This is not a legal advice thread, just a question about whether a certain action passes even a “laugh test.”
Someone I know works on a nine month contract, typically renewed each year. The employer this year said “we cannot afford to pay you guys your normal pay, so we are going to withhold five percent of your pay for four months.”
Seven months have passed since then, and she has now quit working for them. Now, she said “You guys have to give me that money back now, because the contract doesn’t state that you may pay me any less than the amount it states you will pay me.”
Their reply was that she implicitly renegotiated her contract with them by not quitting as soon as she found out about the pay cut in the first place.
Of course details could change the complete and correct answer here, but I’m wondering whether the company’s line even passes the “laugh test.” I would be very surprised if it is legally possible to “implicitly renegotiate a contract” by simply not quitting when the other side unilaterally refuses to hold up its end of the contract.
Not quitting per se, but she should have objected to the breach of her contract when they breached it, I should think. I’m a bit fuzzy on how American law handles equitable principles like laches, though.
A fully trained lawyer will be along shortly, I’m sure.
This thread doesn’t need a lawyer–it needs a psychic. It all comes down to what the terms of the contract are–and the contract could include the terms as modified orally (or perhaps not). So far we don’t have enough facts to really do anything with.
I’ve seen it. It’s one page. It basically says “You’re going to perform the following tasks for nine months, and we’re going to pay you X to do it. We can fire you any time if we don’t like how you do the tasks listed.”
Fair cop, but am I at least right that you should object at the time of the breach (if there was, in fact, a breach) and that if not you have an implied contract with the new terms?
Back during the 2008-2009 recession there were government agencies furloughing (forced unpaid leave) employees all over the place, including those supposedly iron-clad working agreements.
Gannett Company notably has had at least a half-dozen furloughs since 2009, including broadcast talent, who traditionally have pretty all-encompassing contracts.
“Withhold” and “reduce” are different words. If I heard that, I’d think the company had a cashflow problem and intended to make up the difference later. (I would ask for clarification, though.)
But they cut the hours you work and your pay, so your hourly rate stays the same. This is a pretty common furlough situation. There’s no indication in the OP that the person was expected to work any fewer hours.
Not having seen it, I can’t say for sure but this sounds more like an offer letter for a job lasting nine months than a contract. Typically, actual contracts will either bind both parties ( A-Rod can’t quit the Yankees and go work for another team and the Yankees can’t stop paying him just because he’s playing badly) or at least set out specific conditions and/or procedures for firing , require a specified amount of notice when an employees quits, etc. It sounds like your friend may have just signed a letter acknowledging that the company has the right to fire her at will. And if that’s all it is, the company can absolutely cut her pay going forward. They cannot cut her pay for work she performed before the pay cut, but cutting pay for future work goes like this
I have a job paying $X per week.My employer informs me that my pay will be cut $10 per week starting in 2 weeks. The employer has effectively eliminated the job paying $X and offered to hire me for a job paying $X-10. If I continue to work after the effective date , I have accepted that new job with its lower pay
For clarity concerning my question, allow me to amend it here. Recall this is not a legal advice thread, it is a question about whether a certain outlined argument passes the laugh test.
Joanne and the president of XCorp both sign a document. The document says “This is a contract of employment. Joanne will make widgets which we like, for nine months. In return, we will give Joanne one million dollars. If we don’t like the widgets Joanne makes, we may unilaterally terminate this contract. Joanne may not unilaterally terminate this contract unless the president of XCorp approves.”
She signs it. four months later, XCorp tells Joann, verbally, “We are going to reduce the amount you will be paid to seven hundred and fifty thousand dollars.” Joanne does not reply.
Joanne continues making widgets, and XCorp continues to like them.
Joanne does quit seven months into the contract, and the president of XCorp approves the resignation. Joanne now says “You must pay me seven ninths of one million, not seven ninths of 750,000, because the contract did not give you the power to unilaterally change the pay amount.”
XCorp says in reply “By continuing to work for us, you implicitly renegotiated the contract. So we owe you only seven ninths of seven hundred fifty thousand dollars.”
Joanne makes inquiries with the Labor Board. And that is where things stand.
I’ll note that in the actual situation I’m thinking of, of course everything wasn’t to be paid in a lump sum but was spread out over the nine months. I’m assuming, perhaps incorrectly, that this makes no legal difference and only affects the accounting.
“Someone I know works on a nine month contract, typically renewed each year.”
This year that contract was not renewed, instead a different contract was offered at a lower pay rate. The person you know accepted that contract by going to work in the nine month period and so cannot object now.
I assume you’re talking about seven-ninths because she worked for seven months after the contract expired? A timeline would help, so using random dates :
1 Contract is for X dollars and runs from Jan 1 2010 to Sept 30 2010. Nothing is ever signed again.
2 On some date she is told that her pay will be reduced by 5 % for four months
3 That pay reduction occurs either before or after the signed contract ended. If it occurred before the end (maybe Aug 1 2010) , then she **might **be entitled to the difference for the of the contract term. If the pay reduction begins on October 1, 2010 or later, then the contract has expired , no new contract has been signed and essentially she has agreed to work for the new rate simply by continuing to work. Just like every other employee without an actual signed contract who continues to work after a pay cut has implicitly agreed to the new pay.
It's possible to have a contract without an ending date, but a nine-month contract clearly has a start date and an end date. And contracts don't actually renew * - I know people talk about renewing contracts but they are actually signing a new contract. The new contract may have exactly the same terms as the old, but the dates will be different. Think of cell phone contracts- I may get a two year contract. When that contract expires, it doesn't renew unless I and the provider both agree to it. Same thing if I rent an apartment- when my one year lease expires it doesn't automatically renew. In either case,if I don't renew I may end up month to month under different terms that provided by the contract/lease.
It's incorrect to say she renegotiated the contract- but that's simply a matter of wording. No one negotiated anything. It's more accurate to say that she accepted the new pay rate imposed by the company but saying she implicitly renegotiated the contract is not so wrong that it fails the "laugh test"
I suppose there could be a contract with an automatic renewal but that wasn’t in the description given
She worked for seven months after the contract began.
So, to timeline it out:
January 1st: They sign a contract. Text of contract states this and only this: "This is a contract of employment. Joanne will make widgets which we like, for nine months. In return, we will give Joanne one million dollars. If we don’t like the widgets Joanne makes, we may unilaterally terminate this contract. Joanne may not unilaterally terminate this contract unless the president of XCorp approves.
May 1st: XCorp tells her that instead of a million dollars, she will only be paid $750,000. Joanne does not reply.
August 1st: Joanne quits. President of XCorp approves. She now tells XCorp she is now owed seven ninths of one million dollars since that’s what the contract says. XCorp says they owe her only seven ninths of $750,000 because when she continued making widgets for them after May 1st, she thereby implicitly renegotiated the contract with them and agreed to the cut.