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Reduction in Salary New Jersey

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  • Reduction in Salary New Jersey

    Question(s)/Comment(s):
    Due to the poor economy, an Exempted employee in a small 60 employee "C"
    Corporation is advised that her current $100K 2010 salary ($3.846K
    bi-weekly) is being reduced 23.31% to $76.7K ($2.95K). However, when
    payroll is adjusted, payroll for the balance of year is 40% less (not
    23.31%) to $60K not $76.7K understood ($2.308K bi weekly). This is
    effectively, an additional deduction of already paid (and earned)
    compensation, ...

  • #2
    The way you explained it was rather hard to follow, but simplistically, what has occurred is that the employer has made a retroactive salary decrease (back to the first pay in 2010), which is prohibited by NJ law.

    http://lwd.state.nj.us/labor/wagehou...e_faqs.html#q4

    The affected employee can file a complaint with the state Dept. of Labor.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

    Comment


    • #3
      I think the specific details would make or break this case. Were you told your salary was being lowered by percent or actual amount? If amount, were you told a per pay period amount or yearly amount?

      While I understand what Patty is saying about a retroactive adjustment, once you are told of the lower amount (even if it is less than you thought) then you have your notice for the ongoing periods.

      Comment


      • #4
        Reduction in salary NJ

        The employee was told in June of a 23% reduction to a lower annualized salary, which means retroactively for the year 2010. This adjustment in fact, resulted in a very real, 40% reduced amount to be paid for the balance of the year. The employer also gave the actual pay period amount going forward. Please explain your following comment.
        "once you are told of the lower amount (even if it is less than you thought) then you have your notice for the ongoing periods."

        Is this a violation?

        Comment


        • #5
          Sounds like it could be. Contact the state Dept. of Labor and explain it to them.
          I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

          Comment


          • #6
            I'm not sure how disability leave factors into this.

            Comment


            • #7
              Originally posted by adzikowski View Post
              The employee was told in June of a 23% reduction to a lower annualized salary, which means retroactively for the year 2010. This adjustment in fact, resulted in a very real, 40% reduced amount to be paid for the balance of the year. The employer also gave the actual pay period amount going forward. Please explain your following comment.
              "once you are told of the lower amount (even if it is less than you thought) then you have your notice for the ongoing periods."

              Is this a violation?
              If I tell John Smith that going forward he is going to receive a 23% decrease to $1,000 per week but John then gets a check for $900. John checks with management who says "Whoops our math was off and we meant $900". John now has notice of the lower amount. So he may be owed $100 for the one week but he has been properly notified on a go forward basis.

              My understanding of what you have said is that the employer wants the yearly salary of the position to be 76.7k. The YTD paid was deducted from the 76.7k and then divided among the remaining pay periods.

              My thought is that while handled poorly, it would be legal since the company can adjust pay downwards as long as it meets minimum wage/minimum salary for exemption. The employee was given an actual amount that the pay would be before the change occurred.

              Comment


              • #8
                I'm still not convinced this is not a violation of the prohibition against retroactive decreases. Employee was told he would receive a 23% decrease in salary; such decrease cannot, under the law, be retroactive. If I am understanding this correctly, the employer took the new annual salary, deducted what had already been paid since the beginning of the year, and came up with some new number, which was then divided over the pay periods remaining in the year. In my payroll mind, that is the same thing as a retroactive decrease.
                I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

                Comment


                • #9
                  Originally posted by Pattymd View Post
                  I'm still not convinced this is not a violation of the prohibition against retroactive decreases. Employee was told he would receive a 23% decrease in salary; such decrease cannot, under the law, be retroactive. If I am understanding this correctly, the employer took the new annual salary, deducted what had already been paid since the beginning of the year, and came up with some new number, which was then divided over the pay periods remaining in the year. In my payroll mind, that is the same thing as a retroactive decrease.
                  I was thinking along the same lines but the poster did stated the actual amount was given. So I can see both sides of the argument if a dispute is filed. While the employee was told it was an overall 23% reduction the employee was also given an amount on a go forward basis. If the employer had simply given the new amount and said due to the economy your salary is being lowered, without giving an explanation of how it was arrived at, then it would be much clearer.

                  Poster, what was the employee told would happen next year to the salary? Would the 76.7k be divided up by pay period or would the 60k still be used? If the higher amount is given then it would be evidence towards an illegal retroactive decrease.

                  Originally posted by adzikowski View Post
                  The employee was told in June of a 23% reduction to a lower annualized salary, which means retroactively for the year 2010. This adjustment in fact, resulted in a very real, 40% reduced amount to be paid for the balance of the year. The employer also gave the actual pay period amount going forward.

                  Comment


                  • #10
                    Still don't understand what all this has to do with Disability Leave (the forum it's posted in).

                    Comment


                    • #11
                      Originally posted by TSCompliance View Post
                      Still don't understand what all this has to do with Disability Leave (the forum it's posted in).
                      It doesn't.
                      I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

                      Comment


                      • #12
                        reduction in Salary New Jersey

                        Originally posted by Pattymd View Post
                        I'm still not convinced this is not a violation of the prohibition against retroactive decreases. Employee was told he would receive a 23% decrease in salary; such decrease cannot, under the law, be retroactive. If I am understanding this correctly, the employer took the new annual salary, deducted what had already been paid since the beginning of the year, and came up with some new number, which was then divided over the pay periods remaining in the year. In my payroll mind, that is the same thing as a retroactive decrease.
                        I would agreed with you. Although the company is not doing well, this seems to be an unfair retro active adjustment back to Jan 1st, a 40 % reduction in compensation for the remainder of the year. The employee is be made to pay back the 23% reduction YTD as if the employee borrowed the money. Poor mismanagement. The comp was earned, as agreed to and spent as entitled. This employee is not a partner or major stock owner.

                        Comment


                        • #13
                          Salary Reduction

                          Originally posted by HRinMA View Post
                          I was thinking along the same lines but the poster did stated the actual amount was given. So I can see both sides of the argument if a dispute is filed. While the employee was told it was an overall 23% reduction the employee was also given an amount on a go forward basis. If the employer had simply given the new amount and said due to the economy your salary is being lowered, without giving an explanation of how it was arrived at, then it would be much clearer.

                          Poster, what was the employee told would happen next year to the salary? Would the 76.7k be divided up by pay period or would the 60k still be used? If the higher amount is given then it would be evidence towards an illegal retroactive decrease.
                          Not a word was discussed about the following year. It is presumed that it would stay at 76.7k. The employer could very well keep it at 60k.

                          I am assuming these responses are from attorneys that specialize in this area?

                          Comment


                          • #14
                            They are from HR and payroll professionals (including me in payroll) with decades of experience.
                            Last edited by Pattymd; 06-20-2010, 12:13 PM.
                            I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

                            Comment


                            • #15
                              Originally posted by Pattymd View Post
                              They are from HR and payroll professionals (including me in payroll) with decades of experience.
                              Thank you Patty How can I get this out of the disability forum?

                              Comment

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