Employees taking pay cuts to stay on the job during coronavirus pandemic

Published: Apr. 21, 2020 at 6:26 PM EDT
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(04/21/2020) - ESPN recently asked 100 of its highest paid employees to take a voluntary 15% pay cut over the next three months to compensate for the loss of revenue due to the coronavirus pandemic.

ESPN is not alone. Companies across the country are making similar moves to stay afloat.

"At this unprecedented time, employers are looking at all types of options as far as how to deal with their employees," said human resources expert Vanessa G. Nelson, who is president of Expert Human Resources in Flint.

For the past 10 years, she has been advising businesses on how to structure their human resources departments. She said there are a few things companies would have to factor in when considering pay cuts.

"If there is a bargaining agreement, if there is an employment agreement, or if there is just an at-will status for the employee," Nelson said.

She said employees under contract or who are in a union have more options.

"If that agreement, is say, for a year, they cannot change that contract based on that contract agreement. Now, if there is a bargaining agreement, contract, like with a union, and the employee is covered under that bargaining agreement might say that employer has to pay that amount to this employee, based on the employee's status. But if that contract is three years long, then the company has to abide by that contract. But the company does have options, they can go to the union and say, 'Can we go back to the table? We are having a lot of issues and we need to talk about the pay,'" she said.

Nelson said the least protected is the at-will employee.

"That means the employee doesn't have too many options, because at-will is just as it says. The employer has the right to fire for any reason and the employee has the right to leave for any reason," Nelson said.

But she said a short-term fix could lead to a long-term problems for a company if not handled correctly.

"People may remember that and say, I don't want to work there, or I don't want to do business there. Especially at a time like this, when it's just really bad and it's no one's fault, if you could show any type of goodwill and I also recommend to my clients, transparency with what you're doing, because people are already in a state of stress and unknowing," Nelson said.

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