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  • Involuntary Pay Reduction

    My employer has announced that senior employees (which for some absurd reason includes me ) will take a 20% pay reduction effective January 1.

    This is highly regressive; my boss makes three times what I make (around 60,000 annually).

    What is Massachusetts law regarding pay reductions and what are my options? What if I refuse? If they fire me on what basis will my unused vacation and other termination be based?

    Thank you so much for your help.

  • #2
    If you are hoping to find a law that says pay reductions are illegal, there isn't one.

    If you are hoping to find a law that says pay reductions can never exceed x or x percentage, there isn't one.

    When, exactly, was this announcement made? Pay cuts are legal, but cannot be retroactive.

    You don't get to refuse. Barring a binding contract that says otherwise, a pay reduction is legal. Your options are to accept the pay cut or find work elsewhere. If you are fired for "refusing" a pay cut, it's anyone's guess if you will qualify for UI. If I am not mistaken, vacation payout would have to be at the rate it was earned.
    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.

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    • #3
      Thanks CBG.

      It wasn't the answer I wanted, but it was very helpful.

      I appreciate your help.

      Roland

      Comment


      • #4
        I can't offer you any guarantees, because it is very situation specific, but in some states (and I think our fair state is one of them) if the pay cut is drastic enough, you might qualify for partial unemployment IF you stay on the job. They aren't going to pay you to quit, and being fired for refusing a legal change in the terms of your employment often (but not always) disqualifies you for UI benefits, but if you stay on the job at the lesser salary, your MIGHT be entitled to something to make up the difference. It's worth a phone call.
        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.

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        • #5
          Several other employees here have benefited from your advice. Some are even in worse shape than I. 20% of 40,000. $8,000...Ouch. There will be lots of people leaving, including me I think. I think it is a dodge to avoid severance, but I imagine that would be difficult to prove.

          Thanks again for your help.

          Comment


          • #6
            Severance is not required by law anyway, unless guaranteed by bona fide contract or binding policy. Granted, in MA it is easier to prove a company policy binding than in many other states, but the law does not provide guaranteed severance.
            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


            • #7
              One other thought to add to Cathy's posts, if the pay-cuts are significant, you might have a claim for constructive termination (that's where an employer's done something that made it so difficult to continue your employment that they've effectively fired you by forcing you to quit). In that case, you could probably get UI.
              This post is by Philip Gordon, a Massachusetts employment attorney (www.gordonllp.com).

              This post is NOT legal advice. It is for general/educational information purposes only. You should not rely on this post if you are making decisions, and it does not create an attorney-client relationship. This post may be considered "advertising" under the MA professional rules for attorneys.

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              • #8
                Thanks Phillip. That is a very interesting idea. Roland

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