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new owners - complete pay system restructuring - Iowa

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  • new owners - complete pay system restructuring - Iowa

    1 yr ago my employer sold his 30-ish employee company to a much much larger company from a neighboring state.
    because of that companies distribution agreements with their vendors they could not own a company as xxxx company in the region where my employer is.
    so a few of the owners in the purchasing company started a small company in iowa with a different name in order to purchase my employers company and here i am today.

    1yr ago we redid our noncompete agreements to not be so strict but still protect my our new owners, and i am fine with that but in that agreement they clearly state, and i quote word for word directly from the form....
    "We will maintain the current pay and structure as has been maintained over the past year, with the singular exception that the "Timeliness Bonus" will need to be managed on a Bi-weekly basis in order to coordinate with the payroll cycle."
    The new form is actually called "Employee Offer with XXXXX company (dba XXX XXX company)

    (i have been with my employer for 7.5 years and the pay system has been in place for all 7 1/2 years)

    now, last week we were informed of, and given a completely different pay structure where i am losing over $2000/mth in sales commission given equal sales dollars and sales margin when compared to the old system.
    they are implementing a base Salary and a Salary At Risk system to replace the commission.
    (it drives growth they say, and i say.. you are cutting our pay no matter what way you spin it, why would anyone strive for anything but new employment?)

    basically what they have me at now for base salary plus "at risk" salary if i hit their lofty goals is $42k/yr - this is peanuts for what i do. i have repeatedly made more than that in the past 7yrs.
    if i were to sell the same dollars at the same sales margin they are now requiring, i would receive over $62,000 with the old system.
    this is gross annual income

    even if i doubled my sales on the new system i would still not hit that $62k/yr of the old system at the baseline goal.

    given that we signed an "Employment Offer" which clearly states the pay system will not change except for the timeliness bonus, can they legally do this.

    do i have a legal to stand on.
    in my eyes they are in breach of contract. (employment agreement)

    when my manager presented this to me i was internally appalled, and VERY politely, as i always do with him (or he gets elevated), mentioned that the new owners promised us (they did promise us, openly and repeatedly in a large group) that we would not make less money, and given the MASSIVE increase in sales goal, i expected to see a more appropriate commission. (i was fine with the salary since i am in sales and the bulk of my income is commission) i am also fine with the lofty new goal. what i am not fine with is the massive cut in pay as i get to that goal and when i exceed it.

    he responded with, "you have not proven to me that you are worth more"

    my reply was, thats odd because just a few days ago and for the last 7 years i was worth being paid as much as i was.
    he said that i needed to do this for the company and that i cant look at the "old way of being paid"
    i can take it or go find somewhere else to work since not accepting it is ok, it just shows i am not onboard with the new owners plan.

    let's just say i almost broke out my phone right there to call Iowa Work Force Development.

    but i refrained and i said i am onboard with what the new company is doing to grow the company but the new pay system is clearly putting me in the red and for no good reason.

    he started to get elevated as he always does (he is the worst manager of people i have ever seen) so i quickly shifted the conversation to other things.

    in the end i said i would review the new system and let him know.

    later that day i emailed one of our new owners to let him know that i was not pleased with the new system and laid out for him the real life numbers of the old and new pay system and how i was not given ANY justification as to why i was expected to take a $22,000+/yr paycut.
    and that being told i was not worth more money was VERY belittling to me and that we needed to talk about that also.
    at the time i did not think about the employment agreement that we all signed which says the pay will not change.

    how do i deal with this?

    i cant lose my job and being in Iowa.. well, they can fire me and thats that. sure i could get unemployment i imagine, but i dont want that.
    i like my job, for the most part i like the people i work with, and our new owners i think have a vision that can work.

    but they are... in my eyes... breaking the working agreement i signed a year ago. and frankly am not sure of the legal side of such a huge drop in pay.

    scared, worried, and upset
    in C.R.

  • #2
    You would need to take the whole agreement/offer to a local attorney to see if it rises to the level of a contract. However, in most cases, it does not. Especially if somewhere at the end of the agreement they state they have the right to make changes. Unfortunately, you can't just look at one section and interpret it without analyzing the whole thing.

    That said, generally pay changes can be made going forward at any time absent an actual contract. That includes base pay and commission plans.

    Comment


    • #3
      By all means take whatever contract you have to a lawyer but there is a 99% chance this is totally legal. The new company doesn't have to use the same method nor keep the pay the same as the old one. It is totally and completely legal to develop their own method of calculating pay.

      Quite frankly, you come across as very entitled and arrogant. Your "worth" has nothing to do with your pay and insisting that they owe you more money than you are able to make is not going to be very well received. For one thing, these new owners don't know you well enough to know whether you deserve to make more monry or not, but that is also very subjective. If you are so sure that you can make more money elsewhere, apply elsewhere. You can not force this new employer to pay you more. At best, if they are not paying according to the contract you signed (assuming it is a contract), you can take legal action to enforce the agreement. What you can not do, is force the new owners to abide by the plan the old owners created.
      I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

      Comment


      • #4
        Originally posted by ElleMD View Post
        By all means take whatever contract you have to a lawyer but there is a 99% chance this is totally legal. The new company doesn't have to use the same method nor keep the pay the same as the old one. It is totally and completely legal to develop their own method of calculating pay.

        Quite frankly, you come across as very entitled and arrogant. Your "worth" has nothing to do with your pay and insisting that they owe you more money than you are able to make is not going to be very well received. For one thing, these new owners don't know you well enough to know whether you deserve to make more monry or not, but that is also very subjective. If you are so sure that you can make more money elsewhere, apply elsewhere. You can not force this new employer to pay you more. At best, if they are not paying according to the contract you signed (assuming it is a contract), you can take legal action to enforce the agreement. What you can not do, is force the new owners to abide by the plan the old owners created.

        I take it the moderators around here are actual business owners because the replies I see from you people are nothing short of ... "If you don't like it tough poop"

        That is appalling ... This place is to help people and all I ever see form you moderators is belittling comments meant to discourage employees from taking action against dirty greedy employers.

        That being said... I am not sure who you are but if my worth and value to the company isn't how I should be paid then I pity, truly pity anyone who works under you.

        Your comments are not helpful at all.

        I am not asking for equal pay, I am asking for fair compensation for what I do and what their lofty annual sales expectations are. And the pay they are offering for that is laughable.

        I am a commission based employee and I should expect a commission which reflects my performance and sales brought into the company.

        My worth has been laid out over the last 7 yrs and if they can't see that in my sales dollars and compensate me for it then we are truly worse off than we were before.

        Their payment scheme in no way shape or form promotes growth, there is no reward for excellence.
        So why should anyone excell when the reward is minimal compared to what we were getting paid.
        If their intention was to buy the company and rake the employees over the coals they are in for a rude awakening.
        Our company has a problem hiring people because the pay has never reflected what we put in... And now with it being exponentially less,,,well let a few people leave and maybe they will wake up

        Comment


        • #5
          Originally posted by hr for me View Post
          You would need to take the whole agreement/offer to a local attorney to see if it rises to the level of a contract. However, in most cases, it does not. Especially if somewhere at the end of the agreement they state they have the right to make changes. Unfortunately, you can't just look at one section and interpret it without analyzing the whole thing.

          That said, generally pay changes can be made going forward at any time absent an actual contract. That includes base pay and commission plans.
          Thank you HR.

          The agreement does not state changes can be made. To read it for what it is, would mean I am to get paid in the same manor I did in 2011. I was in 2012... But now in 2013... Completely different and not even remotely equal.

          I will take their pay system if they offer me more because right now a $22,000 annual pay cut is not working.
          Yes,... It's a twenty two thousand dollar annual pay cut.

          Comment


          • #6
            If you think you have a contract then take it to a lawyer for review. However usually employment offers contain language about it not being a contract and not negating an at-will environment. A lawyer would need to read the entire employee offer letter, not just a segment.

            If it turns out that you don't have a contract, then the owner can change the pay structure as they deem appropriate. I worked for many years in a car dealership. The commission structures there were changed roughly twice a year. If it didn't have the desired results or if the management changed then the commission structure was changed again.

            By the way, most of the volunteers on this board are not business owners but HR professionals with decades of experience. That is why we know that if what is being done is legal, the only thing an employee can do is to look for another position or suck it up. Sorry if that cold reality bothers you.

            Comment


            • #7
              No desire to be a business owner. Unfortunately, the law just doesn't support what you wish to happen.

              Worth not havin gto do with pay is an honest statement. The Janitor isn't worth less to the company just because his salary is on the low end of the spectrum. Some jobs just merit or command different amounts of compensation. If you start equating your worth with how much you are compensated, you are going to be disappointed. Yes, a 22K decrease is undesireable and if the company starts having problems recruiting and retaining solid employees because they are paying below market, they will probably change it. If everywhere else is paying more, by all means, go for a job that pays better. You just can't force them to change their compensation plan so that you make as much as you did before or more.

              If you are lobbying for change, an entitled attitude is not going to persuade the company to change. Whether that is how you feel or not, it is how you are coming across and that is unlikely to inspire your employer to increase your pay. Remember they are the ones who came up with the plan so they think it is just fine and dandy. Telling them they are "wrong" takes diplomacy and finesse.
              I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

              Comment


              • #8
                Also the economy/laws/regulations have changed a lot in the last few years. This year, I am definitely making less than I have in some years. At one point I did take over a 20% pay cut. Why did I stay? Because of the flexibility of schedule/workplace and other benefits. They work well with my family responsibilities. I tend to be loyal and know that there will be a reward if the economy does pick up.

                It is very possible that the prior company was not making as much as you think it was. Unless you were privy to actual financial statements, you might not realize it, especially if you don't see the expense side of the equation and only the sales/income side of the equation. Two of our sub companies have lost money for the last 3-4 years but the employees still feel like they should be making the same (or more). Ever increasing pay is just not this economic reality.

                The new owner may be "resetting" pay to match the new reality. They could be looking for MORE profit, but often times, I see companies do this just to not LOSE money. Either way, not illegal unless you have a contract that doesn't allow for it. But again, that would be very very rare especially at the level of pay you are at. I've seen executives that are guaranteed certain pay for certain periods of time, but very rarely the general workforce.

                Comment


                • #9
                  I am making 30% less than I was making in 2006. Life happens and it isn't always fair.
                  The above answer, whatever it is, assumes that no legally binding and enforceable contract or CBA says otherwise. If it does, then the terms of the contract or CBA apply.

                  Comment


                  • #10
                    Originally posted by pmbj View Post
                    I take it the moderators around here are actual business owners because the replies I see from you people are nothing short of ... "If you don't like it tough poop"....
                    No, actually only a few of us either are small business owners or work in the Human Resources field. Bad news is, we don't write the laws. We only know from experience. Sometimes what we say is considered belittling or insulting, but in those instances more often than not it's because the person asking the questions either does not understand the law, or it could be answers they do not like or are not ready for.

                    If you feel that your "worth and value" is underpaid, disrespected or both, I suppose you can start looking for work elsewhere. You may hit the jackpot and find an employer that agrees with you. To that I say good luck because unless you are an independent contractor, you are bound to the opinions of your employers. If they say you're top of the line, congrats. Hopefully they'll pay you that well, too. But they can also say that you're mediocre and pay you as that, and all you can do is look for work somewhere else. I have BTDT got the t shirt. I remember how good it felt when I could introduce myself and tell a prospective employer that I'm looking for work and in a couple cases I didn't have to do an application. Get hired right there, and they give you the app to fill out on coffee breaks. But then times changed.

                    Then it didn't matter how good I was. It didn't matter what my certifications and credentials were. There were people with bigger and better resumes than mine and they wanted jobs too. Thus on occasions like that I welcomed getting hired by, or all places, Burger King. Hey, it's not just a low paying mediocre job, it's an opportunity. And a paycheck.

                    I think it would be your best move to stay there and start updating your resume and look around. After a few months of searching you may find your dream job or you may find what many of us have- nothing worth applying for. BTDT as well. Really sucks when you apply for jobs left and right only to find that you're better off staying with the current employer, even though they may be the least desirable to be with. What counts in the end isn't the medals on your chest, it's the paycheck they give you. When you have new owners, you have to prove yourself to them all over again.
                    I don't believe what I write, and neither should you. Information furnished to you is for debate purposes only, be sure to verify with your own research.
                    Keep in mind that the information provided may not be worth any more than either a politician's promise or what you paid for it (nothing).
                    I also may not have been either sane or sober when I wrote it down.
                    Don't worry, be happy.

                    http://www.rcfp.org/taping/index.html is a good resource!

                    Comment


                    • #11
                      This place is to help people and all I ever see form you moderators is belittling comments meant to discourage employees from taking action against dirty greedy employers.

                      That being said... I am not sure who you are but if my worth and value to the company isn't how I should be paid then I pity, truly pity anyone who works under you.

                      Your comments are not helpful at all.
                      15 years ago I was making more than $100K a year as a plumber.

                      I am not asking for equal pay, I am asking for fair compensation for what I do and what their lofty annual sales expectations are. And the pay they are offering for that is laughable.
                      That amount was only 14% of the amount I brought in. I was a salesman, troubleshooter, as well as an installer. It was one of the greatest learning experiences of my life.

                      Today I work when I want, and for whom I want. I built a house over the summer to help out a family that needed it. I charged 10% of what the going rate is. I work here for free, along with everyone else, to help out people. We tell the truth, and have nothing to gain by
                      belittling comments meant to discourage employees from taking action against dirty greedy employers.
                      From my experience as both a worker, and as an employer, I see an attitude in you that would cause people to find ways to "encourage" you to find other employment. I do just that. Find someone that will kiss the ground you walk on, and will pay you as much as you think you are worth.

                      Happy Hunting.

                      Comment


                      • #12
                        I'd venture to say, few of us in HR feel like we are adequately compensated for what we provide to the company. And I'd say that's probably true of 99% of the working population.

                        However, nothing is going to force a. Company to pay you what you feel you are worth. Start looking a find another job that meets your pay expectations.
                        I find that the harder I work, the more luck I seem to have.
                        Thomas Jefferson

                        Comment

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