Cut wages, If I quit, do I still get severence?

I am an V.P. of an Ohio based company. Due to lack of funding, everyone in the company was put on a mandatory lay-off for 3 weeks. At that time, it was verbally said that those employees that would go to half time pay after coming back from the lay-off would be notified by their supervisor. I came back from the lay-off, performed my job and received a paycheck for half. When asked, my boss said that he forgot to tell me that my pay would be cut in half. My question is this. Can they cut my salary without stripping my title? (an employee that works for me is now making three times what i make in salary) If I don't agree to the new terms of compensation, does that mean that I quit and that I would not be entitled to my severence pay? Should I continue accepting paychecks from my employer or should I not accept them until this issue is resolved? What is my time limit for resolving this before it becomes obsolete?

1 answer  |  asked Feb 26, 2003 3:35 PM [EST]  |  applies to Ohio

Answers (1)

Neil Klingshirn
You could get severance if you are constructively discharged

Does your company have a severance plan? If not, you are probably not entitled to severance, whether your salary is cut or you are terminated outright. Absent a severance plan, the company will pay severance only if it decides to do so.

If your company has a severance plan, you will be entitled to severance pursuant to the terms of that plan. Generally, severance plans award severance pay if you are termniated for a reason other than poor performance or other cause.

The issue you raise is, if there is a plan that provides for severance upon your termination, whether cutting your pay in half is the same as termination. Generally speaking, the answer is "probably yes." In legal terms, the issue is whether the company "constructively" (as opposed to actually) discharged you. A constructive discharge occurs where the employer makes working terms and conditions (like pay) so intolerable that the employee feels compelled to quit. If so, courts will treat the constructive discharge the same as an actual discharge. That is, if there is a severance plan that pays severance benefits in the event you are terminated and your employer constructively discharges you without terminating you outright, you are probably entitled to the severance.

Best regards,

Neil Klingshirn.

posted by Neil Klingshirn  |  Feb 26, 2003 4:24 PM [EST]

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