KPMG is being sued in a proposed class action lawsuit filed the Friday (paywall) before the long Labour Day weekend, citing employees were forced to work unpaid overtime hours.
The lawsuit alleges KPMG employees routinely work as many as 90 hours a week to complete assignments on behalf of clients. The firm allegedly requires employees to “eat their time” if they spend more hours on an assignment than KPMG can recover from the client.
First of all, the fact they were forced to “eat their time” is neither here nor there. What does it matter if the hours they work get billed to the client in the end? They’re being paid to do the work, and they’re being paid by the firm.
Maybe my loyalty to the profession is clouding my judgment, but I can’t seem to muster much sympathy. The situation is the same at most accounting firms, and if employees don’t like it they can work elsewhere. The job market for accounting professionals to red hot these days.
The industry is just one where you have to pay your dues, and during busy times the workload is heavy. In a way it helps separate the wheat from the chaff, as those who don’t like it (or can’t hack it) move on after they get their designation. But this lawsuit is about employees who aren’t working towards the CA designation:
The lawsuit outlines the case of Alison Corless, who worked at KPMG in Toronto from 2000 to 2004. According to the suit, Ms. Corless was hired as an assistant to a specialist, and her work was supposed to consist largely of data entry. Her starting salary was $30,000.
After joining the firm, Ms. Corless was almost immediately required to compile complex corporate tax returns, even though she had no experience in that area and no university degree, the suit alleges. During tax season, Ms. Corless allegedly had to work as many as 16 hours a day and well over 50 hours a week.
When Ms. Corless approached managers about being paid for overtime, she was allegedly told she was not entitled to overtime because it was included in her salary. When she left KPMG, her salary was $56,000, according to the suit.
Apparently the starting salary was acceptable to Ms. Corless at the time, but perhaps she believed overtime was going to be paid. Shouldn’t she have clarified that before starting (or at least at the beginning of her work there)? I’m almost certain it was clarified, and the firm probably has her acceptance of the conditions of her employment on file.
Note that she also received valuable training in complex tax return preparation, which is as in-demand a skill as you can get. And for anyone who’s ever prepared a corporate tax return, a lot of it is data entry!
Accounting firms work very hard to attract and retain hard working employees, and they are routinely lauded for being great employers. KPMG was just one of four firms that made Canada’s Top 100 Employers list in 2007! Three of the Big Four (Deloitte being the odd one out) and a smaller firm, Mintz & Partners are on the list.
I don’t know what prompted me to do so, but I ended up Googling Ms. Corless. Turns out she’s joined LinkedIn, the social networking site aimed at professionals:
So she’s moved on from her days at KPMG, and it’s good to see she has been able to parlay her experience preparing complex corporate tax returns into a job at a law firm, Juroviesky & Ricci. (She’s also now a specialist herself, after starting at KPMG as an assistant to one.) But wait a minute, that firm sounds familiar:
“The judicial winds in Ontario and in North America are pro-employee and pro-overtime, and especially in the class-action arena,” lawyer Henry Juroviesky of Juroviesky and Ricci LLP said in an interview Tuesday after his Toronto-headquartered commercial and tax law firm filed the KPMG litigation in Ontario Superior Court.
It will be interesting to see where (if anywhere) this case goes. I know I’ll be paying attention, will you?
15 responses so far ↓
1 Krupo // Sep 18, 2007 at 9:47 pm
Nuh uh on the response to the plantiffs, Neil. I read the article before it fell behind the Globe pay-wall (paying to read articles? Lame!).
From what I understood, they hired “non-exempt” staff, meaning people who are unlike you or me – people who are supposed to be paid overtime. (Sounds like admin staff rather than ‘client serving personnel’, like young CAs and CA students).
If I misread the article and she was actually an exempt employee then you’re totally right and the suit will fall flat on its face for being frivolous.
If, however, she was hired as an admin-type (judging from the pay, I’d say that might be a reasonable assumption), then KPMG made an egregious error or were incredibly awful in their violation of workplace law.
Problem is, we don’t have the details to tell whether someone’s misinterpreted their contract or whether KPMG has committed one of the gravest sins a company can commit (probably right behind failing to submit payroll tax withholdings, I’d argue, in the hierarchy of corporate ‘sins’).
Should be interesting to find out what the actual facts are… it’ll be a shame if they just settle and hide the actual facts, I must say!
2 Francine McKenna // Sep 18, 2007 at 11:08 pm
A couple of things:
1)This is not an isolated case. See http://www.eylawsuit.com
2)The key is, as you both said, what classification of employee she was, in real terms. They can designate exempt but it really boils down to nature of work and here in US there are a strict set of rules to use to judge. Also, having signed up for a salary and no overtime doesn’t mean that the switcheroo can be pulled later and 80-90 hours per week demanded to keep your job. That’s just inhumane. See my story on the poor Romanian girl at E&Y. (She’s dead) In particular, there should at least be compensating time off, (assuming you can take it without jeapordizing your chargeability percentage.)
3)Finally, it’s not ok when a firm makes anyone eat their hours, that is, not record them to the engagement billing system. It matters whether a client is billed for all hours or not. Your bonus, amongst other things, is dependent on it. It matters whether someone can see that staff are working 90 hours a week to finish a report. The firms can not measure their profitability and, therefore, are cheating everyone if they estimate and charge the client one thing and work substantially more hours to get the job done. Careers and fortunes are made on the numbers and, for an accoutning firm, they should be right, inside and out.
3 Neil // Sep 19, 2007 at 12:03 am
Francine – I hadn’t considered the bonus aspect of recording time spent working on the client. It is definitely important to be able to recognize the contribution employees make towards satisfying clients. Time is but one measure, but a well-used one for certain in traditional accounting firms.
There should also certainly be compensating time off during periods of slower business, if 80-90 hours weeks are required during periods of brisker business.
Krupo – I noticed that story is now unfree. How lame indeed. I wonder if the Globe will follow the Times in the future. (The Globe shut down the backdoor that existed through Google News a few months ago!) I linked and quoted to a different story near the bottom of the post.
If they are found to have been required to pay overtime, it will still be the fault of lawyers – KPMG’s.
4 Andrew // Sep 19, 2007 at 1:21 am
In New Zealand KPMG is the only Big Four firm to pay overtime to their employees, but their base salary is lower than the other firms.
However I guess it all depends on the facts (like any lawsuit). Obviously your employment law is different to ours.
Really like your blog – its very interesting and informative!
5 Edmund // Sep 19, 2007 at 2:35 pm
I am wondering if the issue with this lawsuit is that KPMG is mixing up the 2 classes of workers. You make a good point that the accounting profession is one where you ‘pay your dues’. A CA student will join a firm and be underpaid (on a per-hour-worked basis) for the first few years while they accumulate the hours needed to get their accounting licence. Once they get it, they have quite a bit more leverage and can start reaping the rewards of being a professional. The CA student presumably understands this implied tradeoff and accepts it. However, Ms. Corless is another class of worker, a non-professional who is not on the professional track. If she has to endure the same working conditions as CA students, it may not be fair because unlike the students, there is no professional designation and its attendant rewards waiting for her.
6 Krupo // Sep 21, 2007 at 12:02 am
US law is no doubt way stricter than that in Canada.
Heck, as the lawsuit site c/o Francine says, “California’s overtime laws are very strict.”
I read through site, and it seems like firms with lots of non-CPA students could face some trouble (that’s criterion 1 – you’re not a professional).
Criterion 2 is where, if you’re working on anything half-way decent in your day job, the class action lawsuit will fail miserably: “Making the decisions about the kind or scope of information to gather in connection with an audit, and how that information should be interpreted or applied, might well constitute work of a “professional” nature.”
A. Interns are most likely to fall into that category. But they’re coddled in the best, and simulteanously perhaps worst sense of the word. If you’re getting nailed with work as an intern, you chose the wrong place.
B. The lawsuit aims to gather staff and seniors. Staff get strict instructions, but that’s because they’re learning what you’re doing. I’d consider that akin to a Management Trainee. You may be a trainee, with all the attendant lack of freedoms, but (by Canadian standards, anyway) I don’t see that being reason to rule out professional status.
Seniors, on the other hand, better be making intelligent decisions or else they’re just tick-a-form/rollforward-last-year’s-file audit-monkeys and not intelligent professionals.
Would any self-respecting professional admit to being a follow-the-crowd audit-monkey? [A bit harsh, but, eh, it's true.]
7 RC // Jan 19, 2008 at 3:52 pm
I’m afraid you just come off as an apologist for what is an industry of companies that treat their employees exceedingly poorly.
To be honest, I am generally of the opinion that, if you don’t like the job, you should quit. In fact, that’s precisely why I quit my job at a Big 4 firm in California after only 3 months.
However, most Western nations have employment standards regulating the number of hours an employee should have to work, and I can’t believe that you’d just say “80 or 90 hours a week is the job.” If there is enough work to do 80 or 90 hours a week, that is a sure sign that the employer should hire more employees. If it’s a matter of busy season, they are certainly smart enough to hire contractors, or figure out a way of spreading out the work around the year better.
In my experience, it is just trickle-down incompetence. As work is passed down from upper management, it gets more and more delayed, until the staff and senior staff get stuck working weekends just because their superiors couldn’t get the work to them with enough time to complete it.
The fact that this is a case involving an administrative assistant makes it all the more absurd.
In California, for instance, there are class action suits against PwC and Deloitte because non-CPA (CA) accountants were required to work overtime. According to most interpretations of the law, not having your CPA means that you’re not exercising professional judgement and hence not exempt from being paid overtime wages.
What really gets me is that these companies think the “perks” of the job should compensate you for your extra hours. It is a genius proposal; once a month everyone has a really nice dinner with all the perks, all the alcohol you can drink, and so on. But in the end it only amounts to $100 or $150 per employee per month. It is good as team-building, and makes employees feel valued far more than the extra $150 per month on the paycheck would. But really, it’s for people who are bad at math. Get a higher-paying job and go out to dinner once a month with people you ACTUALLY like.
I really feel that the big accounting firms are like cults. They mistreat their employees 95% of the time, then the 5% of the time they get great “perks” makes them feel valued. The “work-life balance” mantra is repeated over and over again, making employees somehow IMPRESSED with the fact that the company allows a Senior Manager to work 4 10-hour days because she has a family. Wow, how flexible! Employees work and play with the same people so they’d feel ostracized if they ever broke away from the groupthink. Everyone at every level of the company seemed convinced that, while they could make more in industry, once they make that next promotion, they’ll be SET. But it never seemed to be true, no matter how high up they moved in the company.
I’m sorry, but there’s something FUNDAMENTALLY WRONG with a company that forces employees to bill far more than 40 hours a week, for at least several months out of the year, then use the cop-out that, hey, “it’s busy season, nothing we can do about it despite our millions of dollars in resources.” Why on earth should you make 50, 60, 70 hours per week worth of billables for a company and only be paid for 40 hours? Yeah, it’s not an hourly job, but the salaries are no better than other 40 hour per week jobs.
I could not be happier since I quit Deloitte over a year ago. I got a shorter commute, bosses who respect me and leave me alone to do my work, better equipment, no stuffy dress code, coworkers of diverse interests, and best of all, a 35% pay increase!
The way the accounting firms treat employees only seems good from the inside. From the outside it truly does look like a cult.
8 Krupo // Jan 26, 2008 at 6:16 am
Although I see what you’re getting at, and have experienced life on the outside too, there are definite pluses in the industry.
I suppose it really depends on which area you’re in – and what your local office is like. If you’re compatible and even friends with your co-workers, it’s a totally different story.
And if you’re clever – and well supported, you’ll have dinner way more often than once a month, and either with your own friends on your own time, or with work friends and still in an enjoyable setting.
I dunno how many would actually accept 80-90 hours. Half that is normal, as I’ve written before.
http://krupo.ca/archive/2008/01/04/how-many-hours-do-you-have-to-work.aspx
Otherwise, you should probably be in i-banking.
9 Krupo // Jan 26, 2008 at 6:17 am
Oh, and the other valid point is that Neil may not so much be coming off as an apologist, but rather a happy employee of a decent company.
10 PS // Jan 26, 2008 at 10:16 am
I work for KPMG in Ontario. I am currently working towards my CA designation. I knew going into this profession that overtime will be expected of me. However, I did not expect it to be so ridiculous. I have been working 7 days a week. From Monday to Friday, I work at least 12 hours a day. I probably work another 12 hours over the weekends. Needless to say, I have no life outside of work.
I am a first year senior and am still learning. Due to high turnover at my office, we are simply thrown on large engagements even though management knows that we may not be ready for such responsibility. I do not mind the challenge. However, it becomes an issue when management expects us to complete the assigned engagements in fewer hours than prior year (even though in prior year the job was completed by a more experienced senior). Currently, at my office all our experienced seniors have left. There are seven first year seniors. Most of us feel very overwhelmed. Management involvement on most engagements is minimal.
The economy in my city is not doing well. There are three big accounting firms here. These accounting firms have to compete for clients. They are willing to lower their fees to get clients. However, the partners expect good recovery on their jobs. The budgets for the jobs are unrealistic. As a senior, I am expected to complete my job within the budgeted hours so the partner will achieve the expected recovery. If I do not complete the job in the expected hours, it reflects in the review I receive from management. I am not the only one dealing with this. Almost every single senior in my office is going through it. Most of us deal with it by eating our time. At the same time, the Office Managing Partner is putting pressure on the staff to increase our chargeable hours. The issue is that if we are working more hours than we report. As a result the number of chargeable hours reported will far less than expected. It is a lose or lose situation. I am sure that everyone in public practice has faced this problem at some point.
In October, I had a discussion with our “People Leader” at KPMG. He gave me positive feedback on my work with the company over the last year. I brought up the challenges that I am facing with managing my work and personal life. I told him that currently there are personal issues in my life that need some of my time after work. He said he will discuss it with my Performance Manager and they will sit down with me over lunch to discuss how I can achieve work-life balance. I did not hear back from the “People Leader”. After a couple of weeks, I dropped by his office and reminded him of this meeting we were supposed to have. He responded by telling me he will arrange something the following week. Another week passes by and I hear nothing. I send him an email and he again tells me “No problem. We will meet next week.” And again, I did not hear back from him. Come on, this is the “People Leader” at KPMG. Being a little bit more vocal than others, I reported the problem to an associate partner. He suggested I put together a group of us and complain. I have gathered all senior and will be meeting with management in a couple of weeks. We hope to address:
- Unrealistic budgets;
- The issue of seniors and junior staff almost forced to eat time; and
- The lack of work-life balance.
I highly doubt anything will come out of it. I am sure management knows how to respond to these issues in a manner that they can buy some more time and have us deal with this BS a little longer. Then there will be a wave of turnover and the same thing will happen to the new employees.
I am hoping that someone who has been in public practice for some time can suggest ways to deal with these issues.
11 Jim // Sep 8, 2008 at 6:51 pm
I worked in this environment for about 10 years and then spent 30 years in my own public practice. If to many hours is a problem wait till your on your own. It’s worse. Managing and working hours and gaining experience in the professions cannot be measured easily. It takes patience and understanding and a firm that will level with you about each assignment. Look for good managers in the firms. Overtime hours will never be paid to trainees unless the client can pick up that cost. It will not happen. That’s the price you pay for the training and lost time due to low paying client work. Sorry but it is worse in law and medicine. Stay healthy and survive as best you can. I did after two wives; four kids and a lot of work. Good luck. By the way if a firm is unreasonable about overtime and cannot manage time properly re asses you job. Time to move on???
12 Lisa // Mar 27, 2009 at 6:13 pm
Hmmm….I have been working in the industry over the past 20 years. I started in a CA firm, but left after two years…and made the decision right then and there that my quality of life was much more important than slogging for someone else’s benefit. An pyramid where the costs are so high for so long…to acheive the pinnacle of partnership with all the “perks”…in my opinion is really no way to live a life…and really the return of investment does not always measure up. For what you have to put in…does not often match what you will get back…what fun is having beautiful things and a great income…if you have no opportuntiy to ever truly enjoy much of it…or much of your life has passed before you ever have the time to do it…
There are many more rewarding wayss to earn a living. The archaic system currently in place smacks of a fuedulist mentality.
13 Lisa // Mar 27, 2009 at 6:21 pm
…and btw…I am in a relationship with a Doctor…he is a specialist…and is required to regulary work 60 – 70 hours a week…but he is compensated with 12 weeks holidays a year…and a six figure income approaching a seven figure income…
I am not sure the accounting professions even come close that in terms of income, with the accompanying holiday time…the doctors yes they definitely pay their dues….but the also get amazing rewards….I am not sure the same can be said the the bean counting professionals…in public practice….
14 William // Apr 27, 2009 at 1:31 am
The big four need to change. For far too long, they have exploited boatloads of wide eyed trainees and graduates only to dump them the next year for another boatload. I presently work at one of them in saudi arabia and have seen this happen. Partners keep reminding everyone of 80% utilisation as well as budgeted hours compliance. Junior staff routinely undertake work that definitely should be done by experienced managers and have to engage on multiple engagements without requisite experience. Long hours and no weekends are an accepted norm. Current crises means people are fearful of making an issue out of this culture.
15 Neil // Apr 30, 2009 at 10:00 am
I don’t disagree with you there William. It’s not an environment that breeds loyalty is it? There are exceptions to the rule, as I know people at Big Four firms here in Toronto who are valued and respected, but it does seem that overall it is not an empowering situation for aspiring accounting professionals.
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