Too Many Managers: Strategic Use of Titles to Avoid Overtime Payments

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See all articles by Lauren Cohen

Lauren Cohen

Harvard University - Business School (HBS); National Bureau of Economic Research (NBER)

Umit G. Gurun

University of Texas at Dallas

N. Bugra Ozel

University of Texas at Dallas; The Wharton School

Date Written: November 16, 2020

Abstract

We exploit a federal law that affords firms the ability to avoid paying overtime wages when an employee is classified as a manager and paid a salary above a pre-defined dollar threshold. We show that listings for salaried managerial positions exhibit an 89% increase around the regulatory threshold, including the listing of managerial positions such as directors of first-impression, cemetery leaders, and window cleaning supervisors. Overtime avoidance is more pronounced when firms have stronger bargaining power and employees have weaker rights. Moreover, it is more pronounced for firms with financial constraints, and when there are weaker labor outside options in the region. We find stronger results for occupations in industries that are penalized more often for overtime violations. Our results suggest broad usage of overtime avoidance using job titles across locations and over time, persisting through the present day.

Keywords: Manager Titles, Overtime, Strategic Use

JEL Classification: M51, M54, G30, G38

Suggested Citation

Cohen, Lauren and Gurun, Umit G. and Ozel, N. Bugra, Too Many Managers: Strategic Use of Titles to Avoid Overtime Payments (November 16, 2020). Available at SSRN: https://ssrn.com/abstract=

Lauren Cohen

Harvard University - Business School (HBS) ( email )

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HOME PAGE: http://www.people.hbs.edu/lcohen

National Bureau of Economic Research (NBER) ( email )

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Umit G. Gurun

University of Texas at Dallas ( email )

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HOME PAGE: http://www.umitgurun.com

N. Bugra Ozel (Contact Author)

University of Texas at Dallas ( email )

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HOME PAGE: http://https://sites.google.com/view/bugraozel/home

The Wharton School ( email )

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