If some of your employees work under an employment contract that sets salary and other terms, be careful about changing anything. While you may need to cut salaries during tough economic times, doing so without getting a written modification is risky.
Recent case: Richard Sloan worked for an industrial cleaning service as sales manager. He had a written employment contract setting his annual salary at $75,000. When the company ran into financial trouble, it cut everyone’s salary across the board—including Sloan’s. He kept working for 33 more months, then quit and sued for the unpaid amount.
A court awarded him $42,000 in damages. The company appealed, arguing that Sloan accepted the changes by continuing to work. The appeals court disagreed and upheld the award. (Sloan v. Shaffer, No. 2008-T-0013, Court of Appeals of Ohio, 2008)
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