If the company is giving out a COLA, can they exclude any employees?

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If the company is giving out a COLA, can they exclude any employees?

One employee recently had surgery and has limitations. His supervisor says he is too slow, so they are holding back his small COLA.

Another employee older and does not speak English was told his COLA was being held back because he doesn’t know how to use a computer. He has been doing his job for over 15 years.

Asked on July 8, 2016 under Employment Labor Law, California

Answers:

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

Answered 4 years ago | Contributor

Employers are not obligated to give raises, COLA's or otherwise, unless there is a union agreement or employment contract to the contrary. Therefore, to the extent that they do, it is a discretionary benefit therefore an employer has a great deal of say in who does or doesn't get one (so long as all employees receive at least the legal minimum wage). In an "at will" employment arrangement, employers can set the conditons of work much as it sees fit. In fact, not all employees need be treted the same or even fairly for that matter. Differing treatment is perfectly permissable so long as it does not contitute legally actionable discrimination. In other words, you can receive lesser treatment unless it is based on your race, religion, disability, age (over 40), nationality, etc. Accordingly, to the extent that age, race and/or nationality are the reasons for not receiving a raise, then those employees may have a claim. They can file a claim with their state's department of labor, contact the EEOC or consult directly with an employment law attorney.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

As a general matter, there is no obligation to provide any raise, including a COLA, ever: it is purely voluntary on the part of companies, and the law does not require raises. And the law does not require employers to treat all employees the same: employers may treat some employees better than others. Therefore, a company is free to give raises to some employees but not others, since it could also choose to not give any raises at all, and may freely treat some employees differently than others.
However, there are exceptions. Companies may not discriminate against employees due to medical disabilities, and may also not discriminate against employees because of race or national origin. In addtion, companies may not discriminate against employees who are over 40. Not giving a raise to an employee who had surgery and "has limitations" could be disability-based discrimination, while not giving a raise to an older, non-English speaking employee could be illegal age-based discrimiantion, or discrimination based on race or national origin (if that is the reason he does not speak English). These two employees may wish to speak to the federal EEOC or the state equal/civil rights agency to see if the do have viable discrimination claims.


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