Can an employer pay some employees at full rate and others at a partial rate?

I work for a young, pre-revenue company. After the company raised money, the CEO started paying employees but paid some employees their agreed to salary and others at a percentage of their salary. The company’s employment agreement says that the company can pay based on available capital and revenues but is it legal to pay some employees their full salary while paying others only a percentage of their salary?

Asked on September 18, 2017 under Employment Labor Law, Ohio

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

So long as the terms of any applicable employment contract (or union agreement) is not being violated, then compensating employees differently is legal. That is so long as it does not constitute some form of legally actionable discrimination. In other words, differing or less favorable treatment cannot be based on a worker's race, religion, age (over 40), disability, nationality, etc. Otherwise, not all employess need be treated the same or even fairly.


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