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Pay cut may be legit reason to quit, collect unemployment

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in Compensation and Benefits,HR Management,Human Resources

To deal with a down economy, employers sometimes cut employee pay. A significant pay reduction may be grounds for an employee to quit and collect unemployment.

Recent case: Wallace Palmer worked for a school district as its HR director. He was informed he would soon see his $121,000 salary reduced significantly.

Meanwhile, a subordinate complained about what she said was an inappropriate telephone call Palmer had made. The district offered him a chance to resign. He did and filed an unemployment compensation claim, arguing that he quit because of the pending pay reduction.

The court said that a pay cut of 25% or more can legitimately justify a former employee receiving unemployment compensation. But the court rejected Palmer’s bid, saying it was clear he quit because he was about to be fired—and that doesn’t justify unemployment comp. (Palmer v. Intermediate District #287, No. A10-108, Court of Appeals of Minnesota, 2010)

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