I know a gentleman who has worked for the same company for thirty years. He has been a dedicated employee, always on time and doing what was asked of him without complaint. In the last couple of years, a new company purchased the manufacturing company and decreased his pay from $25/hr to $9/hr. He is so used to being pushed around that he won’t speak up about it. Is what they did legal? Should he be advised to take legal action? Thank you for your time and expertise!
If they notified him in advance (and in writing in some states), then yes, cutting pay that drastically is legal–as long as that is at least the minimum wage where he lives.
We all know that companies can raise pay (and we are typically happy when they do), but we don’t often think about how they can lower it as well. They have to give advance notice because otherwise, you’re working for something you didn’t agree to. (I assume that, technically, you should be given advance notice before a raise, but no one will complain about that.)
There are times, though, when it is illegal to cut pay. They all have to do with the reason they are cutting pay, not the lowered pay itself.
If you are cutting pay because
- The employee is White/Black/Hispanic/Asian/Mixed-Race/Speaks with an Accent/Comes from France/etc
- The employee is pregnant
- The employee has a disability
- The employee took a protected leave (ADA or FMLA or other protected leave)
- The employee filed a workers’ compensation claim
- The employee filed a legal complaint
- The employee is religious/not religious
- The employee is gay/straight/transgender (in most jurisdictions–the courts are still battling this, but regardless of legalities, we don’t do this)
- The employee is old (as defined as 40 or over)
Then the pay cut is illegal. This is not an exhaustive list.
In this case, if the new company bought the old company and lowered everyone’s wages, then it’s probably legal. But, if your friend was targeted because of his age, then it would be illegal. So, if younger employees got to keep their high wages and he didn’t, then it’s illegal. But, if he had a high wage because of his tenure, but was doing the same job as others making $9 an hour, it would be legal to bring him to the same pay level.
Can he do anything? Well, first off, he should start looking for a new job, because they suck. Second, if he believes his pay was lowered for an illegal reason he can file a complaint with the EEOC or he can hire a lawyer. But, if it was a simple case of the new company comes in and slashes everyone’s pay, then it’s not illegal. But he should still find a new job. Many companies would love to have a dedicated, responsible employee.