Employer is going to take back pay increases from staff, need advice

Shadowfire

A bit of background - my company offers people two types of pay. One is benefitted, where any associate can receive medical, dental, vision, paid time off, disability, etc. The other is non-benefitted, and associates under this pay type receive a $1.00/hr increase in pay, but receive none of the benefits stated above.

Two days ago, it came down from the company that the non-benefited folks were not supposed to receive any pay increases, either. Ever. This was not explained to them upon hire, and they signed no paperwork stating such to my knowledge.

So this week, all of my employees who are non-benefited (I say my, because the vast majority of the employees in the store are in my department) will receive pay cuts. On top of that, their next pay check will be reduced by the amount they were "over-paid" since their "mistaken" pay raises.

This is where I need the advice. My employees all received their pay increases based on merit, as they are all excellent employees. A number of these folks are key people. I could sort of deal with the pay cuts if the company can prove that they signed paperwork acknowledging the lack of pay raises. However, they worked X amount of time under the assumption that they would be getting paid Y amount. Can the company legally take this pay back, under the auspice of "we told them so?"

I assume the answer is no - the pay increases were approved by management (all pay increases are signed by the employee, the store's HR director, and the store manager), and they were under the assumption they would be working for that pay rate. In that case, what is my responsibility as their manager? I will obviously be advising each and every one of them to seek professional help with this, but should I be going to the labor board once this goes through?

Thanks for the help, folks. Most of the employees being hit by this are damn good people, and don't deserve this kind of treatment, especially right before Christmas.

Thanatos

Call your state department of labor. Tell them what is going on. They should be able to advise you on the legality of what your company is doing.

MurphysParadox

It is very likely the company can change future pay rates at the drop of a hat. As for retroactively adjusting pay... it sounds dubious. Even if it is legal, I can't imagine this is a good idea. Since you are a manager, have you complained up the chain stating that this retroactive 'adjustment' will negatively impact your employees and most likely cause some of them to quit, further impacting the quality of work and, thus, the company's profits?

Either way, do what Thanatos says first since that's most likely the best option (assuming the person you speak to is actually able to function on a mental level at least one step above "hungry; eat now").

Peen

You could also (unofficially of course) advise your employees to check with a lawyer who knows the labor laws well and could tell them if they have any recourse that wouldn't involve you.

Endomatic

Yes, definitely look into this. Retroactively subtracting pay for a company "mistake" is pretty ridiculous in and of itself, but compounded with the fact that it only affects the non-benefited, is pretty wrong, especially because they likely won't get retroactive medical coverage.

CoJoeTheLawyer

You'll want an attorney well-versed in employment and labor law issues in your state of choice to handle this matter for you.

However, I will say that in Pennsylvania, minus a contract stating the contrary, that you and the other employees would be screwed. If an employer overpays you, they have the option of either requesting the overpayment back or reducing your current pay by a reasonable amount to regain the overpayment. The old “pay error in your favor” rule of thumb is long dead.

Crashtard

I have to agree with CoJoe here. In Michigan it's basically the same thing. I used to work for a bit retail chain, and I had a similar thing happen as the OP. It sucks, but there probably isn't much that you can do about it.

Lord Malory

CoJoe, the question I think would then really to prove that it was in fact a pay error, and not an internal policy created to control costs. Since the pay increase was approved by management, it is more difficult to prove a pay "error," and thus the burden of proof would lay on the employer to really prove its intent.

In Louisiana I know you can probably get away with this because ALL employment not through a contract is at-will. However, in other states, taking away someone's pay (cutting it) has to be carefully done because of employment law, verbal contracts, etc. Just a thought. I know it warrants looking into. Depending on the value that these pay cuts bring (ie affect employees) I think there would be a case. It just depends on how much crap people want to deal with in suing their employer en masse.

bowen

I think CoJo is operating under the assumption that this was "oh I accidentally paid you $20 more than I was supposed to can I have that back?" as opposed to "oh well, we're paying you too much and we don't like that, so we're going to cut your wage by $3 an hour and we didn't really mean for you to get raises at all. Also we're going to retroactively take all that money we paid you away because we want to. We're assholes like that. This wasn't in your contract, and we probably told you you'd get raises when we hired you so you'd take it instead of the one where we'd have to pay for benefits."

This is a seemingly shady and dubious tactic that is probably largely illegal no matter where you are. Unless you live in Zimbabwe. Your best bet is to contact the DoE and let them know that your company is retroactively removing a wage increase from a large number of employees because of a policy change that wasn't signed by the employee (as long as you have poof of that that wasn't on their contract). See how that fares.

Lord Malory

@above- this is what i was recommending in my own rambling way. A pay increase via policy can be taken to amend a verbal (or actual) employment contract, giving potentially increased weight to the employee's claim.

GungHo

Sounds like whether it's legal or not, you should expect to need to start interviewing for the positions again, because I don't know of a lot of people who are going to lay down and take that shit unless they're in a bind. I'd also suggest you be very careful about how you query about the changes up the chain and to the DoE, as you could easily be labeled as "not a team player."

capnrico

The "reasonable amount" is also usually something like $20 each paycheck for x paychecks, not all of it at once on your very next paycheck.

As everyone else has said, call the labor board, have them consult lawyers.

VThornheart

To twist the words of M.C. Hammer for the solution you need:

My, my, my this news hit you so hard
Made you say "Oh my Lord"
Why would they do this to me
Taking back my pay like it's some kinda fee
It feels bad, they kick you when you're down
Juggling your pay like they're some kinda clowns
And you know it sucks
And this is illegal much

(ohoh oh oh oh ohoh oh oh)

Don't give up, no chance
Contact your labor board, make 'em tremble in their pants
So move, go there right now
And get a lawyer and take your boss to town
While you still can, hold on
Tell your labor board, let 'em know what's going on
Like that, like that
You're on a mission now so you shouldn't fall back
And you know it sucks
And this is illegal much

Can't do that
Can't do that
They can't do that
They CAN'T do that

now STOP
...

Lawyer time.

When you hear of pay takebacks,
your boss will be in trouble
Better seek the labor board and you better do it double
Now who would ever let them do this?
And if they keep it up then you might as well quit
I've been around the law, they'll settle out of court
Pleading "Shadow! Oh Shadow! Shadowfire oh shadow! Why did you have to report?"

Can't do that
Can't do that
Can't do that
Can't do that
STOP.
Lawyer time.

In other words, as capnrico said.

Kalkino

Surely if the programme of pay increases for merit was across the board then it should be easy enough to prove that it was intended. That being said it depends on how hard your employees want to fight it. Fucking jerk like thing to do though - If I was in the US I'd be asking you to tell me who you work for (in PM) so I could avoid your employer in protest

Shadowfire

Crashtard wrote: »

I have to agree with CoJoe here. In Michigan it's basically the same thing. I used to work for a bit retail chain, and I had a similar thing happen as the OP. It sucks, but there probably isn't much that you can do about it.

The employment posters in New Hampshire state:

NOTICE TO EMPLOYEE: Employer must notify employee in writing when hiring of the rate of pay, or any changes prior to change; make available in writing, or by posted notice, employment practices and policies on vacation pay, sick leave, and other fringe benefits; furnish employee statement of deductions each payday.

So they are retroactively changing their pay, making the change not er... "prior." That's where my legal question comes in.

I guess I'm going to have to just call the department of labor as "Joe Concerned Citizen" at this point. Thanks folks.

VThornheart

Aye, I forgot you're a fellow New Hampshirite!

Indeed, they CANNOT do this. Not in our state. The department of labor will slap them SO HARD.

You win!

Shadowfire

VThornheart wrote: »

You win!

Doesn't feel like it.

VThornheart

Oh, you will though. You will. It won't be a comfortable road, but law is law. What your boss is doing is wrong, and the department of labor should be able to set them straight.

kaliyama

Depending how long the've been paying you for - it sounds luke they're trying to get away with changing their policy illegally (talk about bad legal advice they're getting) - and it's obvious they've been paying this out for a long time, then it will a) make a good case for laches or other equitable doctrines, and b) make it a lot less credible to a court that they really did this by mistake, rather than are attempting to retroactively dock people's pay.

Thanatos

They can't fire you for going to the state Department of Labor, Shadowfire. You should only be so lucky. Whistleblower protection laws mean you would get to sue the shit out of them.

Shadowfire

Thanatos wrote: »

They can't fire you for going to the state Department of Labor, Shadowfire. You should only be so lucky. Whistleblower protection laws mean you would get to sue the shit out of them.

There's two thoughts going through my head right now, though.

1 - if they want to, they can find a way to fire me. Of course they can't do so for this, but companies have strict rules that often appear ridiculous in order to create paper trails to get rid of people.

2 - I don't know if I want to work for a company that will treat employees in this way.

Thanatos

Shadowfire wrote: »

Thanatos wrote: »

They can't fire you for going to the state Department of Labor, Shadowfire. You should only be so lucky. Whistleblower protection laws mean you would get to sue the shit out of them.

There's two thoughts going through my head right now, though.

1 - if they want to, they can find a way to fire me. Of course they can't do so for this, but companies have strict rules that often appear ridiculous in order to create paper trails to get rid of people.

2 - I don't know if I want to work for a company that will treat employees in this way.

Companies tend to be extra-careful about guys who are whistleblowers, because if they lose, it tends to carry very large punitive damage awards.

Whether or not you want to work for them is, of course, another question entirely.

VThornheart

We'll look for a job together Shadowfire. You're in Dover as well right?

Well my job sucks too. Let's get out of where we're at and find new places to work. We'll be a PA dev team.

fightinfilipino

Thanatos wrote: »

Shadowfire wrote: »

Thanatos wrote: »

They can't fire you for going to the state Department of Labor, Shadowfire. You should only be so lucky. Whistleblower protection laws mean you would get to sue the shit out of them.

There's two thoughts going through my head right now, though.

1 - if they want to, they can find a way to fire me. Of course they can't do so for this, but companies have strict rules that often appear ridiculous in order to create paper trails to get rid of people.

2 - I don't know if I want to work for a company that will treat employees in this way.

Companies tend to be extra-careful about guys who are whistleblowers, because if they lose, it tends to carry very large punitive damage awards.

Whether or not you want to work for them is, of course, another question entirely.

you'd need to make sure that there are specific statutes that would protect the OP from this kind of whistleblowing. courts seem to favor protecting whistleblowers only if some pressing public policy was involved.

here, it could be easily argued that an issue of backpay isn't something that affects the public like, say, a chemical company employee notifying government officials about the company leaking toxins to the local populace or something similar.

in any event, the OP may want to consider getting a good local lawyer, but contacting the state DoE or DoL is always a good move too.

DrFrylock

Shadowfire wrote: »

So they are retroactively changing their pay, making the change not er... "prior." That's where my legal question comes in.

IANAL, but they seem to be doing this in a way that isn't necessarily retroactive. Let's say I made $100 last week, but the company only really wanted to pay me $90. But you said:

So this week, all of my employees who are non-benefited (I say my, because the vast majority of the employees in the store are in my department) will receive pay cuts. On top of that, their next pay check will be reduced by the amount they were "over-paid" since their "mistaken" pay raises.

You said in the OP that they're not taking $10 back from me, they're just going to pay me $80 next week, and $90 a week for every week thereafter. If they're doing it this way, they're just reducing my salary to $80 for a week, and then giving me a "raise" to $90 the next week, right? What if I quit today? I assume I'd get to keep the extra $10.

I dunno, this just doesn't seem fully clear-cut to me.

VThornheart

Hmm... I suppose they could do it like that Frylock, that would be a way for them to con their way into an effective "retroactive" cut through a loophole.

But that's dastardly. It's the kind of dastardly that one could feel completely justified forming a union and going on strike over.

Shadowfire

DrFrylock wrote: »

Shadowfire wrote: »

So they are retroactively changing their pay, making the change not er... "prior." That's where my legal question comes in.

IANAL, but they seem to be doing this in a way that isn't necessarily retroactive. Let's say I made $100 last week, but the company only really wanted to pay me $90. But you said:

So this week, all of my employees who are non-benefited (I say my, because the vast majority of the employees in the store are in my department) will receive pay cuts. On top of that, their next pay check will be reduced by the amount they were "over-paid" since their "mistaken" pay raises.

You said in the OP that they're not taking $10 back from me, they're just going to pay me $80 next week, and $90 a week for every week thereafter. If they're doing it this way, they're just reducing my salary to $80 for a week, and then giving me a "raise" to $90 the next week, right? What if I quit today? I assume I'd get to keep the extra $10.

I dunno, this just doesn't seem fully clear-cut to me.

I dunno how better to describe it... I'll try, I guess...

On October 1st, you receive a $.25/hr raise. This raise is signed off on by management, and paid out by the corporate office. You work 40 hours a week, resulting in $10 extra each week.

On December 1st, you are informed that your raise was a mistake, and that all money made based on that raise will be deducted from your paycheck. In this case, roughly 8 weeks worth, or $80 will be deducted from your paycheck next week. Keep in mind again that your raise was approved by management, and that you worked those hours over the past two months under the agreement that you would be paid (pay rate +0.25).

DrFrylock

Shadowfire wrote: »

I dunno how better to describe it... I'll try, I guess...

On October 1st, you receive a $.25/hr raise. This raise is signed off on by management, and paid out by the corporate office. You work 40 hours a week, resulting in $10 extra each week.

On December 1st, you are informed that your raise was a mistake, and that all money made based on that raise will be deducted from your paycheck. In this case, roughly 8 weeks worth, or $80 will be deducted from your paycheck next week. Keep in mind again that your raise was approved by management, and that you worked those hours over the past two months under the agreement that you would be paid (pay rate +0.25).

If they're trying to take it out of a paycheck for hours worked before they informed you of the 'mistake,' then they probably can't do this. However, if they're going to take it out of your hours worked AFTER they informed you, how is that any different than getting a temporary pay cut?

Shadowfire

DrFrylock wrote: »

Shadowfire wrote: »

I dunno how better to describe it... I'll try, I guess...

On October 1st, you receive a $.25/hr raise. This raise is signed off on by management, and paid out by the corporate office. You work 40 hours a week, resulting in $10 extra each week.

On December 1st, you are informed that your raise was a mistake, and that all money made based on that raise will be deducted from your paycheck. In this case, roughly 8 weeks worth, or $80 will be deducted from your paycheck next week. Keep in mind again that your raise was approved by management, and that you worked those hours over the past two months under the agreement that you would be paid (pay rate +0.25).

If they're trying to take it out of a paycheck for hours worked before they informed you of the 'mistake,' then they probably can't do this. However, if they're going to take it out of your hours worked AFTER they informed you, how is that any different than getting a temporary pay cut?

Right, and that's exactly what I was getting at in my OP. Guess it took to here to get it straighted out...

Papillon

Corporate might find your store has the world's fastest unionization ever. Especially if they can be in a position to strike by Christmas Eve. I.e. you might not need to do anything; your employees might find a way of making their displeasure known sufficiently strongly by themselves.

Dis

Isn't securing a job more important now?
It's a time of RECESSION.
A couple of my friends are jobless, being laid off.

Sol Invictus

Dis wrote: »

Isn't securing a job more important now?
It's a time of RECESSION.
A couple of my friends are jobless, being laid off.

Doesn't mean you can't find new work if you have the right set of skills and experience under your belt. A few of the chaps I know who lost their jobs at EA in the recent weeks have managed to land positions at Ubisoft pretty quickly, for example. But then I suppose gaming's supposed to be 'recession resistant' so maybe we just haven't been hit as hard as other industries.

VThornheart

It depends on your industry... and I'd say merely the fact that we have a recession is a poor reason to stay with an employer who may intentionally be abusing that fact.

If they did this because they know people are afraid to lose their jobs, how much further will they be willing to go if the recession continues?

Shadowfire

Sol Invictus wrote: »

Dis wrote: »

Isn't securing a job more important now?
It's a time of RECESSION.
A couple of my friends are jobless, being laid off.

Doesn't mean you can't find new work if you have the right set of skills and experience under your belt. A few of the chaps I know who lost their jobs at EA in the recent weeks have managed to land positions at Ubisoft pretty quickly, for example. But then I suppose gaming's supposed to be 'recession resistant' so maybe we just haven't been hit as hard as other industries.

Also, companies are always hiring in this area... unemployment is sitting around 2% here, because there's not enough people for the number of jobs available. That 2% is people coming/people going, and those who don't want to (or can't) work.

Pheezer

Can't hurt to look for work, and so long as you don't make a stink until after you've checked all of your facts, I can't imagine it biting you in the ass if you were to go asking questions with your local labour authorities.