Q. about unemployment benefits and offers of rehire at massive pay cut

In My Humble Opinion
1

**Short version: **

Does an offer of rehire at a massively reduced salary preclude a claim for unemployment benefits in CT?

Long version:

My wife works (worked?) for a non-profit organization in Connecticut. She was hired for a job that was to take about 18 months, perhaps a little more. Her contract specified the amount to be paid, but also that she was an at-will employee and could be terminated at any time.

Just over a week ago, the employer announced that they were laying off a large percentage of their workforce, including my wife. She got the email early in the week, and a few days later she received an official letter in the mail telling her that the layoff “should be considered permanent.” The layoff package contained a bunch of other info about her accrued holiday pay, COBRA (thank god we don’t need that), as well as instructions for filing for unemployment in Connecticut.

This all sucks, but we accepted it as an unfortunate consequence of the current emergency and she immediately began polishing her resume and sending out job applications.

She has been in touch with her supervisor about bringing back her work laptop, and getting into the office so that she could collect any personal items she might have left at work. Then, yesterday, he emailed her saying that they would be willing to let her keep working if she was wiling to take a 40% pay cut.

This was not exactly a high-paying job in the first place. She took a pay cut to take the job because it was a sideways career move into a new field that she wanted to work in. A 40% cut would reduce her pay to not much more than she would make with normal Connecticut unemployment benefits, and substantially less than she would make over the next four months when you take into account the $600/week unemployment supplement passed by the recent stimulus package.

Neither of us have ever dealt with unemployment insurance before, and my question here is: have they screwed her with this new offer? That is, does this offer, even with its massive reduction in pay, preclude her from filing for unemployment?

One of the questions that the state asks of applicants for unemployment benefits is: Did you refuse an offer of work or rehire, quit a job, or get discharged from a job?

She’s not going to be able to answer “no” to that question anymore, is she? I’ve read that some states define a massive pay cut as “constructive termination” or something similar, and still allow people to collect unemployment benefits under such circumstances, but a bunch of internet searches haven’t really helped me work out whether this is true in CT, or what might happen if she turns down the offer and files for unemployment.

Caveats:

I understand that advice of this sort has to come with all sorts of hedging and cautions, and I know that you’re not my lawyer or my accountant or my employment adviser. It may be that we need to contact an employment lawyer. But I also know that some folks here work in this area, or have experience, so any guidance would be welcome.

I also understand that there are non-economic issues to consider here. She is weighing things like how much she likes the job, and the advantages (personally and professionally) of seeing her project through to the end, especially because a god performance will make her more attractive as a candidate for her next job. These are all important considerations, but for the moment, I’m only really interested in the narrow question related to unemployment insurance.

2

I was on unemployment in NJ about 5 years back, so things could be different now and for you. But I clearly remember the rulebook talking about this kind of thing, and it gave a specific percentage - perhaps 80%. If you are offered below that percentage, you can reject it and are still legitimately unemployed. But if they offer you more than that, then it’s your own fault.

Hmmm… I might actually be thinking of job offers from someone OTHER than the prior employer. Like, “I was offered a job, and it is in my field, but at a tremendous salary cut. Can I reject it and keep collecting unemployment?”

Anyway, my point is that your question probably doesn’t have a yes/no answer. It might depend on how big the salary cut is. Check the CT rules.

ALSO watch the news about the stimulus package. I’ve heard that part of it might include Unemployment being jacked up to 100% of regular pay.

3

I believe you can say “Yes” to that question and still get unemployment if the job isn’t considered “suitable employment.” It’s a term with a lot of wiggle room, but a massive pay cut usually qualifies.

This page discusses it. You can probably check with your state unemployment office.

If you do refuse a job, it’s better to say “yes” and describe why than if Unemployment found out after you said, “no.”

4

You need to review the rules in Connecticut top be sure.

Normally with unemployment benefits, you are required to continue to look for employment, but that requirement has been waived during the pandemic. I would think that the offer to be re-hired at a substantial lower pay amount, would not hinder your ability to receive benefits.

5

Reporting for thread change (legal questions go in IMHO).

6

Thanks. I couldn’t remember. Almost put it in the right place, but then decided on GQ.

7

Moved to IMHO.

Colibri
General Questions Moderator

8

From the CT Department of Labor:

My emphasis.

9

Huh. Thanks. I’ve been all over the CT Department of Labor website, and I must have missed that completely. Of course, it leaves some ambiguity in determining what exactly constitutes a substantial change, but it’s hard to imagine that a 40 percent cut in pay wouldn’t apply.

10

It’s a term of art that is used broadly in employment law. If you go on the NLRB website you should be able to find lots of guidance about what constitutes a “substantial change… in the contract of hire.”

11

Over on Reddit in r/legaladvice there’s a massive thread about a dude in Tennessee who got laid off, then the next day contacted by his employer for rehire with a drastic cut in pay.

12

I think a key point here is that the OPs wife was actually laid off. They are offering to rehire at the lower rate, but that isn’t a change in her existing contract to hire, which was terminated.

Whether she could continue to draw UI after declining a rehire is a separate issue. But it sounds like the terms are easily enough lower that it isn’t a similar job, so she should be OK.

13

Well, things have moved relatively quickly in the past few hours.

After my wife told them that she really couldn’t afford to come back with a salary reduced by 40%, they came back and made a new offer: 20% reduction, with a commitment to return to full pay as soon as possible.

She’s decided to take it, partly because she really likes the work and the people, partly because she trusts them to make good on their promise of going back to full pay when possible, and partly because, in the current economic climate, there aren’t a huge number of open jobs in her new field anyway. The fact that they were willing to move shows that they like her and want her there, too, which is a nice thing.

I just read that; thanks for directing me to it. That guy’s boss sounds like a Grade A Asshole. While my wife’s situation was troubling because we need her income, she never suspected her employer of any of this type of bullshit. The people in charge at her job are all just trying to do the best they can under difficult circumstances.

Thanks to everyone for their input and advice.

14

Yes, having your pay or job title reduced will allow you to collect benefits.

HOWEVER and this is the big unknown, there is no formula for this. It will be up to a judge/arbitrator and I have seen identical cases go one way for someone and another judge will decided the exact opposite.

You can always appeal and some states allow you to appeal from the unemployment office (which is administrative) into the judgical system.