If my business is runningat aloss, canI reduce employee wages?
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If my business is runningat aloss, canI reduce employee wages?
I am a business owner and I have been in this business for about 5-6 months. We are not making enough money to pay my employees who are highly paid(and were so before I took over the business). Is it legal for me to reduce the wages of my employees? What are the possible consequence for doing this?
Asked on October 23, 2010 under Business Law, Ohio
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 14 years ago | Contributor
Do you have employment contracts with the workers--including contracts previous owners had signed and you took over? If you do, you are bound by their terms, but if you do not, your employees are employees at will and going forward, you can pay them anything you want. (They of course can quit if the don't like it.) By going forward I mean that up to the moment you make the announcement (whether to an individual or to the group) that you cutting wages, you have to pay them, for all work done to that point, at their old wage; from the moment of the announcement--which should be confirmed in writing, to avoid misunderstandings--you can pay them whatever the new wage is. Just make sure that in making cuts, you don't discriminate against protected categories, like a race, religion, sex, age over 40, or disability status.
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