laid off in order to lower pay?

A reader writes:

Last Friday, I was laid off from my job. Apparently the official reason is “lack of work,” although my manager kept hammering on the fact that I was getting paid so much more than other people in the same positions.

In our area, we had 4 people working the same positions: 3 permanent employees (including me) and 1 contractor. I have fairly good reason to believe (alas, no proof) that the contractor was hired on as a permanent employee just the week before I was laid off. My guess is for a good $10 less an hour than I was being paid. In my papers to be signed, it was stated that the company could not hire anyone for my position in the coming 90 days. Of course it said nothing about any period prior to my involuntary departure.

My manager advised me to take the severance package (approximately 1 month’s pay), yet not to touch it, since they may very well call me back within 60 days and I would have to pay it back. I have a hunch that they will call me back, but only at a much lower pay scale. Is all this legal? If not, what recourse do I have?

First let me say that I’m not a lawyer and this is outside my area of expertise, so I’m doubly unhelpful on this one. I’m hoping someone who can speak more definitively on these issues than I can will weigh in.

However, what I do know is that if your company did lay you off as a method to ultimately get you back at a lower rate of pay, they are not a company you want to work for.

So to me, that trumps the question or whether or not it’s legal, although you could certainly speak with a lawyer to determine your options. (Disclaimer: In general, I tend to think people should save legal action for the most egregious situations, simply because it usually means spending a lot of money and even more energy and emotion on something that can be hard to prove.) But my hunch is that unless you can prove that the whole thing was premeditated (“let’s hire on the contractor, lay off Susan, and then rehire her at a lower rate of pay”), you’d have little recourse. But hey, that’s a hunch with no J.D. behind it, so take it with a grain of salt.

Anyone have more helpful thoughts than my sort of lame advice?

I agree. If what you suspect is true, why would you want to go back?
Put the severance in the bank. Start an intense job hunt that continues until you find something better. If offered, I wouldn’t take to old job back at anything less than the previous package, unless the job search was going very, very badly.
Job change is tough even when voluntary. Hang in there.

Rachel - Employment File* July 7, 2008 at 12:11 am

I agree with what was said above. Even if you do go back DO NOT give back you severance. That was for your time out of work and you shouldn’t give it back.

Anonymous* July 7, 2008 at 2:25 pm

I’m not a lawyer, but I have had some experience in this area. First, I do know that if they give you severance, under no cicumstances can they require you to pay it back, unless it is as part of a non compete or confidentiality agreement that you violate.

Second, I would strongly advise you not to work for this company again, even if they do call you back. I had this same thing happen to me a few years ago, and went back when I was called back (at lower pay, of course) only to be laid off again about three months later, and that time with no severance.

Take your severance and run. You’ll find another job, and hopefully one where if they are running short of cash, they’ll have the decency to ask you if you’d prefer a pay cut to a layoff (which is an option most employers seem to forget).

Good luck!

Jobless in California* July 8, 2008 at 3:30 pm

Thanks for all your advise!
I have already decided not to go back there, unless the job search is not going anywhere.
I have yet to receive my package – is there any time limit on when they should pay that??
Thanks again!!

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laid off in order to lower pay?

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