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Cut My Pay? No Way. Yes, Way.

Written by: Betsey Nash

Article Overview: Can the owner of a company just decide to decrease your pay with no forewarning? The answer to that question is not as simple as it might seem. Read what Betsey has to say & find out some additional options that might be open to you.

Cut My Pay? No Way. Yes, Way.

A general manager called me the other day to ask if the owner of his company could just walk up and tell him his pay was cut. No discussion, no warning, just boom! In my proudest HR style I replied: "It depends."

Short answer: Yes. It can be a unilateral decision. They made you an offer that you accepted when you were hired, and they are actually making you a new offer now. You can choose it or not. "Not" probably means you are no longer employed, but you might be able to negotiate. If you think the owner can't live without you, take a deep breath and think again, and then get your ducks in a row before you try to convince him. And remember, as nice as he has been to you for the last 5 years, he really doesn't care about your mortgage and kid's tuition as much as he cares about saving his business. How can you help him do that?

Longer answer: Maybe. (Isn't HR a great field?) If you are an exempt employee, that is, not subject to the wage and hour laws like breaks and overtime - and as a general manager I would fully expect that you are - check to be sure your new salary doesn't drop you below twice the minimum wage. If your salary goes below $35,360.00 a year, then you are probably losing your exemption. That means you may be an hourly employee, no longer paid by performance but by the hour. Now you have to take rest breaks and a meal break and clock in and clock out, and you get paid overtime if it should ever happen that you work more than 8 hours a day or 40 hours a week.

Still part of longer answer: And check to see if your hours are being reduced. As if you would want to be paid less for working just as hard. Is the owner now coming in to cover some shifts? Even without the salary threshold being crossed, changing your hours may change your classification as well. Are you dropping below the full time threshold - and so, no longer qualify for benefits? You'd better find out all of these details before you make a decision whether to stay or go. And if you discuss this with the owner he may decide he can't afford to make the changes after all. Especially if you start getting paid overtime.

By the way, if the owner tries to lower your pay retroactively: "Hi Joe, we've just finished our taxes and realize we need to cut back, so effective the start of the last pay period, we are reducing your salary by 20%". When you pick yourself up off the floor tell him "No way!" No fair.

By the way, that general manager who called me the other day decided to turn down the salary reduction and move on: shocking his boss, to say the least. He'll be staying on as a consultant until either his replacement is hired and trained or business picks up again. That felt like a win-win to me. But it depends.

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