If my employer told me that I can either take a salary cut or return my company vehicle, is that legal?

UPDATED: Oct 1, 2022

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If my employer told me that I can either take a salary cut or return my company vehicle, is that legal?

I have been working for this company for 10 years. When I was hired the company agreed to a certain exempt salary with a company vehicle. Recently, they told me that if I don’t want a salary cut that I must return the vehicle. What should I do?

Asked on January 5, 2018 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If you have a written contract for a defined period of time (e.g. a ten-year contract) which is still in effect and which guarantees you the company vehicle, the cannot take it away in violation of the contract. However, without a written contract guarantying a benefit or perk or salary, an employer is free to change (including reduce) benefits or compensation at will. So the employer may legally either take away the car or cut your salary--or give you a choice between the two--if you don't have a written contract guarantying  you both the salary and the car.
The fact that you are over 70 most likely does not matter in this case: employers may make legitimate, non-age-related decisions even if they negatively impact an older employee. Reducing costs by either taking back the company car or reducing your salary to compensate for the car is a legitimate economic decision that is not age related.

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.

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