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Give workers advance notice when altering their pay formulas

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in Compensation and Benefits,Human Resources

Never rework compensation packages behind employees' backs. Provide advance notice when making changes that affect their compensation or benefits.

Nearly every state has a wage-payment law requiring you to pay employees in a timely way and to notify workers in advance of changes affecting their pay.

Recent case: Sales rep Gerald Winslow received pay solely on a commission basis. But, without notice, his employer changed the company's commission formula, causing Winslow's pay to drop significantly. He didn't find out until he opened his check.

He sued, alleging fraud and violation of New Jersey's wage payment law. A state appeals court sided with Winslow. Plus, the fraud claim stuck because the company's sales managers knowingly withheld information about the pay change. (Winslow v. Corporate Express, No. A-6309-01, New Jersey App Div., 2003)

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