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Comment by staunch | Hacker News Reader

How does legally reducing the salary of a current employee work?

You should check with your attorney and HR person (or company), but employment in the United Stats is largely at will. This means you can change the terms at any time (unless you have a contract that can't be terminated or something).

There are a small number of obscure local laws around a "plant shutdown" that require that you give a certain amount of notice if you're going to a certain number of people. Priceline, if I remember correctly, got in trouble over this back in the dotcom days when they let go of like 100 people.

It's hard to cut salaries, but if your startup is going to die you might have no choice. One startup I remember essentially fired everyone had them reapply for their jobs in order to save the company.

It's hard times... i hope folks make it to the other side.

all the best, jason

"I'm reducing your salary. If you don't like it, quit."

No notice or consent required?

Edit: Salary vs hourly make any difference?

"You know what? I just don't like you very much anymore. Pack your shit and get out."

Also legal in most states.

Even easier for a startup. All the fun employees benefits like "2 weeks notice" don't apply until a company is a certain size.

Large companies aren't required to give any notice of termination in at-will states.

Unless they have a contract, they are at-will employees, meaning you can fire them or reduce their salary at will. On the other side, they can quit at will as well.

No lawyer is going to let you accidentally draw up a contract that would get you sued for firing someone; you'd probably (I say this as if I know, which I don't) just lose things like your noncompete.

Lots of big companies do this too - for example Agilent is doing this now.

I work for Agilent. One day back in December, everyone gets an email from the CEO saying that all American employees would get a 10% pay cut. All European employees would get unpaid time off every other Friday.

The Europeans got a better deal because they have much stricter labor laws in Europe. It makes me want to move to Europe.

Smart move if you ask me...I mean, it sucks, sure, but you get to keep things afloat, and everyone's losing out anyway.

My decidedly non-tech company (trucking) just did an across the board 2 percent pay reduction, and saved a couple people from layoffs. Bad day for most, but we are glad to have a job that is stable going forward. The company has in the past increased the 401k match in good times, and raises are regularly given, but as Jason says runway is crucial and you must conserve the cash you actually have- not receivables you think are good (but not paid yet.) btw Great letter,Jason. Thanks for articulating your appraoch so clearly.

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