing a degree isn't absolutely required but if it is customarily required to perform the work involved. Yes, architecture and building design requires advance knowledge and skills beyond that of a high school education.
Sure, it is possible that a person may attain that knowledge before graduating from high school, it is not part of the education curriculum of elementary, junior high (middle school) or high school.
In either case, these people are considered exempt regardless of licensure. Licensure is irrelevant but is just one more way of indicating someone is a professional as is professional certifications.
David Cole, I just like to know exactly what is being proposed more exactly.
Geezertect,
It won't entirely fix our problems but it would improve things especially when architects like yourself offer jobs. Instead of overtiming the hell out of your staff, add some more employees to support the work staff. As it becomes harder for firms to simply use exemption of overtime pay, it means more positions are likely to be available and firms would have to charge more money and this rule applies to unlicensed designers as well as licensed designers. Sure, there is too little work but we need to have fewer competitors competing for projects. This means those who are independently doing projects needs to take a real self assessment. If they aren't earning $50K a year then they probably should consider partnering with other architect or get employed. We don't need so many individuals competing for projects.
We need to get people hired again. Some should just go to other occupations.
However, every one of us should simply agree to stop charging ridiculously low fees. If you aren't making substantially more per hour after taking out expenses, taxes, and the proportion of revenue that remains in the bank account of the business then you aren't charging enough and should quit the business. Respect ourselves so we can earn a real living that is better than minimum wage otherwise, quit the business of 'architecture' and get a burger flipping job.
It is a bad sign when they make more money than you do for same or less hours of labor.
The fix for compensation is we aren't saying no to projects where the client wants to pay so ridiculously low. Don't accept the project. Don't charge so little that you aren't going to make minimum wage.
Just because independent contractors don't have a legally defined minimum wage doesn't mean you should do projects for so little. We've done this stuff before. We're all guilty of this including myself but we need to make changes so we can actually earn a living.
quizzical
Jun 30, 15 2:12 pm
Richard: "every one of us should simply agree to stop charging ridiculously low fees" - while a noble sentiment, it flies in the face of human behavior and marketplace realities.
Whenever something being sold becomes a commodity (and, let's face it, to a huge extent that's what our services are now) price remains the dominant factor for both buyer and seller. Until we offer something of greater value -- value that's actually perceived by, and delivered to, the consumer -- price competition, driven by oversupply and lack of differentiation, will remain the primary determinants of the [poor] economics of our profession.
Center for Ants
Jun 30, 15 2:58 pm
Doing some research, the proposal looks specifically at adjusting the qualifications for those who making a certain income and are not part of the white collar exemption. They're trying to base it more on income so that more salaried individuals will qualify. The new overtime standards will be applied to those making less than $984/wk (I'm assuming this is gross income, not net). So that comes out to $51,168 per annum.
However, more than likely, it won't affect architecture. Almost all staff fall under the "white collar" exemption, and there are no plans to change this exemption currently. FLSA clearly lists architecture as one of the fields require specialized knowledge. So if you have a degree from college and are working in architecture, you're almost certainly exempt.
Jun 30, 15 2:58 pm
If people simply calculate how many hours it will take them to perform the services, their direct labor rate, and added room for float costs and then factor in 35%-45% of revenue is taken out by taxes, they need to factor in that to be sustainable a business needs to retain 30%-35% of their revenue as net profit. This means, labor and all other costs of operating (not including taxes) should be 20-25% of the gross revenue but shouldn't exceed 30% of gross revenue. Then we can convert it to any format be it Billed Hourly Rate, Flat Fee, Percentage of construction cost, $ per sq.ft., etc.
If business apply this basic rule for all projects. This whole problem will sort of correct itself because the bottom feeders will burn themselves out of the business and either leave the profession or get a job working for an architect. The supply issue would solve itself. It also means, we charge more because cost of operating will increase because we have to hire more staff instead of overworking our staff. This will correct the supply issue of competitors.
Each employee hired is one competitor removed from the competition. It means instead of them competing against you, they are working for you. We need to consolidate. In other words, we need to shake out like any other occupations and more or less 'corporatize' to some degree.
When we laid off so many in the recession, they became competition because instead of finding jobs outside the profession, they were competing for clients, low-balling so they don't make too much money that they would lose their unemployment. They didn't want to leave the profession like they should have for the health of the profession so it is hurting and then when we starting hiring again, we make people working insane number of hours and using the exemption instead of charging more for our services. This new rule is going to apply to us all so we would have to uniformally be adjusting our prices to reflect the new cost. Also by hiring more people, we also would be reducing the competition for services. Instead of making people work 80+ hours a week. We double staff so they work only 40 hours a week and with increase in cost, will come with increase in pay. It also means accepting projects that pay and say no to clients who don't deserve to be served.
We all have to agree to stop performing services to those who can't afford to pay for services.
So, don't give clients who can't afford to pay properly for professional services an opportunity to have their project designed and built for nothing or next to nothing. This means we must compete without undermining our own ability to be a solvent business.
Human Behavior is a discipline subject matter. Have a disciplined mind. Mind over matter. Mind over emotion. We have as much power to control our emotional urges as Vulcans in Star Trek. It is called discipline of the mind, body and spirit. Then, you make your business decisions on those matters. Trying to underprice the competitor for what? A race to living a poor life?
Think about it. I'm not talking about trying to be rich but try to make a livable and respectable income for the work you do. You didn't spend all this time and energy to attain the knowledge and skills of designing buildings so you can work for sub-minimum wage including all the money spent to go to college for example.
Jun 30, 15 3:14 pm
Center for Ants,
It would apply to Architecture as it would raise the bar level for when exemption of overtime kicks in. Currently, the rule is $23,000 (something like that). Currently, overtime exemption is what allows Architecture firms to pay employees $31,500 and have them working for 80 hours a week with a salary of $31,500 so effectively they work for less than minimum wage when you take the $31,500 / 80 hours per week over 52 weeks a year.
When you're working 4000 to over 4160 hours a year for $31,500 or even $35,000... you are effectively getting around minimum wage. While someone with minimum wage working that many hours would be making more than you because of time and a half.
This can be good or bad. Bad to those who are trying to cheap out by over working staff without paying them more money commensurate of the additional amount of time.
Good when the low ball cheap scums have to pay more and therefore charge more and inadvertently raise the price ceiling.
Because we all would want to charge more for our services so we have to just charge more.
The notion that we can't charge more is because we are raising to the bottom. Just stop excuses why you can't. Just do it. Make small adjustments if needed. We all will have to make adjustments because contractors will also be effected because they can't just pay a drafter $24,000 and have them work overtime.
Sure we have some challenges when it comes to independent contractor relationship but really, are you going to work for less than minimum wage when investing hundreds of hours on a project.
MikeJarosz
Jun 30, 15 5:04 pm
There is a lot of speculation here. Rather than speculate, why not read the Fair Labor Standards Act? It's only about 50+ pages and not too legalese. It is unintentionally hilarious in parts.
This might be of interest to the peanut gallery:
Obama To Unveil Plan To Bring Overtime Pay To 5 Million More Workers
President Barack Obama this week will propose a plan to extend overtime pay to 5 million American workers who are currently excluded under federal law, according to sources.
The president will recommend updating overtime rules so that salaried workers who earn less than roughly $50,400 per year would be guaranteed time-and-a-half pay when they work more than 40 hours in a week.
If this goes through, it will be a big deal to entry-level architects who typically make far less than $50,400 per year but who are nonetheless considered "managerial" and thus expected to work long hours of unpaid overtime.
David,
I don't wish to be argumentative, but the rule that applies to graduate architects is not tied to the concept of "managerial" but to being a "professional" -- meaning, workers who "require specialized academic training for entry into a professional field".
Having said that, I personally support the idea of paid overtime for all unlicensed graduate architects ... and my firm always has paid such overtime.
To my knowledge, federal overtime rules don't make any distinction between "managerial" or "professional", and neither the HuffPo article I linked nor this NY Times article mentions such a distinction.
The NYT article, however, does raise a possible scenario in which employers drastically reduce starting salaries in order to compensate for the overtime rule. I could also see the possibility of lots of employees (especially in more expensive cities where starting salaries are already hovering around $50k) get their salaries bumped up just enough to put them beyond the threshold.
I agree with your second paragraph, though... If you're not yet licensed, then by definition you're not really an exempt employee. I've heard anecdotally that in the rare cases that it's gone to court, judges have agreed that licensure is the standard by which an employee should be considered exempt or not.
This would be good and would put the hammer down on those who over work employees for so little pay.
However, do keep in mind the mere raising the $23,000 level to $50,400 applies would likely apply across the board. As the current $23,000 level applies to all workers exempted be it managerial or professional which would apply to building designers businesses as it would architects because from the perspective of FLSA rules, they don't make distinction of building designers (building designers not drafters) from that of Architects.
So we should hold building designer businesses with employees to the same rules as licensed architects as far as these rules are concern.
I think the $50,400 level would be apply to all those white-collar exemption. for overtime.
It means we would be paid still over $12/hr. even if working at $50,500 a year working 80 hrs a week. This is better than be driven to work effectively below minimum wage. Personally, it should be raised to $75,000 so it would be virtually impossible to work below minimum wage as an employee.
Dave Cole:
Technically, FLSA rules applies regardless of licensure status. It can apply even under creative professionals. It depends a little on what your job duties are.
Federal government and Federal DOL doesn't make distinction between unlicensed building designers and architects. When the duties are essentially the same, the same rules applies. So we should apply the rule and I believe it already does and so the exemption would still apply but raising the $23,000 to $50,400 should be done and that would be good.
We probably won't be effecting building designers as much due to the fact they are most often sole-practitioners but those with employees, it should apply. Typically, drafters will fall into the exemption either as professional or creative professionals. But the $50,400 raise before the exemption rule becomes applicable would be good for the business of architecture/building designers and means we would be having the charge more for our services which is good for the profession as a whole.
If we can, we can use this as a good excuse to charge more money for our services.
Where I work the policy is that as soon as you have the title "senior" or above you're exempt. There is a quite systemic overtime culture and the salary jumps between levels are not astronomical. This has led to me making less in effect than the people who work for me over extended periods of time putting in the same hours. Granted the mere existence of OT pay is better than most places. All the same in my view the biggest fallacy of the whole overtime discussion is the idea that just because you have someone under you, you are automatically "in control" of your own time.
Well you kinda of if you are an owner of the firm. But of course you have to invest the time needed to get work done in the firm.
And by that I mean all the ways in which you can have someone underneath you without being anywhere close to being a partner or owner.
Just went through this discussion at our office. We have many middle to senior level staff members who are not licensed, yet they are clearly professionals who are in charge of delegating to others and in charge of their own workload. We consider them exempt by the definition of the state.
If the standard for exempt employees is judged based on licensure, that would seem to provide a perverse incentive for lower-mid level employees to avoid getting licensed too soon. They'd do better to wait until it was absolutely necessary, or their position was unambiguously managerial.
Does anybody really think this proposal will go anywhere? It is just a political marker for the upcoming election year.
The bottom line is that there is no legislative fix for the pathetic compensation in this profession. Too many architects for too little work equals poor pay. Plain and simple.
The proposal goes into effect next year and does not require congressional approval.
geezertect,
The general rule of FLSA and even the states labor divisions do not look at licensure as a requirement to be exempt. If you are unlicensed and do work like designing houses and other buildings exempt under architect law, then from federal perspective, you're essentially an architect. From the state, they see you doing essentially the same thing from the perspective and intent of labor wage laws. A possessing a degree isn't absolutely required but if it is customarily required to perform the work involved. Yes, architecture and building design requires advance knowledge and skills beyond that of a high school education.
Sure, it is possible that a person may attain that knowledge before graduating from high school, it is not part of the education curriculum of elementary, junior high (middle school) or high school.
In either case, these people are considered exempt regardless of licensure. Licensure is irrelevant but is just one more way of indicating someone is a professional as is professional certifications.
David Cole, I just like to know exactly what is being proposed more exactly.
Geezertect,
It won't entirely fix our problems but it would improve things especially when architects like yourself offer jobs. Instead of overtiming the hell out of your staff, add some more employees to support the work staff. As it becomes harder for firms to simply use exemption of overtime pay, it means more positions are likely to be available and firms would have to charge more money and this rule applies to unlicensed designers as well as licensed designers. Sure, there is too little work but we need to have fewer competitors competing for projects. This means those who are independently doing projects needs to take a real self assessment. If they aren't earning $50K a year then they probably should consider partnering with other architect or get employed. We don't need so many individuals competing for projects.
We need to get people hired again. Some should just go to other occupations.
However, every one of us should simply agree to stop charging ridiculously low fees. If you aren't making substantially more per hour after taking out expenses, taxes, and the proportion of revenue that remains in the bank account of the business then you aren't charging enough and should quit the business. Respect ourselves so we can earn a real living that is better than minimum wage otherwise, quit the business of 'architecture' and get a burger flipping job.
It is a bad sign when they make more money than you do for same or less hours of labor.
The fix for compensation is we aren't saying no to projects where the client wants to pay so ridiculously low. Don't accept the project. Don't charge so little that you aren't going to make minimum wage.
Just because independent contractors don't have a legally defined minimum wage doesn't mean you should do projects for so little. We've done this stuff before. We're all guilty of this including myself but we need to make changes so we can actually earn a living.
Richard: "every one of us should simply agree to stop charging ridiculously low fees" - while a noble sentiment, it flies in the face of human behavior and marketplace realities.
Whenever something being sold becomes a commodity (and, let's face it, to a huge extent that's what our services are now) price remains the dominant factor for both buyer and seller. Until we offer something of greater value -- value that's actually perceived by, and delivered to, the consumer -- price competition, driven by oversupply and lack of differentiation, will remain the primary determinants of the [poor] economics of our profession.
Doing some research, the proposal looks specifically at adjusting the qualifications for those who making a certain income and are not part of the white collar exemption. They're trying to base it more on income so that more salaried individuals will qualify. The new overtime standards will be applied to those making less than $984/wk (I'm assuming this is gross income, not net). So that comes out to $51,168 per annum.
However, more than likely, it won't affect architecture. Almost all staff fall under the "white collar" exemption, and there are no plans to change this exemption currently. FLSA clearly lists architecture as one of the fields require specialized knowledge. So if you have a degree from college and are working in architecture, you're almost certainly exempt.
If people simply calculate how many hours it will take them to perform the services, their direct labor rate, and added room for float costs and then factor in 35%-45% of revenue is taken out by taxes, they need to factor in that to be sustainable a business needs to retain 30%-35% of their revenue as net profit. This means, labor and all other costs of operating (not including taxes) should be 20-25% of the gross revenue but shouldn't exceed 30% of gross revenue. Then we can convert it to any format be it Billed Hourly Rate, Flat Fee, Percentage of construction cost, $ per sq.ft., etc.
If business apply this basic rule for all projects. This whole problem will sort of correct itself because the bottom feeders will burn themselves out of the business and either leave the profession or get a job working for an architect. The supply issue would solve itself. It also means, we charge more because cost of operating will increase because we have to hire more staff instead of overworking our staff. This will correct the supply issue of competitors.
Each employee hired is one competitor removed from the competition. It means instead of them competing against you, they are working for you. We need to consolidate. In other words, we need to shake out like any other occupations and more or less 'corporatize' to some degree.
When we laid off so many in the recession, they became competition because instead of finding jobs outside the profession, they were competing for clients, low-balling so they don't make too much money that they would lose their unemployment. They didn't want to leave the profession like they should have for the health of the profession so it is hurting and then when we starting hiring again, we make people working insane number of hours and using the exemption instead of charging more for our services. This new rule is going to apply to us all so we would have to uniformally be adjusting our prices to reflect the new cost. Also by hiring more people, we also would be reducing the competition for services. Instead of making people work 80+ hours a week. We double staff so they work only 40 hours a week and with increase in cost, will come with increase in pay. It also means accepting projects that pay and say no to clients who don't deserve to be served.
We all have to agree to stop performing services to those who can't afford to pay for services.
So, don't give clients who can't afford to pay properly for professional services an opportunity to have their project designed and built for nothing or next to nothing. This means we must compete without undermining our own ability to be a solvent business.
Human Behavior is a discipline subject matter. Have a disciplined mind. Mind over matter. Mind over emotion. We have as much power to control our emotional urges as Vulcans in Star Trek. It is called discipline of the mind, body and spirit. Then, you make your business decisions on those matters. Trying to underprice the competitor for what? A race to living a poor life?
Think about it. I'm not talking about trying to be rich but try to make a livable and respectable income for the work you do. You didn't spend all this time and energy to attain the knowledge and skills of designing buildings so you can work for sub-minimum wage including all the money spent to go to college for example.
Center for Ants,
It would apply to Architecture as it would raise the bar level for when exemption of overtime kicks in. Currently, the rule is $23,000 (something like that). Currently, overtime exemption is what allows Architecture firms to pay employees $31,500 and have them working for 80 hours a week with a salary of $31,500 so effectively they work for less than minimum wage when you take the $31,500 / 80 hours per week over 52 weeks a year.
When you're working 4000 to over 4160 hours a year for $31,500 or even $35,000... you are effectively getting around minimum wage. While someone with minimum wage working that many hours would be making more than you because of time and a half.
This can be good or bad. Bad to those who are trying to cheap out by over working staff without paying them more money commensurate of the additional amount of time.
Good when the low ball cheap scums have to pay more and therefore charge more and inadvertently raise the price ceiling.
Because we all would want to charge more for our services so we have to just charge more.
The notion that we can't charge more is because we are raising to the bottom. Just stop excuses why you can't. Just do it. Make small adjustments if needed. We all will have to make adjustments because contractors will also be effected because they can't just pay a drafter $24,000 and have them work overtime.
Sure we have some challenges when it comes to independent contractor relationship but really, are you going to work for less than minimum wage when investing hundreds of hours on a project.
There is a lot of speculation here. Rather than speculate, why not read the Fair Labor Standards Act? It's only about 50+ pages and not too legalese. It is unintentionally hilarious in parts.
http://www.dol.gov/whd/regs/statutes/FairLaborStandAct.pdf
This site actually picks out creative professionals as exempt:
http://www.dol.gov/whd/overtime/fs17a_overview.pdf