Was salary reduction a “constructive termination” or did employee resign? (2013)
fkks.com
fkks.com
1) what we are paying you now is still great money
2) by keeping coming to work you agree to being OK with the demotion (same as in the article)
Too bad it didn’t hold up once lawyers got involved. Some corporations really believe they can get away with anything. To their detriment, labor laws exist.
Constructive termination + a reasonable payout to help you adjust to life post-job/divorce.
Constructive termination doesn’t get you money on its own, it just is a way to make a claim for things you would have been owed if you were fired (including wrongful termination damages, if you can also prove that the termination was wrongful) when the employer tried to characterize the termination as voluntary on your part.
The commenter is probably employed in a jurisdiction that is not the US.
A quick examination of their post history yields a description [1] of employment in a jurisdiction that is not the US.
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Labor law supersedes the contract freedom guaranteed by the civil code here in JP. And the conditions for demotion are strict here, e.g. maximum ~40 % reduction of salary, new role must be related to previous role, etc.
The burden of evidence lies with the employer, but some try to construct a fictitious narrative. Nothing that holds up in a court of law if you remember to CYA.
It’s especially frustrating if your visa is tied to doing a certain type of job and having a certain amount of salary!
The word unlawful I am using here is 不法 (fuhō) in Japanese which I believe is used a lot in tort law.
Either way, long story short, there is no at-will employment in Japan.
Side note: its annoying to try to research via typical web tools to find if there is any information about what happened after the appellate decision because of the name collision with Scott v. Harris, a Supreme Court qualified immunity case, which has... quite a lot written about it.
Only if you have cause can you instantly demote them and/or reduce their salary, but establishing cause has a fairly high standard and is usually not worth it outside of obvious cases. It's usually just best to wait out the notice period.
As for me, my personal opinion is it's never worth it to demote someone or reduce their pay. I always prefer terminating someone over those options.
If someone's performance has gone down => performance improvement plan (PIP); gives them an opportunity to improve again, and requires you to document their performance.
Contribution gone down due to inability to assign them profitable enough work => redundancy process. This may include offering them a non-redundant position that has lower compensation.
You can't just demote people because you think you have more power over them and you want to improve your quarterly results.
Employers are allowed to reduce pay, just if the employee chooses to leave as a result of that, then it's legally treated as if the employer fired them.
Normally, that would just mean that the employee would qualify for unemployment benefits and the employer's unemployment insurance premiums might increase by a trifling amount. In this case, the employee had a contract guaranteeing severance pay, so the employer also was liable for that.
under the argument offered by the company, they can lower your salary, and you can choose whether or not to take it. If you keep working, you have a new job at a new salary.
Under the employee's theory, they have the option to keep working, and then sue the company for constructive termination. From the employer's perspective, this is a disaster, as legal fees overwhelm any reduction in salary.
So given that salary reduction is off the table, the employer now has to fire all employees that are drastically overpaid, or make everyone sign a release. This is not good for the large number of employees who would prefer to keep working at a lower salary rather than be unemployed -- it produces a worse outcome.
As a result all the employees who get fired have to look for jobs in which they get paid less, and other factors such as a recession or a crashed market just worsen the situation.
So this isn't applicable to most people.
still any form of unilateral contract change being legal is just absurd IMHO, and saying that because person didn't stop working completely it's like accepting the change is pretty absurd too. I mean if that wasn't a valid change wouldn't that mean that the person is still employed under the old contact and in turn had to come to work?
Having logic like "If you don't instantly walk away from your job on the spot after a salary reduction then you accept it" can practically end up being blackmail: Accept the salary reduction today or go hungry tomorrow.
For example, countries in the EU don't allow for termination without cause (without some form of severance, and assuming you're outside a probation period); unlike the US, where you're employment status is entirely at the whims of your employer.
Other examples are vacation days, sick leave, parental leave, rest periods between shifts, etc.
In this case, the employee was an executive himself, who usually is the one wielding that power against non-executive employees.
How so? What rights do they have that the employer doesn't?
From what I've gathered here, the employer can change their salary at will. The employee can't turn around and do that. The employer could presumably change their location of work, their hours, or even the job they've been hired to do, at will.
This would all be protected against in the EU.
Keeping in mind that I agree with you that I phrased my original statement poorly: more importantly, how do these additional rights that you're talking about translate to benefits for the employee?
Either party can propose basically any change they want, and terminate the arrangement any time they choose. What an employee “can do” is determined entirely by how much the market values their labor. I have proposed take it or leave it remuneration increases (as well as other changes to working conditions, such as location) to employers on many occasions, and they’ve nearly always been accepted.
An employee also has exactly the same rights. They can offer a salary ultimatum, and terminate the relationship if it is not met, at any time they choose. Both parties have exactly the same entitlements in this scenario.
> I have proposed take it or leave it remuneration increases (as well as other changes to working conditions, such as location) to employers on many occasions, and they’ve nearly always been accepted.
I don't think they realize that somebody on a minimum wage job in the US doesn't have the same ability to bargain that they do on their tech salary.
Or, perhaps worse, they do realise that, and believe it's just.
This is a sort of weird take on market conditions to try and downplay the amount of power an employer has over their employee. For example an employee that accepts an offer and moves across the US for a job opportunity only for things to change suddenly or for new conditions to be foisted upon them is SOL. They force you to adapt because you've invested a lot of time, money and effort and if you choose to leave, you lose out on unemployment benefits.
An employer doesn't have to literally hire mercenaries in order to force you to work under bad conditions. There are plenty of ways to abuse soft power, lack of labor laws, healthcare tied to work etc that gives employers a lot of leverage, and new employers a lot of ways to abuse desperate fleeing employees.
Since when?
Without a union or the ability to afford a lawyer, your compensation is entirely up to your employer's whim. Contracts are only useful if you can afford the time and money to fight for your side of it and also know you need to. And many classes of jobs don't involve employment contracts in any way the helps the employee (think service industry, etc.), the employers for those can do basically anything they want, anytime they want.
I don't disagree with you that it's a factor in US economic growth, I'm just not remotely convinced that it's worth the suffering caused by it.
By which measure? Also, how is ireland any better in that regard, especially w.r.t infrastructure? Europe in general wouldn't necessarily have a better public infrastructure either, it's just that there is a lot more discussion about America and its issues (even in Europe). And I'm saying that as someone who is neither american nor European.
(Not to mention that ireland was almost a third world country until it started attracting capital with shady loopholes and lack of regulations compared to the US and Europe, which makes the comparison even weirder.)
> (Not to mention that ireland was almost a third world country until it started attracting capital with shady loopholes and lack of regulations compared to the US and Europe, which makes the comparison even weirder.)
It's significantly more nuanced than that (and the US is equally as guilty of aiding corporate tax evasion thanks to Delaware—if the US actually wanted to tax income that is currently being routed through Ireland, it could just pass a law to do so). We're definitely a tax haven, no denying that, but our infrastructure started improving well before that became the case. But that's not really relevant to the discussion, which is about employment rights.
I hear you, but I don't know where I fall on this. I think my conclusion is that the US is largely imposing this diet onto itself in a self-sacrificial way, as the price to pay to be the world's leading power, which in turn enables world peace (mostly, so far).
I have the intuition that comfortable countries (European, Canada where I'm from) only manage to have those social services because they follow in the wake of the US. And they're also much less economically dynamic.
Also I do think that the worst of US suffering is really much less worse than the suffering seen in the rest of the world, by miles. As such I think it's hard for me to conclude whether it's all worth it or not. If the US wasn't how it is, another power would rule. Would that other power be as benign and cooperative as the US has been? In current days, the alternative powers would be China, and I don't think a Chinese world power system would be better for everyone.
What improvement could the US do to its system so that it would remain dominant while also being a bit more humane? That would be a worthy goal.
I think some immediate policies that the US could introduce is universal healthcare by expanding medicaid, and work toward the elimination of student loan debt (leading to greater social mobility).
From this European’s perspective, I welcome the US’s benign power, now and historically (the Marshall plan), and agree the alternatives have always been terrible (unless, say, Canada were to step up in the event of US decline).
However, I’m not sure I would share this perspective if I were living in one of the South American countries where the US has overturned elections, or Iraq or Vietnam. US power is benign as long as you’re on their side.
We have the worlds richest rich by a mile. But we have some of the least developed infrastructure out of all the developed nations.
By what measure?
What are the implications? He's an executive. He negotiated an employment contract with early termination provisions, as is pretty common at the executive level. I don't see that this particular situation has much implication for regular non-executive employees.
Note that this still allows you to take pay cuts and such. Those are not directly illegal. Nor do I think they should be.
This kind of judgement is incredibly unprofessional.
The judge that wrote the opinion deserves to be paid less than $150,000 a year.
They're not going in with nothing and ending up with tens of millions of dollars on salary through savings.
>An employee is constructively discharged when his employer, rather than discharging him directly, inten-tionally creates a work atmosphere so intolerable that he is forced to quit involuntarily. Kirsch v. Fleet St., Ltd., 148 F.3d 149, 161 (2d Cir. 1998); Chertkovav. Connecticut Gen. Life Ins. Co., 92 F.3d 81, 89 (2d Cir. 1996). We have explained that working conditions are intolerable when, viewed as a whole, they are "so difficult or unpleasant that a reasonable person in the employee's shoes would have felt compelled to resign." Chertkova, 92 F.3d at 89 (quotations omitted).
Using the above framework, the judge determined that a reasonable person would not find a 150k/yr salary "to be sufficiently severe or pervasive to alter the conditions of the victim's employment and create an abusive work environment." when 150k/yr is a really good salary. Reasonable person tests are always a judgment call. I disagree with this judgment call, but I don't think it's an unprofessional one.
This sort of reasonableness standard is why the spouses and children of very rich people get millions of dollars a year in alimony and child support.
Probably not, unless they knew beforehand what Mr. Scott's tolerable financial situation was and purposefully reduced his compensation to below that level.