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"Industry Standard" Paycuts in IT?
noGarnishMe! asks: "I was just reading about a Chicago-based company that has told all its employees earning over $60K/year that they will have to accept a 50% percent paycut for the month of May. This cut might be necessary in these times but keep in mind that the bozos in senior management just finished buying up several failing companies and paying some large bonuses to themselves. The memo announcing the cut is here. This cut, coming in such large chunk and in May, seems like a draconian shot to boost the 2d quarter financials. True, the annual paycut of 3.8% is modest but it ignores that fact that many folks won't be able to pay their May bills with only half their salary. I know that many of us have been through rough times these past 18 months and so I ask, what has been the approach at your company?" There are graceful and non-graceful ways for a company to handle a lack of cash flow. In the scramble for survival, especially in an economic downturn, many companies are caught off-guard and have to show their shareholders that they are doing something to get the company back on the road to profitability (which seems to be the issue, here). In many of these cases, the group most affected by such changes are the employees. It would be interesting to note how many of you have gone through this before and what you had to do to survive the shortfall.
You have a contract that they can't change at will.
Um... shouldn't that read, "If you have a contract they can't change at will"? A fair share of employees these days are precisely "employees at will," with no obligation on either party aside from payment for services rendered. This is the way I've always worked.
This is actually kind of the problem with employment at will: management can hand down whatever terms they want, and it's their way or the highway. This is justified with deference to "the market," on the theory that if conditions get bad enough, you can just go work somewhere else. But a lot of times that's impossible or very difficult in practice; if they have you working long hours for low pay, you have very little time or resources to seek another job.
I'd prefer that I had a set contract for most of the jobs I've had, but that's not the way it's worked.
Addendum:
Illinois Labor Board is located at
http://www2.state.il.us/ilrb/index.asp
Moral indignation is jealousy with a halo - H. G. Wells
Many commenters have said, during a discussion about Loki employees not getting paid for months, that generally when a company starts paying its employees late, it is almost a sure sign that the company is going under (i.e., if that's it's last-resort way of keeping it financially above water). I'd suggest searching for a new job just in case, and I'm not sure what legal action you can take (I'll leave that to other IANALs to answer for).
It is not hard to figure out the "money" thing.
Maybe so. But you'd be surprised at just how insufficiently educated most people are about personal finance.
Many people learn from their parents, who, chances are, are among the 90% of the population that are debtors rather than creditors.
It's kind of like parenting skills. It only takes half a brain and some willingness to invest some effort in learning how to be a parent in order to be a good one, but most people just "wing it" and tend to pass on a comparable ratio of personal dysfunctional habits to their children.
You just didn't WANT to.
More like, they just didn't think it was important to learn how to properly manage personal finances.
Well, it's important.
It's a hard lesson to learn by way of severe salaray reduction, but it will be good lesson.
Apart from the necessity of saving 3-6 months salary as an emergency contingency fund, they'll probably also start paying attention to a few other basics, such as not paying credit card interest, saving for kid's college, and really saving heavily for retirement because actual social security benefits are going to be paltry.
"Provided by the management for your protection."
Yeah - start looking for a new job a month ago. Seriously, late pay is the largest sign of a company about to go under. They will go under and take all that backpay with them. Don't be a sucker. Don't feel like you need to work in interviews or job searching outside of work hours. They haven't paid you for two months of work and they aren't going to. Get your ass in gear and make your number one priority finding a new job. Until they've paid you for the backpay (which they will not do) you are morally justified in coming into work and then spending your time on finding a new job.
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