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The economic downturn has hit your company hard and profits are way down. You’ve lost one major customer and several other customers are buying much less. To fight the decrease in business, several changes have been made in an attempt to keep the company afloat, including eliminating jobs, cutting back on work hours and reducing wages. Michael, an account manager whose pay is based partially on profits, has just returned to work from military leave to find that his earnings have been decreased. He says that the reduction in his wages is illegal. Is it?
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Answer: |
Not necessarily. Under the Uniformed Services Employment and Reemployment Rights Act (USERRA), the wage rate or pay scale to which a returning service member is generally entitled upon reinstatement is that which the employee would have received if, instead of entering the military, the person had remained continuously on the job. Thus, with respect to changes in “seniority, status or pay” occurring during his absence, the veteran is entitled to the same treatment as an employee who remained continuously employed.
Where an employer’s business has decreased, an employer may reduce its wage scale to meet its needs, provided service members are not discriminated against. In this case, Michael’s wages were based, in part, on a percentage of profits. While Michael was on military leave, his employer lost a key customer, causing profits to decline. Thus, Michael is required to accept decreased wages just as the employer would have to carry the burden of higher wages in the case of increased profits.
Source: CCH When Duty Calls; Military Leave and Veterans’ Rights.
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