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Salary reduction for exempt employee in Minnesota

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  • Salary reduction for exempt employee in Minnesota

    I am an exempt employee for a privately owned business (approximately 200 employees, part time and full time).

    My General Manager has informed me that my compensation is to be restructured. He intends to lower my base salary, and then pay me incrementally upon completion of specific projects. He has given me no details other than this, though I know he has discussed it with our human resources and accounting director (same person in dual roles).

    I am over 40 years old and have been employed with this company for over three years. I do not have an employment contract but I do have an offer letter spelling out the terms of my employment at the time I accepted the job. I am currently salaried, with no defined incentive or bonus structure in place, and I do not work in any sales capacity.

    No other employees are having their compensation restructured. I've never been a fan of being singled out for special treatment, especially not in this case.

    My question is whether he can make this change unilaterally. I am not necessarily opposed to the restructure, but I am wary of his motivations. What do I need to expect from the company in order for them to make this restructure legally?

    As an aside - I have been reading posts in several threads on this board and have been impressed with the quality of advice and level of genuine interest members seem to show to one another. How refreshing to see such civility on a message board!

  • #2
    Offer letters very seldom rise to the level of an enforceable contract, and especially one that is over three years old. You can have it reviewed by a local attorney versed in contract/employment law, but I wouldn't be optimistic.

    You cannot receive adverse treatment SOLELY because of your age. However, there are a number of reasons that this might not be the case, for example, if you're the only person in your company who does what you do, or the others who have the same type of job have compensation packages currently that are similar to what is being proposed for you, or the company is in some type of financial trouble, or your current compensation package is not within the market/industry standards in your geographical area.

    I'm not saying you definitely don't have a case for discrimination on the basis of age; just saying that there are a number of possible nondiscriminatory reasons for this change. Having said that, though, I would never discourage a poster from seeking local legal advice from an attorney knowledgeable in this area of law.

    BTW, thanks for the compliment. The civility of this board is primarily due to the efforts of our moderator. (grin)
    Last edited by Pattymd; 11-17-2007, 09:31 AM.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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    • #3
      Thank you for the insight. I do not necessarily suspect age discrimination - I don't have any evidence of it - but I am not sure I have complete information about the company's motivations.

      I do happen to be the only person in the company who does what I do, and I don't believe we are in financial trouble, although our rate of growth has slowed this year, forcing us to cut back expenses.

      My primary concern was with the way in which a company can change the pay of a salaried employee. Can the company, without warning, change a salary structure, lowering the base (and by extension the value of accrued vacation time) and adding "incentives" - without the permission of the employee? Do I have any recourse other than to try to negotiate as high a base as possible?

      You may note by my parenthetical comment that I am considering the possibility that one motivation is to further reduce the value of accrued vacation. The company policy is to "buy out" unused vacation hours at the end of a year at 60% of their value.

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      • #4
        Can the company, without warning, change a salary structure, lowering the base (and by extension the value of accrued vacation time) and adding "incentives" - without the permission of the employee? Do I have any recourse other than to try to negotiate as high a base as possible?
        Short of a CBA or other employment contract prohibiting it, yes they can, but not retroactively. Your recourse is to try to negotiate the best deal possible under the circumstances, or refuse to continue working there if you are not happy with the final result.
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

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