20% salary reduction retroactively. Legal?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

20% salary reduction retroactively. Legal?

Due to the economic downtown, our firm’s owner is planning to do an across-the-board 20% pay cut. He plans to notify people on 6/18 that their paychecks on July 1 (for work performed in June) will be at the reduced level. Is that legal? Thanks.

Asked on June 17, 2009 under Employment Labor Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 14 years ago | Contributor

No, he cannnot unilaterally reduce your salaries for work done prior to the announcement of reduction. Therefore, if he announces a reduction on June 18, he can reduce salaries from that moment forward, but not for work performed already from June 1 to 17.

That's not to say that he might not have leverage to get you and other employees to agree--if for example, he says (and you believe) that the firm's cash flow is inadequate and it simply *can't* pay full salaries, or that paying the full salaries would make it insolvent, well, then you'd have to decide whether believe it and if so, whether you will agree to the reduction. However, that's the key point--unless the company actually goes bankrupt, it needs the agreement of any creditor (including workers waiting for a paycheck already earned) before it can reduce the amount owed. (In bankruptcy, the bankrupctcy court would adjust what is owed to various parties based on what the firm can pay.)


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption