Part I of this series covered how I came to work for a crooked online retailer, while in Part II I started noticing that things weren’t quite right with how the company handled its employees, especially when it came to overtime pay…
WARNING: This chapter contains a LOT of specific incidents, but rather than make cuts I’ve decided to include the full list, both for completeness and because some readers might find them relevant to their own workplaces. Feel free to skim—the point is that at the company a lot of sketchy shit started happening really quickly!
In January I took a ten-day trip to India, an experience that was both an eye-opening look at a new culture and a much-needed break after the gut-wrenching grind of the holidays. Months before, I’d gotten the boss’s approval to use both unpaid days and two of my five yearly vacation days for the trip, but after I got back things took an unexpected turn…
“Our Company Doesn’t Offer Sick Days”
Toward the end of the India trip I got cocky and ate too much greasy street vendor food—a big no-no for foreigners who aren’t used to it. On the morning I was set to leave I fell ill and had to rest, and spent the twenty-four hour trip back (four flights, with layovers!) suffering through chills, stomach issues, and what was likely a mild fever. It wasn’t good, and there was no way I was going to work the next day.
After sending some quick morning messages to the boss and a few coworkers I seemed good to go and spent the day resting. I felt way better by the time evening came, so taking the extra day was definitely a sound decision.
Quick rewind—when the boss first offered me the job over the phone his original offer didn’t mention anything about sick days. When I asked him about this, he thought for a second and said the word “Reasonable,” explaining that employees could take a reasonable number of sick days as long as they “didn’t abuse it.” I interpreted this to be in tune with the company’s laid-back approach—though in retrospect I should have determined whether said sick days would actually be paid. I also should have gotten this in writing, since my contract and other paperwork still didn’t mention sick days at all.
However, you never think about sick days until you need them, and when I got back to work and checked with the boss’s wife about the sick day, her response was brief: the company didn’t offer sick days, which it specified in the handbook.
This, simply put, came as a shock. The company handbook also didn’t mention sick days at all—which implied that the company simply hadn’t planned for them, or that any sick days had to be taken from our five yearly vacation days.
I expressed my concern to a coworker, who laughed and said he was surprised the boss had let me stay home sick at all. The Chinese workers, he said, never took sick days, and didn’t even have set vacation time like I did—taking sick days was something they just didn’t do. I thought of my feverish coworker who’d fallen asleep in the break room and realized what kind of place I’d gotten mixed up in.
The sick day incident led me to finally, FINALLY sit down and research labor laws, which was when I both clarified some of my overtime uncertainties and discovered that in the state of New Hampshire, companies can’t deduct pay from salaried employees who work less than forty hours in a week because of illness as long as they’ve worked at least some time during the week in question.
Once again, it appeared that the company had broken the law—but what was I going to do about it?
I Talk to the Boss
The sick day issue only highlighted the more serious problem of the company violating the Fair Labor Standards Act by only paying overtime hours during the busy holiday season, and I worried that once the January cooldown reached its end that overtime would start disappearing from our paychecks again. Thus, it made sense to focus on the overtime issue first.
I’d wanted to talk to the boss about overtime for a long time, but wasn’t quite sure how to do it. I’d also wanted to have the talk during a slower time when the office wasn’t exploding in craziness, but looking back, I realize I should have brought this up A LOT sooner, since my silence implied that I’d accepted the company’s overtime rules as a given. I also wasn’t sure whether the boss was breaking the laws intentionally or because he genuinely didn’t know how things worked in America, but either way I needed to set the record straight.
I sent the boss a chat message saying I had something to talk to him about, then tensely waited for his reply. All the waiting caused me to get nervous and start pacing, so when he asked me up to his office a half hour later I’d already worked myself into an anxious state—not a good way to start.
I also opened the meeting with a lot of groveling and uncertainty (“You know I like working here a lot, but…”), which was also a mistake because it lessened the impact of what I was about to say. With my hands shaking and my voice cracking, I then explained about the overtime laws, about overtime-exempt versus non-exempt employees and how these rules applied year-round, and that if the boss didn’t want to pay overtime then he had to make sure that everyone worked a maximum of forty hours per week and then went home, as had been the case other places I’d worked.
The boss responded by getting defensive, claiming that the company always followed all overtime laws. When I explained in more detail what was wrong he disagreed, saying that at his previous company the employees had often worked more than forty hours a week without overtime pay. I pointed out that this was because he’d previously worked as a programmer and that many programmers are exempt from overtime pay under the federal rules, which may have led to his confusion. The boss also seemed to believe the myth that blue-collar workers always have to be paid overtime while office workers never do, which I was quick to dispel. This appeared to catch him off guard, and he responded by saying that he wasn’t a legal expert, but of course neither was I, so he’d consult an outside HR company he often used and would get the full story from them.
This felt like a victory in a lot of ways, and to follow up I sent him some fact sheets outlining overtime laws from the Fair Labor Standards Act, which he responded to in a neutral manner.
Now it was time to wait.
“Did You Get Paid For Your Overtime?”
A few days after this a coworker pulled me aside to share an unsettling rumor he’d heard: one of the Chinese warehouse employees, the same one who’d worked 28 straight days during the holidays without a day off, had been asking around saying that his paycheck hadn’t included any overtime.
This felt very, very wrong—I’d seen this particular coworker consistently staying late, and other sources confirmed that he’d been working at least one or two overtime hours every night. There’d apparently been some kind of fight or disagreement between the warehouse worker and the boss that had involved a lot of arguing, but again no one knew for sure what had happened. (Also, just so we’re all on the same page, even if an employer is unsatisfied with an employee’s performance, the FLSA still doesn’t allow companies to take away their workers’ overtime pay!)
The coworker I spoke with had heard this from a third party, but didn’t feel comfortable asking the warehouse worker directly because he kept mostly to himself. I didn’t have a problem asking the warehouse worker about it, but I faced a different issue: I didn’t speak Chinese, and the warehouse worker spoke limited English.
I had no proof that the warehouse worker had lost his overtime and wasn’t sure how to talk to him. That this had come up so soon after my meeting with the boss also implied that things weren’t about to go well.
I Miss Out on a Cool Business Trip
Two weeks after my overtime talk with the boss, I put him to the test.
For months the boss had been talking about he and I attending a conference in New York City—a business trip that would involve very little work and a stay at a nice Manhattan hotel. However, he wasn’t sure which days we’d be attending, since the conference lasted from a Friday until the following Tuesday.
Finally, the boss made a decision: he wasn’t able to go himself, so he’d decided to send me and another coworker instead. New York City, here we come! The catch was that the boss wanted my coworker and I to go on Saturday and Sunday and be back at work on Monday morning.
This seemed like the perfect opportunity to test the overtime boundaries we’d just discussed: I told him that federal labor law considers the actual working portion of business trips to be included as paid time. That meant that if my coworker and I spent Saturday and Sunday attending the conference, we’d either have to take two days off that week (thus giving us a total of forty working hours) or be paid overtime. Either way, I said, was fine with me, and my coworker agreed.
As usual, the boss said he’d think about it, and when he came to us a few days later he admitted that the company “never had to pay employees for business trips before.” He now offered to send us on the business trip from Sunday to Monday and grant us each one banked vacation day to use later, similar to the illegal vacation time deal he’d offered my other coworkers for working on the weekends. To this I answered that unfortunately the rules didn’t work that way—we needed to take our day off that same week since it couldn’t be carried over to a vacation day.
The boss never responded as the weekend of the business trip grew closer. Instead, I found out that he’d pulled my other coworker aside, offered him the banked vacation day deal, and sent him on the trip alone knowing that he’d accept.
I won’t lie—it bothered me knowing that I’d been left out of the trip because I’d stuck to my guns about the law. However, I knew that my taking the deal would have set a dangerous precedent allowing the boss to keep ignoring the laws, so I’m glad I resisted and stayed home.
When all was said and done my coworker ended up taking the trip, getting back super late, then calling out of work the next day to sleep in, meaning that his total hours that week were the same as normal. C’est la vie…
Who Needs a Raise When You Can Get Discount Job Training?
As I mentioned in Part I, my good friend Stu had been looking to change career paths away from his job at a bakery, so I suggested the warehouse job to him as having room for growth—possibly doing the programming work he was interested in, but more likely working with computer hardware.
However, Stu’s accepting the job also meant taking a two-dollar pay cut, a risk he felt uncomfortable with since he, you know, had bills to pay. He accepted the job on the pretense that after the extra paid hours from the holiday rush petered out he’d be eligible for a raise, especially if he took on more job duties.
While I was off deciphering overtime laws Stu started doing a lot of work with motherboards, processors, power supplies, and a bunch of other technical computer stuff. It definitely takes skills to outfit a video card testing rig, and his new tasks seemed to fit the bill for the “advanced duties” the boss had mentioned him taking on in exchange for a raise.
Stu worked up his courage and asked for his raise—but didn’t get it. Instead, since the boss knew that Stu was interested in programming, he proceeded to tell him that the company could offer him a job training benefit program, where employees who’d worked with the company for at least two years (he was very careful to mention this number) would be able to take a job training class that the company would pay a percentage of—as long as the employee continued with the company for at least two more years (again, he was very careful to mention this number). Otherwise, that employee would have to pay the company back for the class.
This deal was made in pretty poor taste for a few reasons:
- Stu had asked the boss for a raise to help pay his bills, but the boss had offered him a future job training course instead
- The job training course was clearly designed to get Stu to stay at the company for at least four years, during which time his ability to get a raise would still be in question
- The boss was offering Stu a paid job training benefit when his company didn’t even offer sick days or health insurance
Not surprisingly, this job training class wasn’t mentioned in the employee handbook or anywhere else, nor (to the best of my knowledge) was it ever offered to another employee. At the end of the meeting Stu still had no idea when or if he’d be eligible for the raise he needed—the boss hadn’t given him an answer, and he didn’t have any other info to go off. He was stuck.
Tax Trouble
In January the company gave us our year-end W-2s, and after we had a good laugh at the boss’s wife’s misspelling the company address, I soon discovered a bigger problem.
During the holiday season the boss had offered to pay a dinner stipend to employees who worked overtime—the employee could buy dinner, save the receipt, and give it to the boss’s wife for reimbursement, which would then show up on their next paycheck. This is a common practice that I’d encountered several times at other jobs and felt comfortable with—except that at my other jobs, the reimbursement money was never included as taxable income on my W-2, but at this company, it was.
Here’s a quick rundown of how employee reimbursement works: setups like ours where an employee buys something, gives the receipt to a bookkeeper, and then receives the exact amount back is called an accountable plan, and payments given to employees through accountable plans don’t count as taxable income. This is different than an unaccountable plan, where companies give employees a set stipend to use on food, lodging, cell phone plans, or other expenses, but don’t ask for receipts or proof of how the employee spent the money.
In the real world, this makes sense—if you work for a landscaping company and they need you to run out and pick up some dirt from Home Depot, you charging five hundred bucks worth of topsoil on your credit card to use on a company project and the company paying you that money back is different than if you’d actually worked for that five hundred dollars and gotten paid for it.
In our case, the boss and his wife were too busy to organize dinners, so it was just easier for us to pay and for them to pay us back—the employees did the paying because it was more convenient, and shouldn’t have to pay extra tax just for handling the bill. To exacerbate things, multiple coworkers often ordered dinners as a group that a single person paid for, meaning that a few of us got more money back through reimbursement and thus stood to pay more tax on that money.
I brought this up with the boss’s wife, sending her a few websites like this one that explain the difference clearly. I wasn’t sure whether this was a case of her simply not understanding the American tax system, but when she responded she said that she understood that all reimbursements were treated as income, and vaguely mentioned that she would take this up with the accountant.
Not surprisingly, I didn’t hear back from the boss’s wife, and when I followed up, she didn’t have an update for me. As was the case with our other problems, it was clear they weren’t taking this one seriously.
No Bonus for You!
When I was hired, the boss mentioned that the company offered a bonus (which he initially referred to as profit-sharing) during well-performing quarters, though he also mentioned that said bonuses were only paid after the holiday season. The year-end bonus served as a beacon of light during the hellish holiday onslaught, and the employees who’d been there longer talked about it often.
I got a thousand-dollar bonus at the end of December as part of a vague evaluation meeting with the boss (“You’ve come a long way, but you still have a long way to go,” etc.), and Stu got one the following week. Most of the other Chinese employees also received bonuses and evaluations, but two of them didn’t. I found out about this later—not only did my two coworkers not receive bonuses like everyone else, the boss never even met with them for evaluations.
If company bonuses were actually based on performance, and my coworkers’ performances had earned them $0 while other employees’ performances had earned them much more, shouldn’t the boss at least have told them what they did wrong and given them opportunities to improve? And was the supposed discrepancy in their work really so large that they deserved to get nothing?
The $200 Loan That Didn’t Happen
This next issue isn’t a legal one, but it was still a damned cold thing to do.
The company employed several remote worked in the Philippines who worked in the mornings and did a variety of tasks. The boss had clearly hired them as a means of saving money—he could pay remote Filipino workers a fraction of what he paid workers in America, since minimum wage in the Philippines is less than $10 US per day and the cost of living there is so much cheaper. The salary that the boss paid most of the Filipino employees was, astoundingly, $400 a month.
One of these Filipino workers had been with the company more than six months and proven his loyalty countless times. He consistently did excellent work, and the boss had specifically praised him for his skills and leadership abilities.
One day, this worker’s Paypal account got hacked and he lost half his month’s paycheck—$200 he needed to pay his bills and get his car repaired.
I knew something was wrong right away by the way he responded to my messages, and when I heard what had happened I felt awful. He’d been on the phone with Paypal, but things didn’t look good. My immediate suggestion was for him to tell the boss or the boss’s wife what had happened and see if they could at least give him a pay advance to get him through the next two weeks.
Not surprisingly, both the boss and the boss’s wife turned him down cold for the $200 loan. The boss’s wife offered the consolation that she hoped the person who’d taken the money would give it back.
Now, setting aside the fact that the $200 was a VERY small portion of the company’s weekly sales, and that the boss had no real reason to believe that the employee was going to quit before the end of the pay period and walk off with his money, this was just poor leadership. My Filipino coworker spent the next several hours in an anxious stupor, smoking cigarette after cigarette and worrying about how he was going to fix his car while I attempted to calm him down via chat. Because of this, both he and I lost several hours of worktime—a pretty significant loss that the boss could have avoided by loaning him that money.
The story at least has a happy ending—several days later, Paypal sorted out the problem and got my coworker his money back, but the incident still spoke eons to how little the boss was willing to help his employees.
The Final Straw
It had been a crazy month, and things were about to get crazier.
You may remember from Part I that my brother Kyle was hired as a four-month temp independent contractor and paid using a 1099 form instead of a W-2 like the rest of us. You might also remember from Part II that another new hire who’d been offered this 1099 deal rejected it and walked out on his first day, ostensibly because independent 1099 contractors pay a WAY larger share of payroll taxes than W-2 employees do (i.e., the entire share).
At the time, both Kyle and I considered the 1099 another aspect of the deal he’d made—it was just a shittier way of being paid. As it turned out, though, it was also illegal.
A mutual acquaintance who was more experienced with the business world tipped Kyle off that the IRS issues set standards for which kinds of workers can be paid as 1099 independent contractors and which workers have to be paid as regular W-2 employees. You can read about those on IRS Publication 15-A or check out the shorter, highlighted version I made to send to the boss, but here’s a quick rundown:
- While 1099 independent contractors work on their own terms, W-2 employees work in environments where the company controls the manner in which the work is performed (emphasis mine)
- W-2 employees are told by the company when and how to work
- W-2 employees are told by the company what tools and equipment to use, as well as who must perform certain tasks
- W-2 employees may be trained in new tasks, while 1099 independent contractors use their own methods
- W-2 employees generally do work that’s a key aspect of the company’s regular business
- 1099 independent contractors can generally realize a profit or loss from their work
If this all sounds crystal clear, it’s because it is—Kyle was trained in a specific job, given set guidelines on how to do it, and answered to several supervisors about how his work was performed, so legally, he was a W-2 employee and the company had to pay 50% of his payroll taxes.
He and I realized all this in January around the time I started my research, and while I was looking into the 1099 issue I came across IRS Form SS-8, which allows workers to describe their positions in detail so the IRS can decide whether they legally have to be paid using a 1099 or W-2. After some discussion, we realized the problem wasn’t worth acting on because we were both sure that come February the boss would offer Kyle a genuine, legal W-2 contract the same as everyone else in the company (the other 1099 holiday help had long since left), and would hopefully give him a raise as well.
However… *cue ominous music* …that didn’t happen. Kyle got called in for an evaluation meeting where the boss told him that he “still had a long way to go” and that the company was offering him another 4-month contract at the same pay rate with no holiday bonus. Once again, he’d be paid on another 1099.
This was more than I could handle—as terrible as it was for Kyle to not get a bonus after working just as hard or harder than everyone else, I couldn’t stand to see the boss defying the law any further, either knowingly or through sheer ignorance. Kyle too was visibly devastated and embarrassed, not only at the vague assessment of his abilities and the higher tax bill, but because the boss had singled him out as unworthy of being paid the same way as everyone else in the company.
That evening we decided that this injustice couldn’t stand, and the time had come for action. We had to confront the boss, and we needed a plan.
Will Ian and his friends confront the boss about his under-the-table dealings, or will they cower in fear before his defiance of the law? (Spoilers: They confront him—and things get even crazier in the next chapter!)
Keep in touch, and don’t miss the next chapter!
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