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.
3 thoughts on “Can a Pay Cut from $25 to $9 per Hour Be Legal?”
Agreed. He needs to look for a new job. Lowering an employee’s pay from $25 to $9 is a bit much. Depending on his financial obligations, he will probably need a new one (additional income).
Just the usual All-American cost-cutting tactic designed to get a ‘voluntary’ resignation instead of paying severance or unemployment-insurance.
Agreed with both of the other comments, he needs to get another job but left out of description was why he got such a decrease in pay, other than new company taking over.
I have seen similar situations when my last company closed down entire company. During the remaining time period we were still open, different stores were sold to different companies and negotiations were made by union for that specific company to re-hire the employees at store at what every payrate they wanted to pay. Some of us, were age discriminated against with no offers of full time and only guaranteed 10 hours a week, even with union push for hire.
He probably took the paycut to keep the full time status and health benefits and has a part time job to offset the difference in pay. After 25 years, he’s probably in his 40’s already, so any new job he will need re-training for new skills, especially in the field of manufactoring
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