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Take a pay cut or leave: Is such a demand legal?

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in Compensation and Benefits,Hiring,Human Resources

Q. We’ve concluded that a small group of our employees don’t appreciate their jobs. We’d like to post their jobs and replace employees who won’t take a pay cut with unemployed people who will work for a lower wage. Is this a problem? — A.D., New Jersey

A. Assuming that your workers are employed on an at-will basis, you are at liberty to change the terms of their employment prospectively, as long as it’s not for an unlawful reason (e.g., because of these employees’ gender, race, age, etc.).

But be aware: Depending on the amount of a pay reduction you are contemplating, it’s possible this action could qualify the affected employees for unemployment compensation. Also, realize that labor unions have increased their presence and these are the types of actions that could spawn organizing activities.

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