Wat are my options if the company I work for was sold and my new employer wants to switch me from salary to hourly but at a significantly lower pay rate?

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Wat are my options if the company I work for was sold and my new employer wants to switch me from salary to hourly but at a significantly lower pay rate?

I am a salaried general manager of a major top 3 chain pizza shop. I have worked in the same general area for 16 years during which different franchises have owned and sold these stores repeatedly. I have been a salaried employee for the last 11 of those years. We were just sold again last week and the new owner wants to switch me from a salaried employee at $750 for a 40 hour week which is approximately $18.75/hr to $13.00/hr with hours over 40 still being paid a flat $13.00, so nothing extra for overtime. I did not have a contract with the previous company but the new owner would like me to sign one accepting the reduced pay. I don’t want to quit but I can’t afford to take such a substantial pay cut. Do I have any options?

Asked on May 12, 2019 under Employment Labor Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 2 years ago | Contributor

1) Your employer has 100% discretion to set, change, or reduce your pay at will, so they may do this.
2) However, they have to follow the law, which includes that any hourly employee MUST be paid at the overtime rate (time-and-a-half) for any work past 40 hours in a week. Hourly employees are never exempt from overtime, so if you were switched to hourly, you are now overtime eligible. If you work more than 40 hours and are not paid at the overtime rate, you could contact the state or federal department of labor to file a complaint.
3) You might be able to quit and get unemployment compenation. When someone's job is changed so much for the worse that no reasonable person would do it, that person could be considered to have been "constructively"--or effectively--fired, by essentally forcing them out. A significant-enough pay cut can be enough to consitute constructive termination. But there is no hard-and-fast rule for when a pay cut is large enough to be constructive terminaton: it is a subjective determination, made on a case-by-case basis. We can advise that the almost one-third cut you describe is in the ballpark for constructive termination, but we cannot guaranty that if you were to quit on that ground, that you would indeed get unemployment benefits.


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