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Late July I got a job as a computer programmer on a 6 month contract with the agency that recruited me (although I actually work for another company). The job is W-2, paid hourly, but as I'm a computer programmer making over $30/hr I'm overtime-exempt.

However, when the agency told me the offer over the phone, they told me that I would be paid time & 1/2 for overtime and the written offer that I accepted explicitly said exactly what I'd be paid for overtime and it was time and 1/2. Moreover, when I accepted this offer they were trying to pressure me into taking it and tried to make me decide within 2 hours of receiving the offer because they knew I had another very competitive offer. Had their offer not included overtime pay, the other offer would have been much better in comparison and I probably would have chosen that one. Lastly, the job description they sent me before they even sent the offer stated that my target hours are 45 hours a week, so they knew I'd be working overtime as well.

Yesterday, the agency called me and said that because I was classified as exempt, they weren't supposed to be paying me overtime and wouldn't be doing so going forward. They even tried to frame it as them doing me a favor by allowing me to keep the money that I'd already been "wrongfully paid". I pushed back though and will be discussing it with them again later today.

My first question is, being overtime-exempt means they're not required to pay me time & 1/2 for overtime, but they're not prohibited from doing so correct? Like, they're not breaking any laws by paying me extra for overtime?

Secondly, since the offer said in writing that I'd be paid time & 1/2 for overtime and I was told that verbally, are they required to keep paying me that as part of the contract or can they just stop whenever they'd like since I'm exempt?

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    That all depends on your contract. also, you'll want to contract a lawyer. not internet randoms.
    – Trish
    Commented Sep 23, 2020 at 15:16
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    @Trish I'm aware that comments/answers here don't equate to expert legal advice and the only way to get a definite answer would be to have a lawyer read the full contract, but there is still better advice than "you'll want to contact a lawyer", like telling me what else in the contract it might depend on since I already said it explicitly stated my overtime rate. Furthermore, my first question wasn't specific to my situation or my contract and an answer from internet randoms would definitely suffice for the time being.
    – Marcellus
    Commented Sep 23, 2020 at 17:52
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    – feetwet ♦
    Commented Sep 25, 2020 at 22:29

4 Answers 4

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being overtime-exempt means they're not required to pay me time & 1/2 for overtime, but they're not prohibited from doing so correct?

No, the employer is not prohibited from paying you time & 1/2 for overtime. Nor is the employer doing you a favor with respect to the overtime you have been paid already. The employer looks foolish by telling you "I'm doing you a favor by breaching our contract only for future payments but not for past ones".

are they required to keep paying me that as part of the contract or can they just stop whenever they'd like since I'm exempt?

Yes, the employer is required to keep paying you under the terms of your contract: 1.5 times the normal rate in case of overtime. Your clarification reflects that the notion of "overtime-exempt" is not contemplated in the contract at all, and the employer just brought it up belatedly.

Even if the contract were ambiguous or contradicted itself in this regard, the doctrine of contra proferentem would entitle you to the reasonable interpretation that favors your position (that is because the employer is the party who drafted the contract).

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    What's more, I spoke with them again since posting and they even admitted that this is due to a mistake on their end because they "didn't send my placement to compensation for classification [as exempt/non-exempt]" until after they'd given me the offer, which I would think suggests even further that they should have to continue paying me at the agreed upon rate. Thanks again for all the help!
    – Marcellus
    Commented Sep 23, 2020 at 19:18
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    @Marcellus "overtime they'd already paid me since this is there fault". It is going to be the employer's fault if the employer doesn't do you the "favor" of complying with the contract. Your second comment reminds me of a suggestion: Whenever possible, make sure that your communications (at least the important ones) with the employer be in writing or in a way that prevents the employer from switching versions. Many employers (recruiters/intermediaries included) are less honorable than they should.
    – Iñaki Viggers
    Commented Sep 23, 2020 at 19:24
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    This may be correct, but a "6 month contract" does not usually contain a clause which says it can not be terminated before the end of the 6 months. The 6 months only specifies the end date of the contract. Most "contract employment" in the UK can be terminated with zero notice. If the OP has to make a choice between no overtime pay or no pay at all, well, welcome to the real world of contracting!
    – alephzero
    Commented Sep 24, 2020 at 14:59
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    @IñakiViggers I think you're focusing more on legal theory than what is actually going to happen here. Realistically, the employer has breached and is offering a new contract under the same terms, minus overtime. The penalties for employer breach under this contract are probably de minimis, if they exist at all. OP might have a cause of action for the 5 hours a week (I say might because those hours are merely speculative at this point), but that's going to depend on the contract, and even then it may not be worth the fight, but that's up to OP and his/her lawyer to determine.
    – Michael W.
    Commented Sep 24, 2020 at 16:41
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    The crux here is the damages: The OP had another offer in hand, this employer knew that and made a better offer. I could throw a whole bunch of terms in here, but I would start with "bad faith".
    – dotancohen
    Commented Sep 25, 2020 at 13:57
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Yes, they owe you time and a half. But, and it's a big BUT: If the contract lets them fire you, then they can just fire you.

So, depending on whether they can let you go, what they're really saying might be, "We can't undo the time and a half we gave you in the past. Going forward, do you want to forfeit the overtime pay, or be let go?"

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    Luckily OP got two competitive job offers in the middle of a pandemic, so they have good odds of getting another one if they are let go.
    – stannius
    Commented Sep 24, 2020 at 16:44
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    And it would be easy for the OP to show damages and bad faith on the part of his current employer.
    – dotancohen
    Commented Sep 25, 2020 at 13:57
  • My contract is "at-will" so technically they can fire me, but not only would I hopefully have a good chance of getting another offer as @stannius pointed out, it could also really hurt them from a business standpoint. For simplicity's sake I left this out the original post, but the "employer" is actually a recruiting company and the company I actually work for is their client. So not only would firing me look really bad on their part because they'd be unexpectedly removing one of the client's workers, but it would also give the client the opportunity to hire me directly and cut out the agency.
    – Marcellus
    Commented Sep 25, 2020 at 20:29
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It sounds like your employer's general policy is to not offer time and a half for exempt employees, but they didn't notice that you were exempt when they made their offer. That's on them, not you.

Companies are free to offer more than what is required. They are no more prohibited from offering time and half to exempt employees, than they are from offering holiday pay for days that are not recognized as legal holidays in their jurisdiction, or paying more than minimum wage. When they offered you $30/hr, it's reasonable to assume they did so because they though that such a wage was necessary to secure your services, not because they somehow thought that the minimum wage is $30/hr. Similarly, you reasonably thought they were offering time and a half not because it was required, but because they wanted to encourage you to take the job.

As for their obligations, that depends on whether the employment is at will, and the wording of the contract. If the contract does not guarantee you any overtime, then they are free to simply not request you work overtime, and the question of overtime rate will then be moot. It will also be moot if they request you work overtime, you refuse, and there are no repercussions for that refusal (other than not receiving the additional money from overtime).

Where things get sticky is if they take action against you for refusing overtime. If they fire you, this is not a for-cause firing; even if the original contract said that you were obligated to work overtime, you agreed to that with the understanding that such overtime would be at time and a half. So this case reduces to the question of whether they can terminate your employment at will. If they can, then they are free to make not terminating your employment contingent on you accepting regular, rather than time and a half, pay on further overtime. If they can't, then you are free to pursue whatever action you would be entitled to for any other unlawful termination.

It gets even more sticky if, as is likely, they don't outright terminate your employment, but "reprimand" you, or otherwise take action against you. In that case, you may have some action available to you, such as a hostile workplace claim.

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The contract says time and a half for overtime. The company cannot change the contract, but they can cancel the contract. So it's up to you and up to them: Do they want to switch to a different contractor in the middle of a contract to save a bit of money? Do you want to insist on the pay and risk losing the contract? That's what you need to negotiate.

You should make it clear during the negotiation that a) you won't work for less than the contract says, out of principle, and b) you could have got more than they want to pay, so they won't get anyone of your quality for what they want to pay, and c) it's not your fault, they should blame whoever signed the contract on their side. The more convincing you are, the better the chances that you will stay and get paid overtime.

Just repeating: IF they keep employing you and IF you work overtime, then they have to pay according to the contract. They can cancel the contract, but not change it. That also means that letting you keep the money for earlier time is not "generous", it's what the contract says.

PS. Being slightly "unreasonable" and saying that you won't work for less out of principle even if you lose financially works in your favour.

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