we’re being asked to choose our own pay cuts

by Alison Green on April 1, 2020

A reader writes:

In the wake of COVID-19, my large company has been told that “tough decisions” are ahead, and that they would first start by asking us to to take voluntary pay cuts. The more of a pay cut that everyone takes, the fewer people will need to be laid off.

Here’s the catch — we get to pick the pay cut. While I think I am fairly paid for my experience, and I wouldn’t mind taking a temporary pay cut to save my job or others, my company is notoriously tight-fisted with salaries and I have fought hard for the raises I have gotten during my tenure.

Of course, I want to do my best to prevent layoffs of myself or others, but I don’t know what percentage to say. Do you have any advice on how I can navigate this?

Ugh, I don’t like this at all.

I’m sure the argument for this is that people can volunteer according to their own financial situations — one person might be in a position to take a significant cut because their spouse has a high-paying and secure job, while another person has multiple dependents and no savings, and so forth.

But with everyone deciding on their own what they’re willing to do, you’re going to get lower-paid people who take larger cuts than higher-paid ones … and people who contribute significantly more to the company taking larger cuts than the slacker down the hall who watches YouTube all day.

And that’s before we even get into all the data showing that women and people of color are less comfortable asking for money than white men are, and how that might play out here (potentially even in ways that put the company at legal risk).

Plus, personality type will affect what people do. Some people in this situation will be very loyalty-above-all-else, everyone-pitches-in-during-a-crisis, and they’re likely to suffer financially for that loyalty.

You’ll also have people worrying that they’ll be judged for their choices — like if you choose no cut at all, will you be the first person who gets laid off because you didn’t demonstrate sufficient commitment to the company? When things recover, will you always be seen as not as loyal as Jane, who offered to take a 25% pay cut? Will people think you’re responsible for a colleague getting laid off because you didn’t take “enough” of a cut?

It’s just … not a good system.

And really, they’re giving you no information. If they want to give you some degree of choice here, a better way would be to announce that they’re cutting executive level pay by X%, and that pay cuts of Y% to Z% (where Y and Z are less than X) would be helpful from anyone who can volunteer for them. I still really don’t like that, for all the reasons above, but it would be better than leaving you so in the dark.

So I don’t have a good answer for you! You’d have to look at what you can afford and what you’re willing to work for, and how valued you think your role is, and what your colleagues are doing … and ideally someone would ask the company for guidance in the form of info on executive-level cuts … and still you’re in a crappy situation.

If part of your concern is that a temporary cut will become permanent, you can ask your company for written agreement that they won’t (ideally with triggers like when X and Y conditions are met, salaries will return to their previous levels, so it’s not up to their total discretion).

But I can’t help but think the company is abdicating responsibility here and pushing it on to you and your colleagues in an unfair and inequitable way, even though they’re framing it as giving employees more control.

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{ 360 comments }

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  1. Joan Holloway*

    It is deeply troubling to me how much more this is likely to impact women and POC at your company.

      1. valentine*

        This will absolutely break down along demographic lines and, even if everyone knew everyone else’s pay and were able to confirm the cut, an employer like this will be making backroom deals. And if can’t complain about whatever they do post-cut, such as when you find out who didn’t volunteer and is beloved for it, because you chose it! Then, it’ll be, “Oh, no, we can’t restore pay levels yet because X, Y, and Z. Please bear with us again in these trying times.” Rinse and repeat. Or they’ll say nothing because they’ll still be in the stronger position and your willingness to work for lower pay is just that.

        This is the plot of Saw and the Spanish Prisoner con.

    2. Count Boochie Flagrante*

      Seriously. Either in pay level or in reputation if they don’t do “enough.”

      1. Bostonian*

        Exactly. Not only are we more likely to offer up more of a cut, but women are also more likely to be judged as “not a team player” or “not nice enough” if we don’t cough up more. Women are “supposed to be” generous and cooperative. Ick.

        1. Quoth the Raven*

          And a lot of people will believe a woman’s salary is not as important because her spouse will provide, so they’ll also expect it from that angle.

    3. KHB*

      For that reason alone, if my company tried to pull something like this*, I’d be tempted to say “I’ll take a pay cut equal to the average one taken by (the five white men in roles most similar to mine).”

      *I’m pretty sure they wouldn’t, but you never know – this crisis seems to be bringing out the most awful sides of all sorts of employers.

      1. Dasein9*

        This is a good reply. And if everyone does it, then the management will have to step up and make a decision it is obviously trying to foist upon others.

      2. Ms. Norris.*

        I would suggest that before employees cut their own pay, that they be permitted to vote on the pay cuts for the executives who came up with/presented/permitted this idea to be communicated to the work force. I also would make clear that these decision makers (dodgers) should not be limited to their salaries (including benefits/stock options) would be on the table.
        Yes, I am a bitch.

        4. LittleRedRiding...huh?*

          And here you are proving a point, that women have to be nice or else. You’re not a bitch, you’re being reasonable and forward thinking, and if you were a man you wouldn’t feel the need to call yourself a bad word.

    5. Erstewhile lurker*

      Speaking as a POC, I disagree and think this is a defeatist attitude. The company didn’t segregate between gender or ethnic origin so why would the employee? Why not simply state the amount that you are prepared to sacrifice, or discuss with your colleagues and come to an agreement on an across the board percentage of reduction between you.

      1. Ms. Norris.*

        No. It is not the responsibility of the rank and file to do work of the C-Suite executives. They do not get to do this and keep their jobs. Hey, I think I just fixed the problem. I hope I get a good bonus.

        1. Erstewhile lurker*

          Well then they can push back, my point was that the company is treating everyone with the same latitude (albeit a questionable one) so why disadvantage yourself by going in with the belief that you are in some way ‘expected’ to offer more of a pay cut. Just stand your ground like everyone should.

          1. Shirley Keeldar*

            I think one worry is that woman and POC will be judged more harshly for what they offer, even if the decision-makers in the company have no intention of doing so. These biases sneak into our decision-making. If Joe and Jamal and Jane all offer to take a 1% pay cut, Jamal and Jane may end up suffering for that in ways Joe won’t–they’re not committed, not team players, not really invested, and so on. Whereas Joe, you know, he’s a good employee, he’s just got kids at home, he’s taking care of responsibilities. I appreciate your perspective, but I can understand people worrying that it MAY play out like this, even if it doesn’t, which puts pressure on Jane and Jamal in a way that it doesn’t on Joe.

            1. Erstewhile lurker*

              Thanks Shirley. I do see that perspective and perhaps was a little gung-ho with my comments, i’m sorry if I offended anyone.

              I’ve had to deal with racism for my entire life (38 last week), as well as being severely disadvantaged from an early age financially. My approach is that if I have had to work harder/smarter than the next person that makes me more determined and a better employee. My worry is that I see people sometimes ‘expecting’ to lose.

              Although the past/present environment can’t be disregarded, I would urge everyone to not let that affect their confidence. If you are a good employee, are reliable and offer value to the company, then you should approach matters like this on that basis.

              1. Blueberry*

                My approach is that if I have had to work harder/smarter than the next person that makes me more determined and a better employee.

                It does, outside of all other humans’ judgement in the place where things actually exist. But it doesn’t mean people will give you the credit you deserve — they may still see you as stupid and lazy because of your skin color and/or they may expect you to work harder as a baseline, as is often expected of women.

                As another POC, I appreciate your opposition to ‘defeatism’ but my experience, both lived and observed, has not at all borne out your optimism.

                1. Joan Holloway*

                  Absolutely this; women and POC cannot control the (often unconscious) biases that others have, and this situation makes those folks acutely and highly susceptible to those perceptions being leveraged negatively against them. Statistically, women are already paid less and, given the way women are socialized, they’re more likely to sacrifice their own wellbeing for the good of the group. POC are also statistically paid less, and POC women even moreso.

              2. Shirley Keeldar*

                I get it, that makes sense! One way to think about it is that your attitude of “work harder / smarter” is of benefit to the individual, making the best of the existing situation, whatever it may be. At the same time, the broader perspective of “Wait, this could really play into existing biases and make things worse” is crucial for people setting up systems like the one at OP’s company. So the two attitudes may be complementary, not competing.

        2. Hiring Manager*

          I agree with this. The cut percentages need to be based on a business case decision accounting for operating capital, revenue, etc. This is not knowledge that the average employee has, nor are these decisions of the type the average employee is qualified to make.

          1. Mimi*

            “Before I make my choice, could you tell me what percentage of our expenses we’re projecting that we’ll have to cut, and how much of a cut to their total benefit package the executive team is taking?”

            1. Texan In Exile*

              Exactly. “Is our CEO taking a pay cut – is he not going to take any salary or bonus at all – the way the Texas Roadhouse CEO is and some of the airline CEOs are?”

              Because to me, that’s where the cuts start. At. The. Top.

              1. Quiet Liberal*

                This reminds me of the time our owner and directors asked people to tell them how many unpaid days we were willing to take each week, but did nothing themselves after the mortgage meltdown. One of the directors was a woman and told me privately that she had suggested they all set an example by taking a 10% pay cut when they were discussing asking the employees to take unpaid leave. The owner and other directors, all men, said they wouldn’t even consider a pay cut. We had a few ladies volunteer, thinking they’d be safe from layoffs if the time came. As it turned out, they were the first to be laid off when their work was distributed among the rest of the staff.

              2. Avasarala*

                Yes. Nintendo execs have famously taken massive pay cuts when the company was not doing well financially. (Link to follow.)

                This is how it should be done. People with higher salaries can afford the hit more, they are the ones in charge of setting the company’s strategy and vision and balancing budgets. Are rank and file button pushers supposed to analyze the economy and company finances and make an informed decision here?

      2. somanyquestions*

        It’s not a defeatist attitude to acknowledge history and how it affects us still today.

        2. Princess Consuela Banana Hammock*

          And for many of us, it’s not even history. The pay and compensation gap is acute today, and it is particularly disproportionate for women of color (and within that, trans women of color, LGBT women of color, and particular racial groups within the broader “of color” umbrella).

      3. EPLawyer*

        Why should you have to come to an agreement with your colleagues? What if they won’t agree? What is they want more than you can sacrifice.

        This actually proves the point. Women and POC are less likely to stand up and say “Nope, not doing it. This is wrong” Or “Can’t we all agree” so as not to seem “difficult.”

        1. Erstewhile lurker*

          Because strength in numbers may be needed to push back. Yes, you shouldn’t have to, but the company has acted already so that is the situation the letter writer is in.

  2. LeahS*

    I absolutely agree with the last sentence- they are abdicating responsibility here. I also think that this is a really dicey way to go about solving this problem… it is going to result in disparate impact, I’m sure.

    1. Escapee from Corporate Management*

      This is such a clear lack of leadership. It smacks of cowardice.

      At my company, we set a target number and had a series of 1-on-1 discussions with the senior staff. We did not force them to bid against each other. It’s draining to do this, but it’s what leaders do.

      1. Not a Girl Boss*

        I just feel like the entire thing is aimed at it being “your fault” when they do make layoffs. “Oh, sorry, people were too selfish and didn’t give up enough” is easier on the leadership team than “We did not have adequate capital set aside to withstand this particular problem.”
        Or, on the flip side, they get to save more money than they expected.

        Either way, its gross and cowardly.

        1. Kumajiro*

          Was I the only one thinking that there would be layoffs no matter how much people cut? Sort of like they wanted to double dip in the saving money category but also shift the blame to the people who didn’t get laid off?

    2. Engineer Woman*

      So much so! Ugh, everyday there seems to be more and new horrible tactics that companies and executives come up to respond to an already terrible situation.

      It’s management’s job to do the analyses and make the hard decisions – that’s why they get paid the “big bucks”! Not to go foist this #%^*! plan on the employees!

      1. BellevueBeth*

        100% This.
        “Dear HR/Company Management/Etc.
        Management is paid more than the majority of the workforce they oversee because their role is to manage things. Presumably these are people with more experience and insight into company needs at a higher level. If they find it too taxing to actually perform the duties for which they are paid more, then I happily invite them all to surrender their salaries (on their way out the door) to offset the costs they asked lower-level employees to take on.
        tl;dr – I will not be offering any of my salary at this time.
        Hugs and Kisses,
        [LetterWriter]”

    3. SierraSkiing*

      Yeah – during the Great Recession, my family’s business did still get employee input, but they did it in a different way. They told the employees, “We need to either reduce everyone’s salaries – janitor to CEO – by X%, or we will need to lay off X% of our payroll. Everyone gets one vote for which one we’ll do.” Almost everyone (90% plus) voted for the salary reduction instead of layoffs. Was it the most efficient way to handle it? Maybe not. But we came through the recession with an incredibly loyal and energized team, and when the crisis was over everyone’s salaries got bumped to the previous level or above at the same time.

      1. A*

        I think this is a really nice solution to a challenging problem. Obviously not possible on a large scale, but a wonderful compromise for small/medium size businesses (ya know, if it comes down to this kind of thing). Thanks for sharing!

      2. Avasarala*

        I think it should be a staggered scale as well though–CEOs should take more of a pay cut than the janitors.

          1. Kumajiro*

            I think the issue is that the janitor is more likely to be living paycheck to paycheck than the CEO. When a 5% difference means holding off on buying that new boat, it’s not the same as a 5% difference that means making rent.

          2. MsSolo*

            it is, but 5% of 2000 could be the difference in whether you can pay your electric bill that week. 5% of 10 000 is unlikely to make that same different to the individual. It’s a bigger number, but it’s still having a smaller impact.

    4. PartyTyme Brand Yohimbine-Rohypnol Injection*

      This is SOOO much BS.

      If nothing else, don’t agree to or volunteer for anything until mgmt presents a very clear set of rules and policies on how this ungodly plan is supposed to work.

    1. Wednesday of this week*

      I have the same question, as it wasn’t covered in the letter. Asking people to take self-determined pay cuts is bad enough that it distracts from this even more insulting potential factor–that management may be taking no hit at all.

    2. Harper the Other One*

      Yeah, my first thought was to reply “so I can get a sense of the scope of the issue, please let me know what pay cuts the executive suite has decided to take.”

      3. designbot*

        I like that very much. I’d also like some metrics more broadly, say for example if you told me that 25% paycuts across the board would preserve all jobs, I’d be likely to do that. But if you told me that it would take 50% paycuts across the board, but 30% paycuts would preserve 85% of jobs, I think a lot of people would be likely to gravitate towards the 30%. But each person individually volunteering blindly is BS.

    3. Diahann Carroll*

      I doubt it given the way they approached it. My company is talking about cutting our quarterly bonuses up to 10%, and when they said this in their virtual presentation, they underlined “all of us” would be taking a cut, which included executives. And they’ve cancelled our yearly salary review, again, underlining that meant the entire company including execs.

      1. General von Klinkerhoffen*

        In the company I know that has done a sweeping cut, the top level won’t be taking a salary at all for the duration.

        1. Diahann Carroll*

          That’s truly the best way because it will show the rest of the staff that the execs are willing to sacrifice as well to keep the business afloat. You can’t tell people, “We’re all in this together,” while expecting lower paid individual contributors and management staff to take the brunt of the cuts. It’s a lie that harms morale and pretty much ensures that when your industry stabilizes, your top employees will leave.

        2. Zombeyonce*

          In my husband’s company, the executive’s all took a 30% paycut and everyone else took a 10% cut, and it’s all expected to be paid back after everything sales are back up (crossing fingers that happens). The cowardly way OP’s company is doing this leads me to believe that the executive’s aren’t taking a pay cut at all, much less expecting to pay back what’s being taken. Heck, I wouldn’t be surprised if they don’t even bring salaries back up to what they are now until LONG after the crisis is over and revenue is back to normal, if ever.

          If I were OP, I wouldn’t offer up a cent and make them come up with a more fair across-the-board cut.

          1. Violet Rose*

            This! I would be asking what % of cut the high-level execs are taking “as a guideline for my own decision-making”

      2. zora*

        I don’t like that straight percentage thing, either, though, because 10% of the CEOs bonus of 1million, means they still get $900,000.
        While 10% of the entry-level person’s bonus of $500 means they only get $450, in a time when $50 can make a huge difference to that person and paying their bills.

        A flat percentage still seems like a terrible approach to me, since pay discrepancies in this country are so huge.

        1. Diahann Carroll*

          That’s very true, but at least it’s bonus money, which is discretionary and not an obligation to pay out in the first place, versus cuts from our base salaries. I know I negotiated my base up high enough that I have around $1k extra in my bank account every month that I typically use to pay down my school debt faster. If they were taking it from my base, I wouldn’t be able to do that.

          They also said that if they’re being too conservative and they end up not depleting our cash reserves to keep us operating during this pandemic, they’ll give us all back the money that was cut.

          1. zora*

            Yeah, true, taking the cuts from bonuses is far different from taking it from salaries. That’s a fair point.

            1. Diahann Carroll*

              Frankly, I’m shocked they didn’t cut them altogether since they nixed our raises and promotions (my manager was supposed to be promoted to a director role, so I feel for him because he truly deserves that promotion and the subsequent salary increase). They even still gave us our profit sharing bonus, which was almost 4% of our salaries including incentive bonus pay. So that makes me think that we have enough in our cash reserves to be alright for the time being – not sure how long that will last, though, which is scary.

    4. Chili*

      I feel like this could be a fair question to ask the C-suite and/or some of the highest earners in the company, but it’s a pretty insensitive question to ask anyone below that without giving more details about who is taking what cuts. I would be really pissed if I found out the CEO took a 5% pay cut and I took 10%, or something like that.

    5. zora*

      We had this come up at the large nonprofit I worked at during the 2009 collapse. They announced that the top level was taking a ‘voluntary’ 10% paycut, including the Executive Director, but then in our office, some idiot suggested we all ‘volunteer’ to go to half-time/half-pay to keep everyone working. And when I pointed out that was way more money than the ED was giving up, our director admonished us all to be understanding and grateful to the ED for giving up that much money to help everyone and that we ‘didn’t know their situation’ so we shouldn’t judge.

      When I pointed out that our 990s were public and therefore, we could do the math and that the ED was going from bringing home something like $15K per month to $13.5K per month, and that I didn’t think that was something I should be grateful for, since my entire yearly take home was about $28K, I got a stern talking to about ‘lowering team morale.’

    6. MissDisplaced*

      I have horrible flashbacks to after 9/11 when the small company I worked at gave us all 20% pay cuts to stay afloat. Meanwhile one of the owners kept right on building his million dollar house up in the hills.

      Even worse, after 7 or 8 of us had our pay cut, they hired a “manager” with that money to come in and be the strongman to try to force us to work weekends and overtime (we were salary). I had some glee in informing him that he was essentially “hired on the backs of our pay cuts” and that no, I would not be working any weekends or overtime anymore. I don’t think he lasted long.

  4. Person from the Resume*

    This is awful. Now is the time for the leadership to lead and make the hard decisions for which they are presumably paid the bigs bucks.

    Everyone picks their own pay cuts is unfair for all the reasons Alison listed like some interprets that they’ll cut all the way to eating peanut butter sandwiches everyday to this is as liw as I can go and still keep all the streaming services abt eat takeout 4 times a week.

  5. Mama Bear*

    Agreed. Not making the choice at the top puts a terrible burden on employees. What are they aiming for? Do they need to make a company goal to stay afloat, and will it be permanent? You need more data. I think it would be better to say “10% or a week of PTO” or whatever vs this “name your price” thing.

    1. ArtsNerd*

      I straight up GASPED. I’ve been reading AAM for a decade so not much makes me gasp aloud anymore. This did it.

      Oh my god. I’m so sorry OP.

  7. Peter*

    As a European, it just boggles my mind that companies can simply decide to give people a pay cut. People have rent, mortgages to pay in addition to everything else, and if you can your salary cut or you can be laid off on a moments notice, how the hell are you supposed to have any certainty in life?

    That said, even besides that, this is a terrible idea. People that need the job and the money the most may even take the biggest cuts out of fear of being fired otherwise, which achieves pretty much the opposite of what OP’s company wants to achieve. If they’d want to cut pay, talk to people to find out what they absolutely need, balance that with the companies decision, and then make a decision that’s equally fair to all employees.

    1. ZSD*

      Does your country have a law saying that a certain amount of notice has to be given before a pay cut?
      And to be clear, they can’t *retroactively* cut someone’s pay here and say, “Oh, we said we’d pay you $20/hr for the past two weeks’ work, but now we’ll only be paying you $15/hr for that.” Rather, they can say, “We’ve been paying you $20/hr for all your work thus far, but from now on, we’ll pay you $15/hr for the work you do.” I’m guessing that in your country, they have to say something like, “Starting two weeks from now, you’ll be paid only 15 Euros/hr for your work.” Is that right?

      1. Anon Anon*

        I can’t speak for Peter, but most EU employees have contracts. The contracts are often renewable, but you can’t just change someone’s pay level mid-contract.

        1. valentine*

          which achieves pretty much the opposite of what OP’s company wants to achieve.
          Don’t be so sure! If you think of the worst-case scenario, that won’t be too far-fetched.

        2. Media Monkey*

          umm, you can. ours just have. and we all have contracts. but most include a clause saying that the company can furlough or cut hours if the need to. in 20 years of working i have never known it to happen, but these are interesting times.

      2. Peter*

        They can’t cut your pay at all without your consent. They can fire you, but if you’re on a contract, they’ll need a good and documented reason to do so and probably also pay you a few months of severance pay.

        Of course some people are on contracts with a fixed duration (most people start with a contract that lasts a year, which can be extended into an indefinite contract afterwards). In that case, they can let you go after your contract is up, but not earlier (unless they have very good reasons and/or pay you severance).

        So if they’d want to cut my pay, they’d have to fire me (you have at least a month notice before getting fired by law) and pay the severance that comes with it (also one or two months of salary, depending on how long you’ve been with the company), and then rehire me on a lesser salary. Unless I voluntarily agree to a lesser salary of course.

        1. CmdrShepard4ever*

          If you have signed an indefinite contract you can only be fired for a “very good reasons” what are those reasons usually?

          Is not enough revenue/customers a good reason? Are they still required to provide severance if you are fired for that?

          Can the company say, we will have to fire you if you don’t agree to a 10% pay cut?

          1. Koala dreams*

            Not Peter, but in my European country, that would be a layoff. When revenue is going down, or the workload is going down, you do layoffs. It could be one employee, or many, depending on the situation. The company is not required to provide severance, but they are required to pay the notice period. Sometimes employees work their notice period, sometimes they get garden leave.

            Very good reasons for firing are things like not showing up for work, being late too many times, refusing to do your tasks, stealing.

            Sometimes employees and employers agree to a pay cut. Maybe the company says: If you all don’t agree to a pay cut, we will need to do layoffs. If the employees agree to it, then the contract can be changed.

          2. Peter*

            You can be laid off due to business downsizing, but that will take a few months at least, and you’ll also have the right to hefty severance pay. If the company wants to lay you off due to poor performance, they must have it thoroughly documented and tried to have you improve your performance first. If they don’t, you can sue and probably win.

            I don’t know all the exact specifics, but employee protections are pretty good here. Of course, it’s not impossible to get rid of your employees if you need to downsize, but the employees will get at least a month’s notice and a few months extra pay for it.

        2. Gumby*

          Companies don’t fail and go out of business in Europe? Or if they do, somehow they have to keep paying until former employee contracts finish? Or is “the company is no longer financially viable” a good enough reason to lay everyone off? If the company could survive the current crisis by laying off half the workforce and curtailing operations, but would fail entirely without any layoffs, do the contracts mean they have to just not make changes and go under or are they allowed to have a reduction in force?

          Yes, there are a lot of benefits to having the contracts system you described. But, the OP’s company aside (because that is a horribly unfair way of handling things), very many companies are facing really tough choices right now. Sometimes pay cuts mean the company can stay in existence. Or fewer people lose their jobs outright. I know of several companies which have already closed entirely with no plans to resume business ever. It is very odd times. I would normally rail against pay cuts of any amount, but if it means my company doesn’t close? I can deal with it for 3 or 4 months. Fortunately I am not in that situation (yet?). Though I did take a temporary pay cut during the dot com bust and was back to my previous salary within 6? 9? months. Also, in that case upper management decided on cuts (20% for them, 10% for people making over $x, 5% for people making between $z and $x, and no cut if you were making under $z) so they weren’t shirking their responsibility like OP’s “leadership” is.

          1. Rewe*

            Yes, people can be laid off. But getting laid off has it’s own set of laws on how it can be done. And a different benefit system comes to play. And there are certain ways how when company picks up again how people will come back. Getting fired is then different.
            Contracts for us mainly cover you from being fired and defining your salaries, benefits and job description. Employee can agree for salary cut, point is that it cannot be forced on you.

            (All commenters might be from different countries with different laws)

      3. Rewe*

        In my country the employee needs to concent to the paycut. So if the employee doesn’t agree to have a paycut, then there is no paycut.

        1. Netto*

          Any chance that in your country, the paycut can be conditional; aka over a specific period of time with the agreement that the company will payout the loan once things are back to normal or will provide shares in the company in lieu?

    2. No raise this year*

      My work just cut our pay 6% (this was right before coronavirus). We were told a week before it went into effect and you either agreed to it or you gave notice. It sucks, the morale around here is very low and when the current situation is resolved there will probably be several people leaving.

      1. Diahann Carroll*

        Sadly, I will be looking as well if I don’t end up getting a sizable raise next year to make up for the one I won’t get this year due to my company cancelling salary reviews across the board. I work too damn hard and have improved several business processes and standards to end up with the same salary a year-and-a-half later. I’m fortunate that I just entered into a new lease at the beginning of March, my rent only went up by $47, and my rent won’t increase again until August of 2021. But when my rent goes up again, I need to ensure I’m paid well enough to cover my living expenses comfortably, so I need to look around to see if it makes sense to jump ship to an industry that wasn’t greatly impacted by all of this so that I’m not essentially taking a yearly pay cut.

    3. Kaaaaaren*

      To you question: “How the hell are you supposed to have any certainty in life?” The short answer is that you AREN’T supposed to. Or, at least, no one cares if you do or not.

    4. The Original K.*

      My friend is a journalist who has had her pay cut at least twice (at the same paper). I know other journalists with the same story, no pun intended. It sucks.

    5. Black Bellamy*

      Well my choice as a business owner is one of two things. I can shut the entire business down and stop the bleeding. This way everyone loses their job right away and maybe I can restart the business later after this is all over. Or I can institute pay cuts so that people are getting something and I can reduce costs so the business can operate. If there is a third choice I would love to hear it.

      How can people have certainty in their life? They can’t. Life doesn’t work that way.

      1. Harper the Other One*

        But presumably as a business owner you also recognize this is asking a huge sacrifice on part of your staff, and you give them assurances that you’ll make them whole in other ways (being gracious about sick leave, reinstating previous salaries after a certain period of time, etc.), right?

        Nobody expects complete certainty but the North American system really does play havoc with people’s lives, especially for those at/near minimum wage who are the most vulnerable, and particularly in the US where health insurance is directly related to employment.

      2. DistantAudacity*

        Well, a third option is what my European country (Norway), and others, are doing, which is using the already established mechanisms around sudden (temporary) layoffs, and adjusting them to be more generous towards businesses (i.e. the government foots the bill on severance from day 2 instead of the regular day 18(?)).

        In essence, the government is paying for people to keep their jobs, as much as possible. This avoids shifting people over to unemployment benefits, and the additional costs/hassle of re-hire when things start to open back up. This is part of a much larger package to help employees and employers alike.

        I realise this not at all helpful to you, of course!

        For context, the standard notice period when leaving a job is 3 months, which is also what you need to take into account when hiring someone with a job elsewhere. And before USians ask «how could that possibly work?!?», the answer is «you plan for it». And, of course, it helps that the entire job market works this way.

      3. Coverage Associate*

        Options 3-5: Line of credit for your business, or reserves, or insurance. (Pandemic insurance exists, though I don’t know how many types of businesses can access it.)

        1. A*

          Sure, except it can take time for businesses to work up to all of those things. As upset as I am about everything going on, I for one do not want to live in a society where it is considered irresponsible for people to open a business unless they can afford the whole kitten caboodle right off the bat.

      4. Peter*

        Businesses and their owners manage just fine in Europe. Under extreme circumstances like this, governmental support will help them pay their employees, but otherwise, they make do within the laws. And that works out fine.

        1. A*

          “governmental support will help them pay their employees”

          This makes all the difference.

          1. Autumnheart*

            Whereas in the US, taxpayers pay businesses to fund gigantic executive salaries at the direct expense of the wage-earner. So not only do we not have job security or access to health insurance and medical care if we lose our job, but then we get to watch hundreds of billions of dollars awarded to businesses to maintain their C-suite, with no guarantee that any of that trickles down. And it doesn’t.

            That’s why the same companies who got a 1.5 trillion dollar tax cut 18 months ago are now holding their hands out for another bailout, while employees can expect a whopping $1200 AT MOST, in addition to the gracious gesture of being allowed to file for unemployment a week early. Amazing, isn’t it?

      5. J.B.*

        I understand that, but you can make humane choices about the way you cut pay or the decisions you make surrounding it. Executives who have higher salaries can often absorb a larger percentage cut than someone making very little. And if you do do a cut, committing to a specific duration or set of circumstances is better than cutting pay and making people believe they’ll never get it back.

        I’m hopeful that I will have part time work in the summer, but most positions I’ve been applying for have evaporated. It’s pretty wild right now.

      6. Anon Business Owner*

        Also a business owner. Many of the people on this site do not understand the realities of running a business and paying your bills. Hang in there.

        1. EPLawyer*

          I’m a business owner. If I had employees I would not ask them to decide their own paycut. At a time like this I would lay it out for them, then explain why I made the decision I did. With promises that when things get back to normal, pay goes right back to where it was.

          You can be a business owner, pay your bills and NOT treat employees like “resources” instead of human beings.

          2. Blueberry*

            I hope that, if you want it to, your business grows to the point where you can employ people. You sound like someone worth working for.

          3. Zombeyonce*

            I hope that when it is all over, companies don’t just bring their pay back to what it was, but pay them retroactively for those pay cuts even if it takes awhile. That’s what my husband’s company is doing and it’s the right thing to do.

        2. Blueberry*

          That’s because this is an employment site, not just a business owners’ site. I believe there are plenty of places online where business owners can commiserate about the temerity and ungratefulness of those they deign to employ.

        3. MissDisplaced*

          Actually I think we do. We understand that many small businesses run a very close P&L game.
          But this is also a part of the system of capitalism in the American system, which has no federal backup for SMB owners either.

      8. Koala dreams*

        The usual response is layoffs, I believe. If it’s a temporary thing, there’s taking out loans, in whatever shape they take. A bank loan, asking your landlord to defer rent payments, discuss payments plans with vendors, applying for assistance from the state (if they have programs to help companies in this crisis).

        There are also some innovative ideas about lending out your employees to companies that need people right now. Airline employees working for hospitals or assisted living facilities, hotel employees working in warehouses of pharmacies or grocery stores. Not possible for most companies, of course, but I’ve read about some places where it has been done.

      9. Western Rover*

        I’m going out on a limb and guessing this European “certainty” is mainly for privileged office workers and not for people who make a living out under the hot sun selling food out of a truck or cutting lawns. I’m guessing that even in Europe they can’t force their customers to give them a month’s notice before they stop buying their business lunch from their truck. In the U.S. we all have the same uncertainty, not just the working class.

        1. Koala dreams*

          It’s true that things vary very much across Europe. In the European Union, the countries have some broad agreements on how things should work, but the countries are independent and can implement the rules in many different ways. Among European countries utside of the European Union, there is even less agreement on which employee protections should exist.

          In my country, many rules are decided by unions and employer organisations through collective bargaining agreements. Typically different jobs have different unions and different employer organisations and so the rules can vary quite a bit. The factory workers have one agreement, the grocery store employees another. There are some rules set by law, but there are still room for negotiations.

          Though I think it’s wrong to say that the most important factor is working class versus white collar. It’s more complicated than that. To take your food truck example, many food trucks are operated by business owners (self-employed). Business owners are typically not covered by employee protections, at least where I live.

        2. DistantAudacity*

          Same where I am. it is not a blue collar/white collar divide, but rather « are you an employee or not»?

          Coupled with what Koala said, there is a due process to be followed, even in a layoff situation.

        3. Myrin*

          The certainty of contracts does indeed apply to everyone (unless you’re self-employed, logically, which the food truck person in your comment is likely to be).

      10. GB*

        What are these other costs you mention? And why is it that employee pay is the go-to default for cost savings?

        Try cutting in other areas. Rent? Landlord provides a period of forgiveness (not just a accrued deferral to be paid back later). Materials? Renegotiate supply contracts. Finance costs? Lender gets less.

        It’s time to stop giving capital a complete pass and putting the burden on those with the least power and leverage.

        1. Koala dreams*

          You’ve pinpointed the big problem with this idea. The finances of a business is not just about employee costs, there are so much more.

    6. Coldbrewinacup*

      I had take a 10% pay cut due to the pandemic. Not so bad… I am trying to stay positive, even though I don’t get paid fairly anyway. At this point I am glad to have a job.

    7. Steveo*

      On the other hand, I can switch jobs without having to give 4 months of notice. There are some upsides to this when the economy is doing well. As for life, the only certainty is your own skillsets – which you should always invest in – and that’s true even without a contract.

    8. MissDisplaced*

      Yup. That is the lie of American Capitalism. Only the bigwigs have employment contracts and golden parachutes.

    9. Media Monkey*

      as a european (UK) i can tell you that my company have furloughed about 20% of staff and the rest of us have had our hours and salary cut by 15%. doesn’t make the LW’s situation any less awful but pay cuts are not limited to the US.

  8. Snarkus Aurelius*

    Important question: did management tell you *how much* they need to cut pay? Or did they just tell you they needed to cut pay and left the details up to you?

    All of it sucks, but this is why my question is important. Let’s say management only needs to cut pay by ten percent, but they haven’t said that. What if enough people volunteer that your employer ends up seeing a 25% or 60% pay cut? This arrangement and secrecy only benefits them, not you. If they’re as tight fisted as you say, I wouldn’t trust them to be honest if you all went way over what was needed.

    So if you don’t have this information, ask for it first. Oh and if there are layoffs? Still not your fault.

    1. JustaTech*

      Exactly! I’ve had this in very different contexts, where my team was told, “we need all the reduction we can get” and we kept asking “but how much do you need to make this change?” If you need X and we can only give you a quarter of that, is it even worth our time?

      And very much, there is no reason for anyone at your company to give up *more* money than they have to.

    2. Willis*

      Yes! This is such a weird request that it totally warrants being questioned (and I’m surprised there wasn’t really more advice in the advice). I was coming to say that OP could go to her manager (or HR or whoever initiated this) and ask what order of magnitude they are anticipating paycuts to be, can they give employees some range, etc. OP could also talk with co-workers, who I would assume are in a similar lack-of-information boat, and ask as a group so the request is taken more seriously. If the company gets a bunch of confusion from it’s employees, I wouldn’t be surprised if they provided more info.

      But otherwise I would probably give a relative conservative cut and say that if it’s not in line with what others are doing I could revisit it with more info.

    3. Bostonian*

      That last line is really important. The company is trying to shift blame for the layoffs to the employees who aren’t sacrificing their own salary “enough” (whatever that may mean). OP, you should feel no guilt if you offer up a small cut (or none at all). This is the company’s decision.

      And as a small comfort: even though getting laid off will always be awful, at least there is a larger than usual safety net for these people right now (at least if you are in US).

    1. No Tribble At All*

      Seriously. Why not ask the team to vote someone for layoffs, while they’re at it. This is some reality show nonsense.

      1. beanie gee*

        My husband’s company essentially did this.

        They (probably reasonably) said they needed to reduce the number of people in their shop to about 3 people (from 8) and asked for volunteers to be laid off. Which resulted in people voting for my husband to get laid off because his wife (me) could support him.

        We will be fine, and he would have volunteered anyway, but it felt really crappy for him.

    2. Peter*

      Yeah, assuming that this company has enough employees that one single employee’s salary isn’t relevant in the big picture, not taking any cut is always the right decision (financially speaking), no matter what other people do. But then everyone does that, and everybody is worse off than if they just all took a small cut. Classic prisoner’s dilemma and terrible decision by the company.

    3. NW Mossy*

      My first thought in reading this letter is that someone in upper management really got into their game theory class during their MBA.

      I’m as big an economics nerd as there is, and even I think this is gross.

    4. Róisín*

      I was looking for this comment because yeah, I got halfway through the letter and thought “your job should not be asking you to play the prisoner’s dilemma!”

      Your company sucks, OP.

    5. boop the first*

      It really isn’t, because no one is being isolated. Everyone seems to be forgetting that coworkers are allowed to talk to each other about pay. You don’t have to guess what everyone else is gonna do, you can just ask and decide together.

      1. Alli525*

        And in fact it might be EASIER (and safer) for employees to organize and discuss pay now that they are working from home.

        1. valentine*

          you can just ask and decide together.
          And then x of them don’t volunteer, or, if they go in as a group to do so, at least one person goes back later and says it was peer pressure and they want a smaller cut, or none. There’s no way to keep anyone honest here because TPTB aren’t being honest.

      2. zora*

        right, but I’m sure they are assuming no one will talk to each other, because talking about money is so taboo in the US. But I personally would be reaching out to my coworkers if i was in this situation and say “F*ck the awkwardness, let’s talk about how we want to respond as a group to avoid being totally screwed.

      3. LisaNeedsBraces_DentalPlan*

        Oh I completely agree that the OP and their coworkers talking to each other negates this, but as others have pointed out, people (in the U.S.) aren’t as willing to talk about pay.

        That said, it would be the perfect solution. I for one am suspicious that the company is banking that people won’t organize and they may be able to have it both ways: people volunteer for a much lower salary than needed so they save more money and if they don’t organize, the company can still claim to not have enough funds and fire people to save even more. Either way, the solution seems to be getting some guidelines on exactly how much needs to be cut to save jobs and organizing.

    6. Annony*

      That’s what I was thinking! Is this some weird psychology experiment they are running?

      One of the biggest problem I think is that they really do need to decide this as a group if they do it. They should agree on a number AND be told if that will actually be enough to avoid layoffs. The worst case scenario is that some people take significant but not enough do it to avoid layoffs so those people then have less in savings when they need it.

  10. Anon Anon*

    This is horrible. I know of one organization in my industry that did paycuts during the great recession, and they graduated paycuts that got phased out. The more money you made the greater the paycut. So the CEO who was making a million dollars a year, took a 25% paycut, but the Director who was making 100K a year got a 5% paycut. And they phased it out so anyone making less than six figures didn’t have to take a paycut. They also had to do layoffs, but they had fewer because of the paycuts.

    Paycuts are horrible, but to me if you have to do them to preserve jobs then that is the way to do it. Not by volunteering. Sadly once salaries get cut and benefits get cut they often don’t come back. Even if employees are told they are temporary.

    1. Diahann Carroll*

      Sadly once salaries get cut and benefits get cut they often don’t come back. Even if employees are told they are temporary.

      This is my problem with pay cuts.

    2. zora*

      This is amazing. I commented above, but I worked somewhere that also did paycuts for the recession. They were supposed to be 10% across the board, but salaries ranged from $200K to $20K, and then there was subtle pressure for those at the bottom to volunteer even steeper cuts/reduced hours, to ‘save our programs’.

    3. Gumby*

      I commented above, but when we had pay cuts during the dot com bust, we absolutely did go back to previous salaries within 6 – 9 months. But I knew, liked, and trusted the management of that company. (On this topic at least. Was not impressed with the widely-gossiped about and ill-hidden affair between 2 people on the upper management team both of whom were married to other partners at the time.)

  11. Beatings Will Continue Until Morale Improves*

    That’s a particularly cruel kind of test. I worked for a guy who would tell me if I got paid what I was worth he couldn’t pay his very underpaid office staff any more. It’s meant to guilt trip women in particular into sacrificing for the greater good like their unsuccessful business (or insufficient bonuses for the CEOs) is their family.

    1. If the devil were to explode and evil were gone forever what sort of party would you have*

      That’s a good point too. There’s no easy solution to this that helps everyone.

    2. The Rural Juror*

      I had a terrible boss who was just bad at running his small company, especially when it came to finances. He would often “forget” to pay me so he could make payroll for people who worked in the warehouse. I was the only salesperson, so my check was the only one that would include commissions on top of the base salary. We got paid every other Friday, so it was convenient to him that customers’ payments would roll in on Friday, and then he would pay me on Monday when he had the funds. I can’t tell you how many times I had to transfer money from my small amount of savings in order to make rent or pay my bills on time because of his “forgetfulness.” It was an exhausting cycle. He couldn’t believe it when I quit and he got really upset with me for having no loyalty. Loyalty?! HA! Apparently I had started a trend, though. 5 or 6 people left right after I did. Good for us!

  12. Phony Genius*

    If I’m reading this correctly, the writer is saying each employee may elect to take a different pay cut. Would it make any difference if the company said that they wanted to come up with one plan for everybody, but wanted employee input as to how much to cut pay vs. how many to lay off? Or would that still come of as management being unable to make a decision? (Which is what this is.)

    1. WellRed*

      Still puts too much of a burden on the employees. Management is paid to make the hard choices.

        1. valentine*

          Management could’ve decided to have a zero-profit year and pay out all the profit to the lowest-paid employees, but they’re obviously not going to do that and, by offering a “choice,” they’ve lulled everyone into siloing on it instead of getting creative or organizing to fight it.

    2. Cascadia*

      It still is too much of a burden because the employees don’t know how much needs to be cut, what other people’s salaries are, etc. You really can’t accurately make these decisions or even recommendations without all the bottom line numbers.

    3. Annony*

      I think that they should be informed of how much the paycut will be and then ask individual employees if that is doable for them or if they would rather be laid off. That is the only fair choice. No debating if maybe they could take more of a paycut to save their job or someone else’s job. Just run the math and decide.

  13. If the devil were to explode and evil were gone forever what sort of party would you have*

    This is terrible.

    But IF I were given the option, I would take a paycut instead of being laid off completely. and yes I’d be one of the higher level/management employees and I’d gladly take a paycut if it meant jobs were saved.

    1. The Rural Juror*

      But IF you weren’t one of the higher level/management, you were someone who lived paycheck to paycheck and didn’t have much in savings, could you afford to take a paycut NOW with the risk that you MIGHT still have a job down the road? What a terrible position to put their employees in, especially with no guarantee of job security.

      1. If the devil were to explode and evil were gone forever what sort of party would you have*

        @ Rural Juror – I still would have preferred it since I’d have a tiny bit of cushion while I’d look for another job. The way I see it, some income is better than $0 income and despite all the promises about State and federal unemployment kicking in, I’m skeptical about it until that money actually hits my account.

        I was on UI twice 6-7 years ago and everytime, each employer fought it and DOL significantly delayed my payments. I understand why DOL did it, but by the time the funds were released I’d already secured another job so I am skeptical.

        I was a manager in a different role so I was at 40 hours but it was slow so i could easily do 20 hours. However, if I was still a lower level employee pulling 55 hours in my previous role, I could easily see my (former) company demanding 55-hours worth of work but paying me for only 20. It’s awful.

    2. WellRed*

      Would you take a paycut but continue the same workload? I’d have trouble with that myself. If I’m making 10% less, than I should be able to reduce my work output similarly.

      1. If the devil were to explode and evil were gone forever what sort of party would you have*

        @ WellRed — the two weeks before I was cut were slow so I could see myself doing 20 hours a week instead of 40. It wasn’t so much of an issue when I was in the office.

      2. Coldbrewinacup*

        It doesn’t work that way, unfortunately. I am the top performer in my position, took a 10% pay cut, and I don’t dare think of slowing down, because I will lose my job.

        1. If the devil were to explode and evil were gone forever what sort of party would you have*

          I’m sorry, that’s a tough situation to be in

    3. Marthooh*

      Speaking of hypothetical questions, though: how big a paycut would you take? Because that is the actual question the OP is facing.

      1. If the devil were to explode and evil were gone forever what sort of party would you have*

        @Marthooh – Me personally — I was willing to take 50% cut just to save my job. But I had a lot wrapped up in this job and I would’ve done everything to keep it. I know it’s not healthy and down the line I may find this as a blessing down the road but for now it feels awful.

        Like I said, this is a terrible situation for everyone, no matter the solution people are going to suffer.

        1. A*

          I would have done the same. Even if just to remain employed while job hunting. It would take a lot for me to view unemployment as the better option than a temporary pay cut while I look elsewhere (realistically I’d only stay in a position that I had to accept a cut in if there was a contract in place stipulating when salary would return to as it was and when retroactive compensation will be provided, even then it would very much depend on how they handled it as a whole).

          1. If the devil were to explode and evil were gone forever what sort of party would you have*

            Agree. Even if Unemployment somehow ends up being more than my weekly salary, it’s only temporary, and can stop at anytime. I’d rather be employed and using my skills than be unemployed.

    4. Anon Anon*

      I think the struggle for me is that many non-higher level employee took paycuts and had benefits cut back in the last recession and they never got them back. Too many organizations realized that with lower overhead their profits were higher.

  14. Wilbur*

    GM rolled out a 20% pay cut for salaried employees, that gets paid back with interest as a lump sum.

    Something like that or rolling layoffs/furlough days would seem like a better way to handle this.

    1. irene adler*

      Yes- I was just going to write: can the OP get the company to reframe this pay cut as a pay deferral?

      And, when I was asked to take a 10% pay cut, management indicated that they were taking a 50% pay cut. Only, I later learned theirs was a pay deferral. Don’t know if they also accrued interest on the deferred amount. But I never got the 10% back.

      1. MCMonkeyBean*

        Damn, that’s some sneaky BS from management!!!

        I agree that if they can ask for that that would be ideal, and people might be willing to take a bigger hit now if they know they’d get it back in the future.

        If not, then definitely do not accept a significant cut without getting in writing that it is temporary!

  15. EPLawyer*

    UGH.

    Did someone do the math on that one letter about the employee who was giving up her health benefits and not eating the pizza to save the company to show that minor cuts here and there do no good to save a company? I mean how many people here would have to cut their pay by how much in order to save jobs? If you cut your pay 5% that isn’t saving Perdita down the hall’s job.

  16. Nonproft worker*

    Does anyone know if people subject to temporary pay reductions are eligible for partial UC?
    I’ve been googling and cannot find a clear answer. My hours are the same, but my pay rate has been cut by my company as a “temporary” (but no fixed end date) measure.

    1. The Rural Juror*

      I thought it was a reduction in hours, not a reduction in pay rate (I could be wrong). I’m sorry for your situation.

    2. WellRed*

      I doubt it unless your paycut was that drastic. In which case, I’d have a hard time working the same hours.

    3. These Old Wings*

      I’m in the same boat. I was just given a 35% pay cut and have also had trouble finding the answer. I emailed the state unemployment office (and don’t expect to receive a response any time soon) and also reached out to my state rep, who essentially read the language that’s written on the state unemployment page. What I think is the case (at least in PA where I live) is that you need to have BOTH a reduction in pay AND hours to qualify. Ours is apparently a deferral and the hope is to pay back the lost wages at some point, but I’m somewhat uneasy with the unknown and when I will revert back to my previous pay. I’m sorry you are in the same position!

      1. somanyquestions*

        35% is enormous. Did they give you the option of being laid off? I would likely pick that instead.

        1. These Old Wings*

          Not as of yet, but I’m still looking into the details of what the stimulus package offers and if it makes more sense for me to be laid off, I will likely ask for that.

  19. Bagpuss*

    Yes, this is awful. Do you have any standing to speak to your manager or grandboss and raise some of the points Alison has flagged up, perhaps specifically the risk that this could result in actual / apparent discrimination – and maybe to suggest an alternative – I think people are more likely to consider the concerns you raise if you also offer a solution – which might be something like suggesting that they propose cuts based on seniority and salary – e.g. 25% for those earning over $100,000 , 15% for those earning between $40,000 and $100,000, and 10% for those earning less than $40,000,* on the basis that the company commits to returning to current pay rates.
    Assuming that the fall is because there is less work you could also propose that they ask for people to temporarily reduce their hours, again on the basis that they will be reinstated to their previous hours when the crisis ends – so if someone were to cut from 5 days to 4 they would take a 20% pay cut . It would also let people have something in return for giving up part of their py.

    (*Figures are totally random, I am not in the US and don’t know what kind of range of salaries is normal, just through it was clearer than typing $xx-$xxx!)

    1. Shirley Keeldar*

      That’s a great idea–I too was trying to come up with a way of not doing this that didn’t look insubordinate, and this is perfect. “Look, I’m not just suggesting pay cuts for me, I’m suggesting them for everybody! I’m doing more that you asked me to do!”

  21. ThinMint*

    This is the kind of letter I’d be tempted to print out and submit anonymously back to the company.

  22. Reality Check*

    OP, if you do decide to take a pay cut, just bear in mind that it isn’t just X percent of your salary they’re saving. Worker’s Compensation insurance, for example, is based on payroll. The lower the payroll, the lower their premium. It’ll save them in other areas as well such as payroll taxes, 401k match, etc. I’d be feeling generous at 5%.

    1. Kaaaaaren*

      Agreed with a MAX of 5%. OP, if you’re forced to do this in the way they say, volunteer no more than 5%. If that’s not enough, then let them let you know.

    2. Beatings Will Continue Until Morale Improves*

      Worker’s comp is a good point. If someone gets injured on the job then they get the reduced WC pay minus whatever cut they took? Ouch…

      1. Reality Check*

        No that’s not what I meant. What I’m saying is that the premium the employer pays is a percentage of the payroll. Lower payroll = lower premium. The claim payouts are not reduced.

  23. SomebodyElse*

    This is honestly the weirdest thing I think I’ve ever heard. So weird… I’m not even sure what I would do in this situation (besides spruce up the resume).

    It’s really a no win situation and I think(!) I’d be tempted to to offer a 0% cut. Yes there is the risk that this makes you a non-team player and at greater risk for a layoff. And I’m not sure that I’d do this if I was in a position that was easily absorbed or one that wasn’t currently maxed out with responsibilities and workload. At the same time, if you survive any layoffs at least you won’t have screwed yourself on your salary. It seems to me that weighing the risk of layoff, which it sounds like is going to happen in the organization anyway I’d try to preserve whatever income I could for as long as I could.

    Once again… Yuk! This is truly a terrible position to put employees in.

    (I’m super curious what industry and sector (non-profit, public, corporate, academic, etc) the OP is in.

    1. SomebodyElse*

      Replying to myself… Another question I would ask is how this would affect things such as unemployment and/or potential severance pay. Both would be based on salary (I think), so this could have longer term ramifications as well.

    2. Diahann Carroll*

      It seems to me that weighing the risk of layoff, which it sounds like is going to happen in the organization anyway I’d try to preserve whatever income I could for as long as I could.

      This is where I’d land as well.

  24. Ashley*

    What’s the point of having a leadership team if they are pushing this issue off on staff? And what paycut are they taking?

    1. PollyQ*

      Maybe they should let some of leadership team go, since they’re not up to doing their jobs.

      1. J.B.*

        No joke. I thought the reason leadership made more was because they worked so hard and made the tough decisions?

      2. zora*

        OMG, yes, this is now my dream response: “This must mean we are laying off the entire leadership team, because in any other situation, this would be there job to figure out. And in that case, seems like we’re saving plenty of money already, so I’ll just keep 100% of my salary. KTHXBYE!!”

  25. Myrin*

    This makes me uncomfortable the same way “What are you salary expectations for this role?” makes me uncomfortable. I’d feel less uncomfortable if I had something to hold onto – like a salary range or, in this case, something like a percentage they might have in mind – but just like that? I honestly can’t even think about it too much, I’m starting to feel lightheaded.

  26. ThisColumnMakesMeGratefulForMyBoss*

    What happens if you refuse to provide a number? Are you automatically laid off? The company is putting their responsibility on their employees and that’s no way to do business. Good luck OP.

  27. NW Mossy*

    As if COVID-19 wasn’t enough of a problem in its purely medical symptoms, it also seems to have a crippling effect on the leadership skills of some management staff. This is bonkers.

    If I might shake the OP’s management team by the shoulders for a moment: this is your time, dudes. This is why executives get paid the big bucks – to step up in times of crisis, make hard decisions, and LEAD the organization through. This is the precise purpose of your job. EARN YOUR PAY.

    1. Name Required*

      This, for real. It’s literally their jobs! What kind of manager or high level exec wants to tell on themselves like this? It’s basically declaring incompetence in front of the whole company.

    2. Ali G*

      For real! I just had an emergency budget meeting with senior staff and the board where we discussed all the options. That’s OUR job, not our employees. It’s their job to do the work and keep up with our projects, etc., while we sort this crap out.
      This is a failure of leadership, plain and simple.

  28. Name Required*

    Besides it being awful, it just doesn’t seem very effective. Do you know how much of a paycut is needed? Are they telling you how much other people are pledging? Do you know who will get laid off if the amount isn’t met? How do they expect you to coordinate the effort with incomplete info?

    1. Reality Check*

      They would probably lie about how much the others are pledging. “Well, Fergus agreed to 20 percent….”

  29. CatCat*

    I wouldn’t voluntarily take a pay cut without a corresponding reduction in my time base.

    1. Noni*

      This is a great idea.

      I once worked for a small company that opened up the option to work fewer hours for correspondingly less pay during a true financial hardship. (Leadership already took cuts. They were legit trying to stay afloat and doing it well, I think.) There were many people who were happy to spend a few months taking a 3 ay weekend or working fewer hours per day, and earning that much less. And people who couldn’t, didn’t. The financial savings to the company were meaningful.

    2. WellRed*

      same here! In fact, we had to do a temporary paycut several years back, but took two furlough days a month to offset it. These days, though, I would push for a % cut instead of a flat rate with an appropriate number of corresponding days off (though I don’t think we have a huuuge range of salaries).

  30. Kahunabob*

    So, stupid question. But if companies are starting to do that now, only about a month into the self-isolation / lockdown /whatever it’s called in your particular country. Doesn’t that say something for the level of reserves the company (does not) have?

    That’s kind of like saying you want the benefits of being your own Boss, but do not want to take the asociated risks.
    It feels weird and icky. Especially when done like this. “Here’s a knife, you decide how many fingers you want to lose.”

    To be fair, I live in the Netherlands. Our social security and our rights as employees are better protected by law than in the USA. But still.

    2. Laney Boggs*

      You arent the first to ask this question. People making $10/hour are told they need to be prepared for 3-9 months of no income, whereas Boeing (airline) was flaunting with bankruptcy within a month.

      1. acmx*

        Boeing is an aircraft manufacturer. With the grounding of the MAX last year, they have numerous settlements with the airlines. Plus, airlines are deferring delivery of their aircraft orders or canceling them.

    3. Coverage Associate*

      The US tax system disincentivizes cash reserves, as does our system of corporate governance, to some extent, for large businesses. What businesses should have is a line of credit, as well as lots of types of insurance.

      Pay deferrals have been mentioned. These are just a small level, private way of accomplishing the same thing as a line of credit.

    5. Rose Tyler*

      It depends. I’m in the professional services industry and our company is in good financial shape but we’re in belt-tightening mode because with the economic crisis we know our customers may not be able to pay OUR bills in the coming months, so money in the door will dry up. It has nothing to do with the health of our firm, but rather our customer base and how work flows.

    6. fhqwhgads*

      At the company I work for we just had pay cuts across the board, with different percentages based on salary range. So the highest paid people got the biggest cut. We had enough reserves to pay everyone for about 3 months, which I think is pretty reasonable? But the problem is literally ALL our customers are shut down right now. Even if the shelter-in-place only lasts three months, we don’t expect customers to be able to start paying us at previous levels for at least six. It’s one thing to have reserves for a downturn or a bad quarter, but to cover what’s basically a 95% reduction in incoming cash flow for the better part of a year…they didn’t plan for that.

  32. Generic Name*

    This line in Alison’s response really says it all: But I can’t help but think the company is abdicating responsibility here and pushing it on to you and your colleagues in an unfair and inequitable way, even though they’re framing it as giving employees more control.

    The company talks about “tough decisions”, but they are apparently too cowardly to make those decisions? I thought one of the justifications some executives make for their exorbitant salaries and bonuses is that they are the ones who make tough decisions that affects many people. Cutting people’s salaries is bad enough, but going about it this way is really low. The CEO of my own company has stated (in writing) that if salaries need to be cut, her own salary and the principals’ salaries will be the first to be cut. That’s leadership. What your company is doing is the opposite of leadership and is cowardly.

    1. gsa*

      Yup!

      Our executives took a 40% cut and SVPs took a 25%. And we get two weeks paid if we can’t work, we’re ok now because we are “essential”, or get sick or need to care for a sick family member.

      It will be interesting to see how employer/employee relations change when we get back to “normal”. I have a feeling there will be a lot of people looking.

      They did freeze 401k matches and raises.

      1. teapot*

        Yeah there is a fair way and a crappy way of dealing with this.
        My spouse’s company has just announced pay cuts across the board, which is a blow. But the CEO is taking a 60% cut, partners 40% and everyone else 20%. So at least it doesn’t feel grossly unfair.

  33. Grr*

    I doubt this policy will effect upper management, (executives, CEO, CFO, CIO, and C-Suite employees).

    This sounds so bad, but Allison is right on the money.

    It’s as bad as the CEO of Amazon asking for donations for masks for health care workers. It’s like dude your a billionaire and you can’t donate any of Your own money to help?!

  34. Jeezy*

    I doubt this policy will effect upper management, (executives, CEO, CFO, CIO, and C-Suite employees).

    This sounds so bad, but Allison is right on the money.

    It’s as bad as the CEO of Amazon asking for donations for masks for health care workers. It’s like dude your a billionaire and you can’t donate any of Your own money to help?!

    1. Kettricken Farseer*

      I didn’t know that about Amazon – and it’s completely insane! Jeff Bezos has more money that Croesus, he should be using it.

  35. Amethystmoon*

    What if someone literally cannot afford to take a pay cut? As in, they’ve already cancelled every non-essential thing they can, they’re not buying fancy groceries, not buying soda pop or snacks, they’re not buying alcohol, they still do need to pay rent/mortgage/car if they’re being asked to show up or still, you need a car to pick up groceries? If someone does all of that and cannot afford a cut, is the company still going to give them one anyway, and they’re just supposed to put up with it? Some states are giving people breaks on being evicted (just during the crisis), but in my state, we are being told the rent is still due. It seems that a lot of companies are being as awful as they can get away with, and using COVID-19 as an excuse to do so.

    1. SweetestCin*

      Previous CrappyJob did just that. 10% across the board. I’d been there less than a year. I made the least by a significant amount (due to really crappy negotiation on my part). And then the owner at CrappyJob was severely upset and spent an inordinate amount of time trying to go “the legal route” to force me to quit the second job (completely unrelated to CrappyJob, think Professional Teapot Designer v. Llama stall mucker) that I *had* to pick up to make up for the cuts he took. Because student loans, car payment, car and health insurance, and a mortgage weren’t changing any.

      Paycuts should be the last resort, IMHO.

        1. SweetestCin*

          I’m a couple GoodJobs beyond CrappyJob now. I work for a company that is doing this particular health crisis right from all fronts at this point. They also handled a completely out of the blue personal health crisis with aplomb last year, so I’m pretty loyal to them :)

          The Owner of CrappyJob went bankrupt and is back in the field in a non-union (this is relevant in this case, the pay scale is very different) area installing teapots. His children loathe his existence. Sometimes karma does exist.

    2. Employment Lawyer*

      There are awful and non-awful reasons to use pay cuts.

      If the company is losing money (which many of them are, hand over fist) then a pay cut may be a reasonable way to avoid/reduce layoffs and hopefully preserve future employment for folks. That isn’t awful behavior: Yes, it sucks for the employees, but then again a lot of things suck for a lot of people right now and the action is reasonable.

      If the company is making a lot of money and is using pay cuts just because there’s a favorable job market, that’s awful as hell. But I haven’t heard of anyone doing that.

      1. Name Required*

        Agreed. It’s very likely that there are some real cash flow issues promoting this behavior, as bizarre as the proposed resolution to it is. The employee can “put up” with being given a pay cut or get a new job. I’m not sure how the business is supposed to pay folks money they don’t have.

      2. SweetestCin*

        I would agree that if its a temporary cut, and used to avoid/reduce layoffs, that is one thing. But when it turns into a long term salary reduction, which is the only thing I’ve seen it do, through a hiccup with CrappyJob and then the “Great Recession” with OtherwiseDecentFamilyBusinessForWhomIWorked, it just seems awful.

        And in neither of those two cases were the companies over-paying their employees anyways, so it wasn’t even a market adjustment. Mileage varies, you’ve probably seen a few more cases of this than I, given your handle :-)

        I’ve not heard of anyone doing the latter before, that’s a thing? Yeesh.

  36. Tuckerman*

    I’m confused as to how they can do this. If two people with similar experience/credentials are doing the same job, doesn’t the company have to make sure they’re paid the same?

    1. PollyQ*

      Nope, not in the US, as a general rule. Sometimes true for employees in a union or who are working for the government.

      1. Amethystmoon*

        Right, this is how women and people of color get paid less than others in the US for doing the same job and having the same job title.

        1. SweetestCin*

          I mean, it has to be RIDICULOUS before anyone flags it and says “oh carp, we need to do something about this”.

    2. AKchic*

      Ah, but if you *volunteer* to take a pay cut, then the company is absolved. It’s like one person refusing a COLA increase so they can continue qualifying for the state low-income medical insurance for their kids, or continue receiving food stamps (because the $30/mo in cash they see would wipe out the $150-200/mo they receive in cash assistance and would kick them off of the free lunch program at school, which could then make them have to get re-evaluated for daycare assistance and rental assistance…).

    3. Odriana*

      My response is very US specific as I lack familiarity with how other countries deal with this.

      Simple answer: No.
      Complex answer: Pay scale is, for most companies / organizations, given with a range and often left to the discretion of the hiring manager OR left up to the negotiating power of the person being hired. This is why women and BIPOC often are paid less for the same job – culturally we’re taught not to ask for much money for fear of being perceived poorly. Combined with many companies having significant penalty for discussing pay, people don’t really know what other people make and they are unaware that there may be some disparity. Companies that have an open policy for salary discussion, or who are outed by employees, often find that there are significant difference in pay and are then driven by employees to bring those disparities closer together.

      It’s nice to think that companies work in such a way that one would be paid equally and fairly for the same work and / or experience. Unfortunately, it’s not the norm.

      1. Iron Chef Boyardee*

        “many companies having significant penalty for discussing pay”

        Isn’t it illegal for companies to forbid employees from discussing salary?

        1. Mimi*

          Technically, yes, but many companies do it, and employees who need that paycheck to pay for groceries probably aren’t going to bring the law into it.

  37. Cendol*

    Huh, interesting. I was just reading an article in Inc about Gravity Payments doing this (link in reply). They’re the company whose CEO took a pay cut in 2017 so that all employees would make, at minimum, 70k/yr. I was mildly skeeved out while reading it (mostly wondering how voluntary those cuts really were). After reading some of the comments here, I’m wondering now whether they took into account how disproportionately women and POC might have been affected.

    2. Observer*

      Well, according to the article, higher paid people took a bigger cut. They also say that this was not just a top management decision.

      Also, given the prior context – that they’d raised the floor on salaries in good times – it’s much easier to believe that this was a genuine attempt to help people through a bad time.

  38. Employment Lawyer*

    This is slimy.

    You probably realize this, but there are built-in inequities in any type of non-progressive pay cut. A flat “dollars per week” will hurt low paid folks much more, because it’ll be a higher percentage. But even a flat “percentage per week” will hurt them more, as they tend to have less marginal income. Your manager might take this into account.

    Push back if you can. It’s best if they drop it entirely, but the least they can do would be for the company to give you information so you’re not shooting in the dark. Like, if everyone took a 10% pay cut, would the company keep all employees? Is the company guaranteeing not to lay of people who take XXX%? What happens when business goes back up; what happens if the company makes a lot of money in 2021,,,? You should know that before you act.

  39. JamieS*

    The issue to focus on isn’t that some people are going to take more of a paycut than others. The issue is that the company is transferring the responsibility of keeping the business afloat and having layoffs from themselves onto the employees. It’s no longer “Jane was let go because the company didn’t have enough revenue to keep her on.” but “Jane was let go because Mary and Roger didn’t take enough of a paycut even though the could have.”

    Not to even mention the issue with paying people different wages for the same work based on their real or perceived financial situations. Certainly harkens back to the days women were openly paid less because they ‘didn’t have a family to support like men do’.

    Bottom line OP and their coworkers shouldn’t be asked to make these decisions in the first place.

  40. AVP*

    This is interesting in the context of last night’s ProPublica article about Alteon Health cutting salaries and benefits to ER doctors and nurses this week. One of the higher-up execs (but still a frontline doctor) who got a 20% pay cut had a quote saying something like, “I wish they’d asked us about what we’d be okay cutting before making these decisions for us…” but I think he meant in terms of benefits that are more optional than salary (401k match, health coverage, etc).

    Not that anyone should be cutting ER staff’s benefits right now (who does that??!) but is this scenario better if people are voting on which benefits they could lose?

    1. TimeTravlR*

      I am so alarmed by this (I also saw an article on it). Who does that, especially now? I am keeping lists of companies that have stepped up for their companies and will, as I am able, shop (or whatever) through them. I am also trying to keep track of those who have not.

  41. Wednesday of this week*

    Can the staff (or a large enough number of them) say they aren’t comfortable determining their own pay cuts, and ask management to let them know after they’ve made their various tough decisions?

  42. GiantPanda*

    You might be able to push back in a very cooperative and friendly way.
    “Can you give us some examples how much people are cutting? Say, the C suite? Just to get a feel for the numbers and how much is needed and expected.”

    And then wait for the reply.

  43. JM in England*

    As a trekkie, this would be the ultimate work-based Kobyashi Maru scenario for me……

  44. QCI*

    Before I named any number, I would want to see what pay cuts everyone else took starting from the top down.

  45. MissGirl*

    What is a good system? If you’re a good CEO faced with making severe cuts or closing your doors, what do you do? I know in a previous company, I volunteered to go to four days a week along with about half the company to keep lay-offs from happening.

    1. Fikly*

      A good CEO starts with their salary. Then the execs. And doesn’t play mind games with their employees.

    2. DANGER: Gumption Ahead*

      I would think that making the deepest cuts at the highest levels and the smallest at the lower levels would be best. For example, C-suite gets a 25% cut, senior management 15%, front line management 10%, professional staff 5%, and 0% for the lowest paid workers. If possible, make it a pay deferral, not a cut, and make it clear exactly when everyone will be back to their normal pay level (e.g. at end of emergency declaration everyone reverts to prior pay). What you don’t do is make employees do your work by choosing how to manage the crisis

      1. JustaTech*

        And you’re transparent. “We need $X to keep everyone. I, CEO, and cutting Y%. That leaves $Z we still need to make up.”

        But also maybe have a plan for an end point. Like, it’s one thing to ask people to cut pay if you know for sure your business will pick up again in, say, 6 months. But if this is the latest blow to a faltering company…

        1. Fikly*

          Yeah, it’s all too easy for these “temporary” pay cuts to become permanent. After all, if the company sees the same amount of work for y lower cost, why should they pay what they used to?

    3. AVP*

      The reaction to Buzzfeed’s cuts last week went reasonably well, all things considered.

      100% for the CEO, then different percentages that got lower progressively with salaries so that anyone under 65k was taking the smallest cut, and all of the bands and percentages were announced.

    4. James*

      There isn’t a good solution. NO solution is going to be popular, and the harder hit a business is the less popular any choice is going to be.

      But you can’t abdicate responsibility, which is what asking for volunteers is. Not in a company large enough to have a C-suite anyway (a company with 20 employees could get away with it, if they all got along).

    5. So Anon*

      Exactly what Fikly said. While my company had to do some layoffs, they are ALSO doing salary cuts, but it’s only top leadership (biggest % cut) and director level (smaller % cut). And they were really open about how these cuts are allowing us to be confident that we’ll be in business for awhile (literally gave us numbers).

  46. Mark Roth*

    My first th0ught is that those who offer the largest drops get to stay…and don’t get their pay restored to its current level later.

  48. TypityTypeType*

    My company hit us with a 10 percent pay cut across the board when this situation began (I’m in an industry that’s being flattened by the travel restrictions), and while it sucks, at least it was clear and decisive, and for the moment, I still have a job. But I’m not counting on ever getting my previous salary back — our pay after an earlier downturn was never restored, despite promises.

    So LW, do get the reassurance in hand if you can that they will in fact restore salaries — it is the nature of most companies to think “If they’ve been working for X amount and seem fine, do they *really* need to go back to Y amount?”

    That your company is playing payroll chicken with its employees is terrible.

  49. AKchic*

    Alison is so, so right about all of this. And the rest of the commentariat has made *great* points as well. I am chiming in to express my deep concern about all of it as well.

    The company is essentially trying to guilt trip the workforce into volunteering and using the threat of layoffs to do it. That’s not a good-faith volunteer response when you feel obligated to save one (or more) job(s)! Add in the acknowledgement that the company is notoriously tight-fisted on salaries to begin with and this reeks of a company that will be very slow to return salaries back to pre-pandemic settings, if they ever do (I mean, you were “okay” with working for less for a while, so obviously it’s okay, right? Ha ha, no). And being reluctant to give a salary that is competitive or even industry standard and slow to give raises could indicate other issues that have been going on for years.
    What if there is no actual financial issue and the company is just concerned there *could* be an issue down the road and they want to penny pinch now to minimize losses later? Or, they weren’t as financially stable as everyone thought and this global crisis is making them have to rethink their structure in general and they really can’t sustain the employee numbers in general? A temporary pay-cut may only delay the inevitable.

    I think that the company should look into how the government and banks can help them meet their payroll obligations without asking their employees to subsidize the company. Or, they need to really make the hard choices and recognize that their business model is unsustainable and either cut hours, or cut positions (temporarily or permanently).

  50. Dual Peppin Whiskey*

    It seems especially…unfair? that the company isn’t telling everyone how much they need to save on payroll in order to not do any layoffs. Without a hard number being made available to everyone, this would seem to give the company the opportunity to save more on payroll than would ultimately be necessary to stave off layoffs, which just feels icky.

  51. AnotherAlison*

    From Alison’s reply: “And really, they’re giving you no information. If they want to give you some degree of choice here, a better way would be to announce that they’re cutting executive level pay by X%, and that pay cuts of Y% to Z% (where Y and Z are less than X) would be helpful from anyone who can volunteer for them.”

    They aren’t giving information about what salary cut they’re looking for, but the employees also have zero information on their larger strategy for dealing with this. Although if they’re punting this decision to employees, there probably isn’t one. If I’m taking a random pay cut, I want to know what the rest of the financial picture looks like. Perhaps they’re going out of business in 30 days if I take a cut or 45 days if I don’t. I’d rather have my full paycheck if the layoff is inevitable. Who knows what the OP’s company scenario is, but I’m just saying this is BS for even more reasons than identified. They didn’t ask you about buying new equipment, hiring Jake in logistics at a premium, or what payment terms to sign up for with vendors. . .Ugh. Don’t ask the lowest employees now. Do your jobs and manage.

      1. Bostonian*

        Totally didn’t notice. My brain read it correctly. I swear, I’m saving all my attention to detail for my work! :-P

  53. The Happy Intern*

    I have a friend who’s company is doing a similar thing but in a much better way. Their company was doing quite well before the crisis and so they’re able to afford to keep all staff hired and paid full time while only working 1-3 days/week. However, they made the decision to have everyone take a pay cut in order to keep being able to pay people full time wages for as long as possible, but they were transparent: executives take 50% cut, and employees take 10%. It’s uniform across the board, no one is taking an unfair share, and the lowest levels take the smallest cut (on a wage that is already above-average), all in order to prevent any layoffs.
    Personally I’d rather have that setup than any other.

  54. Mina, The Company Prom Queen*

    This sounds like management trying to wash their hands if any responsibility. It’s also such a mind game. Absolutely disgusting. Shame on them.

  55. Tiffany In Houston*

    I would like to know the name of a company that is doing something like this so I know who not to patronize when we come out of this pandemic. This is NOT a employee responsibility..Executive leadership needs to LEAD.

  56. irene adler*

    So is there any indicator from management as to what % pay cut they expect folks to take?
    And is there any sort of algorithm that will indicate how much of an effect on layoffs the pay cut size will have?

    Thinking no-on both counts. Blind man’s bluff.

    In fact, with this prisoner’s dilemma scenario, how will employees know how many jobs were saved vis-à-vis the pay cuts? I’m thinking management will be pleasantly surprised that the amount of the pay cut could very well allow them to preserve their own salaries (i.e. “Workers are willing to take a 30% pay cut? That’s wonderful. We only expected them to take a 10% pay cut. What shall we do with the extra savings? “).

  57. Keymaster of Gozer*

    I still keep in touch with people at a previous firm or two. One of them, help desk staff, told me that they’ve been told by management to have the help desk calls routed to their personal mobiles…and then the firm turned round and said that since nobody was willing to do that, the help desk staff are only going to be paid the bare minimum required by law.

  58. CupcakeCounter*

    My boss told me yesterday that the possibility of pay cuts are coming tomorrow. The way they have explained how they’ve worked in the past actually sounds like a decent trade off. For a 10% pay cut you get every other Friday off or if they have to go to 20% every Friday. They were very clear that at my level (salaried), there was very little expectation for work those days outside of checking email once or twice a day and having my phone available in case something urgent comes up. Both of the people I work with say that the last time they had to implement this they were only contacted for something urgent once or twice over the couple of months it went on.
    Seeing as I have a kid running around aimlessly all day while I work, having Friday’s to do something with him sounds nice (his dad is home on the weekend – essential job – so they tend to do “guy stuff” on the weekends together.

    1. James*

      That still sounds like they expect you to work. If I was told that I’d take a 10% cut in exchange for an extra day off, I’d be very disgruntled to be told “But we expect you to still be on call.” (We’ll leave aside the fact that I’m one of those people who considers myself perpetually on call anyway; the point is the company shouldn’t mandate it!)

      1. Diahann Carroll*

        Yeah, I would not be checking phones or emails on my days off. If I’m not working, I’m not working. If you want me on call, you need to pay me for it.

      2. CmdrShepard4ever*

        I would prefer to have Friday off (while on call) for a 10% pay cut, rather than the company just announcing a 10% while still working everyday. I think the pandemic is causing issues with NO good options only less terrible options. I think giving people more time off for a pay cut seems like a reasonable option, especially if the company is being good about only reaching out for urgent situations.

      3. montescristo1985*

        It doesn’t sound to me like they are contacting them on the day off anymore than you might expect to get contacted on the weekend with a regular salary job (or else my W/L balance has been so off for so long I’ve forgotten that some people don’t take calls on the weekend.

        1. Diahann Carroll*

          It depends on your industry. When I was a salaried, in-house claims adjuster, I never worked or was contacted on the weekend until the hurricanes of 2017, when I volunteered to come into the office on Saturdays to get property claims closed (and was paid time and a half via bi-weekly bonuses to do so). At my last company in the transit industry, I was salaried and only responded to messages on the weekend if I had a proposal going out on a Monday (which was rare). I’ve been in my current position for 10 months (in software) and have only responded to a message on the weekend one time – everything else waits until I’m back “in the office” on Monday.

          1. James*

            For me it depends on which projects are going. If it’s a project with weekend work, we work weekends–meaning I’m onsite 10 hours a day (getting paid). If I’m not onsite, my role usually can wait until Monday, but sometimes things come up. Again, I get paid for every hour I work (and if it’s bad enough to call me on the weekend, it’s legitimately going to take a few hours to resolve).

            Personality comes into play too. As I said, I always consider myself on-call. I don’t know how to NOT respond to a call. Other people are much better at the work/life balance thing.

            1. Diahann Carroll*

              At least you get paid for it! If I got paid for working on weekends, I probably would too, especially now that we’re trapped inside with nothing to do and nowhere to go besides the grocery store.

  59. WinStark*

    My husband works for a small business, and the owner has asked this of them. The owner is taking a 100% deferral, the head brewer is taking a 50% deferral. We decided we could afford a short term 30% deferral. But…that’s what makes this palatable – it’s a deferral. We will get that money back later in the year, if sales goes back to where it should be.

  60. WorkingGirl*

    OMGOMGOMG this is…. so bad!

    I don’t know what this company is like but I can’t really afford to take ANY paycut!

  61. Micro Economist*

    The game theory here is interesting, and probably could generate an interesting paper in a professional journal if someone took the time to write out all the possibilities in a model. I would model it as a game where you take turns offering a percentage of your salary (which is equivalent to a certain number of dollars). To make the game tractable, I would treat the total salary reduction, achieved through job cuts or pay cuts, as exogenous to the model and fully known. Every person can know the salary of other people (either as a point, or a range), but what they do not know is the other people’s risk preferences. In effect, everyone needs to compute their expected salary, which is a function of their pay-cut offer and the pay-cut offers of other people. The tractability of this game depends on the number of players and the initial variance of their salaries.

    It goes without saying, and others have said it already, but this is far better for a theoretical paper than something a person would have to endure.

  62. James*

    “How much of a pay cut do you want?”
    “I want to cut my pay by -50%.”

    Of course, it’s likely that someone so inept at managing is also mathematically illiterate, so they probably wouldn’t get the joke….

  63. Anon For This*

    This is one I’d send to the reporter Allison cited who is writing stories about bad employers.
    Polly Mosendz
    pmosendz (at) bloomberg.net
    phone number / Signal: 339-227-1657

    1. CM*

      Yes!!

      This is horrible — there is absolutely no good decision here, because if you refuse to take a pay cut you’ll be seen as disloyal / hurting others, but if you take one, you’re sacrificing your own financial security. And I agree with those that say it’s cowardly on the part of the executives. Ideally the employees could push back as a group, but in this situation they might all get fired.

      Getting the media involved is a great idea. They can put some external pressure on the company by shining a light on this terrible practice.

  64. Clementine*

    This sounds like it could be Gravity Payments. There’s an article about it on Fast Company right now (won’t bother providing URL). If so, this is the same company that started paying everyone $70K a few years ago, and the CEO has now dropped his own salary to $0. So it could be as terrible as described here, or it could legitimately be a situation where they are trying to do the best they can.

    1. CM*

      If they are legitimately trying to do their best, they would not be putting their employees in this situation. Even if it’s a misguided attempt at kindness because some people are in a more precarious financial situation than others so they’re trying to give people a choice, they would make a commitment to restore salaries later, AND would not frame it as “the bigger cut you take, the more people you save from being laid off,” AND would publicly commit that the executives are taking large paycuts.

    2. Diluted Tortoiseshell*

      That’s not what gravity payments did at all!

      1. 5 years ago is when all staff were brought to $70K and the business has grown tremendously since then.
      2. All reports state that Gravity payments had all hands brainstorming sessions (with all staff members able to contributed) as soon as Covid was impacting seattle economy.
      3. Recently, and remember Seattle was one of the first locations hit, some employees have volunteered paycuts in order to help prevent paycuts.

      This is a far cry from what the OP experienced. In the gravity payments model, all staff know what all other staff are paid. The CEO reduced their salary 100% and it was stated as such. Finally all staff were part of decision making/brainstorming ideas and they have volunteered cuts, they were never asked to make cuts to save jobs from the executives.

      1. Diahann Carroll*

        This is a very reasonable and thoughtful way to handle this situation. Kudos to that CEO.

  65. Lucia Pacciola*

    What’s wrong with:

    “We’re planning 10% pay cuts across the board, which will buy us X months of breathing room at current projections. The senior leadership tier will be taking an additional 15% cut, which buys another Y months. We’ve assigned a team of senior leaders from HR and Payroll to work with [lowest wage tiers], where it’s possible that a 10% cut will be unsustainable for our employees. Etc.”

    1. Cedrus Libani*

      Agreed. That’s what my company has done, and I don’t have a problem with it. Our customers aren’t going to work, so they aren’t using our products, so we aren’t making money. We all know this.

      First round was: C-suite 50% pay cut, next tier 25% cut, all bonuses and raises deferred for six months. They just announced another 5% cut for everyone. They told it like it is. It’s either this or mass layoffs, this is temporary and replacing a bunch of highly trained employees is expensive, so here’s your pay cut. No mind games needed.

      (In fact, people were upset on the behalf of the group that’s currently making COVID-19 stuff – some of whom have been working double shifts since late January. Our leadership is currently trying to get permission to spare them and cut the rest of us harder.)

  67. Sharon*

    Presumably the company needs to cut because business is down. A much more sensible way to address this would to ask for volunteers to temporarily work 4 days a week instead of 5 for 80% pay. Some people might jump at such an opportunity. And if no one wanted to, move to Plan B.

      1. Media Monkey*

        except the UK govt have capped the monthly amount at £2,500. which if you make more than about £30k will be a bigger pay cut.

    3. I Wrote This in the Bathroom*

      Would that then be considered part-time? Would they keep their medical insurance and other benefits? Asking because I honestly do not know how it works. Assuming they would, this does sound like a great deal and honestly I’d be tempted to take advantage of this opportunity.

  68. Trek*

    It would be great if everyone pushed back to publish salaries of everyone including leadership. That way OP can know if she/he is being underpaid vs paid average and then decide if they are willing to accept a pay cut. I think they would find a lot of people not being paid equal or correctly and those that need to take a pay cut to save jobs are the ones least likely to take more than 2%.

  69. Web Dev Miss*

    Something else to keep in mind – there is no guarantee your pay will return to normal after this. I went to work for a company and, after working there a few months, found out that everyone there had agreed to a pay cut to help the company. It was supposed to be temporary to help the company stay afloat – no more than a year. I arrived a few years later and they were still waiting for it to be reversed.

    1. Fikly*

      This is incredibly common with anything that gets cut due to some kind of economic pressure. After all, once the company knows it can get away with it, what incentive does it have to go back to paying more?

  70. Diluted Tortoiseshell*

    For fucks sake this is messed up on so many levels!

    This reminds me of the torturous “go pick your switch” punishments I had as a child. Where you had to agonize over picking too little of stick, and risking the parent getting a huge one to wallop you with, but then you also might bring too big of stick, and deal with a smug “I didn’t think you were that bad but you must deserve it” as they hit you with “larger then it would have been” stick.

    2. KoiFeeder*

      Yeah, there’s a reason those punishments are considered abuse, and it’s not solely the part where someone is beating their child.

  71. Oh fun*

    This is not the same thing, but we just got an email from management asking people to volunteer to be laid off. We’d get unemployment and they would still cover our insurance.

    They’re also discussing cutting hours and cutting our pay for those hours. So. You know. Fun all around.

    But none of that is quite as rough as what your company is doing.

  72. boop the first*

    I’m sure a lot of people are gambling on how they are perceived by their boss. Management is too weak to make the pay cut decision, are they going to make employees decide among themselves who will be laid off, too?
    I’m guessing what everyone is planning to do here will be based on their rank in the inevitable layoff. And let’s face it, it’s inevitable. They’re just grooming everyone into taking personal responsibility for it.

    It’s like negotiating with a murderer… why follow orders at knifepoint? Assuming they’re gonna let you survive if you just do what they say is a high level of trust to have in someone who should not be trusted.

    Don’t decide in secret, talk to as many coworkers as possible. The difference between this and the prisoner’s dilemma, as someone called it, is that the decisions are not secret. You can organize.

  73. BenAdminGeek*

    My company is needing to do some pay cuts, but they actually cut executive pay, put planned 5/1 raises on hold for higher-paid people, and are trying to give some raises where they can to front-line people most impacted by our changing business. I’m losing my raise, but proud of how my company’s handling it- they’re prioritizing those most at risk, cutting mostly for executives, and trying to keep cash flow going to keep us on solid footing to weather the storm here.

    Your company is just tossing it out to individual employees to figure it out, and that’s deeply irresponsible. What if they get too much of a cut- how will they decide whose cut is cancelled or changed?

  74. The Man, Becky Lynch*

    I don’t trust a soul when it comes to “voluntary pay cuts” and the lip service people will pay about their cuts.

    I had an executive who told everyone he took a pay cut to keep the business a float during layoffs a few years ago, to make it seem like “he sacrificed” and he “tried” so hard not to cut employees.

    It was a straight up lie. As the only other person other than his spouse who touched the payroll, I knew he didn’t take a cent of a decrease. The most he did was postpone his draining of the accounts for his assorted bonuses he’d set up but he took them after layoffs and the liquid was then suddenly available.

    Don’t fall for this trap. They need to stop passing on hard business decisions to the employees.

    1. JM in England*

      Totally agree with the last line. The main reason that the top brass are paid more is for the stress of making hard decisions such as these….

  75. Anon for this...*

    We just did this at my company.

    The C-level folks had to determine their pay cut from 30-50% with no reduction in time (most did 40% with a couple doing 35%).

    Staff had their pay cut across the board 40% but also had their hours reduced the equivalent amount.

  76. Jeffrey Deutsch*

    Why do I get the impression that management is priming for possible layoffs, and intends to use the answers here to decide who goes and who stays?

    1. yala*

      Yeeeeah. You don’t know what anyone else’s answer is. You don’t want to be in the lowest pay-cut bracket, but you also don’t want to take more of a pay-cut than absolutely necessary. Do you overshoot or undershoot? Where is the middle, even?

  77. yala*

    So…. the Prisoner’s Dilemma, with a little dash of Saw?

    “We have X amount of money. To stay on budget, you all can take a pay-cut. If people don’t cut enough of their pay, we’ll have to lay people (possibly you) off. You can choose the size of your pay-cut, but you don’t know what anyone else’s pay-cut is, or if they’re even choosing to take one.

    Option 1: Everybody takes just enough of a paycut–you keep your job, but at moderately reduced pay
    Option 2: No one takes a sufficient paycut–you lose your job
    Option 3: You take a smaller/no paycut but other folks take bigger ones–you keep your job and your pay
    Option 4: You take a larger paycut in case other folks don’t take a sufficient one–you keep your job, but at very reduced pay

    (I mean, there’s other options too. The Prisoner’s Dilemma generally works with 2 people. Either way, this is twisted)

  78. ynotlot*

    My dad was tossed out by his employer of 23 years because he had the highest salary. Years later, it still breaks my heart that they didn’t even offer him a pay cut. He would have taken it gladly.

    2. The Man, Becky Lynch*

      Essentially happened to my father too. He was also costing them too much in insurance because of his age.

      And it was a union job but the union said they did it the “right” way. They moved him to the crew that was first on the chopping block because there was a “need” for it. And people wonder why I’m lukewarm on unions on a good day.

      1. MissDisplaced*

        ALL employers will do that. They only see numbers not the value a person brings.

    3. I Wrote This in the Bathroom*

      I (briefly) sat next to a guy at an OldJob who was forced into early retirement for the exact same reason. They told us he was retiring and his last day was this date, but he and I shared a cubicle wall and I overheard him on the phone telling people about “premature retirement”. At least that place offered pension.

  79. Nesprin*

    I’m feeling charitable, so I’ll ask- is there any chance they were asking for people willing to be furloughed? As, in people willing to reduce their hours by 25% or something and retain the same hourly pay?

  80. Koala dreams*

    This sounds like a terrible idea, for all the reasons Alison mentioned. I can’t help thinking that the threaths of layoffs will be the most effective for the people who are already the most vulnerable: the people with the lowest pay, with the least opportunity to find another job, with children or other family members to support, with health issues…..

    If you have a sought after skill, are healthy, have no other people to support, and a big savings account, it will be much easier to say no to this pay cut suggestion. Also, what happens if people agree to the paycuts, then the revue goes down even more, and the layoffs happen anyway?

    Some commenters are suggesting a reduction in pay AND worktime across the board. I think this is a better suggestion, even if it’s not ideal. It has some fairness to it, and it puts the burden of making the pay cuts where it belongs, on the employer, not individual employees.

  81. MissDisplaced*

    Choose you own pay cut? Um. Like how abut none? Seriously, how can you be expected to answer that?
    And if the pay is cut, for how long? Even in these strange times, people ought to know the details of what is being asked. Because it’s been my experience that once pay/perks/benefits in the corporate world “go away” they will never come back!

    This is really needs to be a fully-thought out executive decision, not something to be put to the employees.

    1. WorkingGirl*

      Right… are we talking a 10% paycut for the next three months, or a 5% paycut that’ll never come back?

  82. I Wrote This in the Bathroom*

    I have no words. Way to kill the morale and have everybody resent everybody else.

    On top of this being a prisoner’s dilemma like everyone said, sounds like a trolley problem to me too. Would you rather take money (and things that money would buy like extracurricular activities for the kids, education for the kids, or how about medical care for family members? sorry Bobby, we have to cancel your therapy appointments because otherwise they will lay my teammate off) away from your family or get your teammates laid off/get your teammates to take higher cuts because you took none or not enough? Wow, just wow. Just when I thought the corporate world could not get any more cynical and inhumane.

  83. Mayflower*

    The average CEO makes HUNDREDS of times more than regular employees. Cutting executive salaries to be on par with lower-paid employees should be the first step.

    1. Anon for this one*

      So a CEO making $20k a year or so?

      Too humiliating – they’d rather take a $0 salary this year.

  84. Auburn*

    Terrible cowardly leadership. We’re in the position where pay cuts or partial furloughs (going down to 4 days a week for example) might be necessary but we’ve already told people what they will look like if they have to happen so everyone can prepare. They will be staggered, with executive leadership taking a much more significant cut than everyone else.

  85. Aphrodite*

    And I’d take a guess that the higher-paid executives will take less, far less, than the admin, warehouse or other support staff will. If they take any at all.

  86. Rose Tyler*

    “I’m really not able to name a percentage because I don’t have an understanding of how deep the collective cut needs to be. I’ve seen news stories of other companies making across-the-board cuts by percentage based on salary band, which seems like a more equitable approach and can be driven by our leaders, who have the total picture.”

  87. MoopySwarpet*

    Well . . . depending on your salary, state, how much you like working for this company, and how difficult it is to find work (generally and/or currently) in tour industry, it might be worth exploring unemployment. With the extra weeks and $600 per week, it might end up being more than your newly cut salary for long enough to find a new job.

    At the very least, I would probably not volunteer more than a 5% decrease and take my chances while saving every penny I could in case the layoffs happen anyway.

    I also like the suggestions of decreased days worked in line with the decrease in salary.

  88. Elizabeth West*

    Eww.
    If anyone takes a pay cut, it should be fat cat executives, well before the rank and file. Gross, super gross, and endless grossosity.

    1. James*

      I’m not a fan of this sort of language, for the same reason that most people wouldn’t be a fan of using abusive terms against lower-income folks. The issue isn’t socioeconomic class; the real issue is responsibility. It’s the responsibility of executives and managers to make these choices (again, assuming an organization of reasonable size). Passing that off is an abnegation of responsibility, pure and simple, and a cowardly one at that.

      1. Anonymous Educator*

        I’m a fan of this sort of language. It’s punching up instead of punching down, and there’s a difference, and the issue is often socioeconomic class coupled with power.

  89. Jennifer Juniper*

    I’m guessing pay cuts will become a way of life at this company. Every time something goes wrong, people will be pressured to take pay cuts.

  90. Pay no attention to the man behind the curtain*

    I’m late replying so no one may see this, but if even after pay cuts the company still decides to lay people off, wouldn’t unemployment payments be based on the last salary the person was making before being let go? So the reduced amount? I’d rather get laid off at the highest salary i could so my unemployment was higher. But maybe that’s phase 2 of their plan…pay less in salary, contribute less in UI, employees end up with 70% of the 70% they elected to accept…ta da it’s a magic trick.

  91. Mannheim Steamroller*

    This is clearly just another way for a company to supplement its coronavirus bailout by “seizing” its workers’ stimulus payments.

  92. R*

    Perhaps I’m overly cynical but I feel like this is a way to get employees to blame themselves for forthcoming layoffs rather than management – “Oh if we’d been less selfish, X, Y, & Z would still have jobs.”

  93. Ryan*

    Ask to tie your pay cut to company revenue goals. For example, you’d be willing to accept a temporary pay cut of X% for one year or until the company quarterly revenues return to Y amount.

    Otherwise, the economy could recover in 9 months and you are stuck with a pay cut.

    Encourage others to demand the same.

    1. Ryan*

      You could add that you want a bonus equal to the pay cut before any futures dividends are paid out to the shareholders.

      1. Captain dddd-cccc-ddWdd (ENTP)*

        As in do you think you work for the same company as the OP, or is this another company doing the same thing.

  96. RVA Cat*

    Is anyone else worried bosses everywhere are watching Tiger King and expecting us to be Saff?

  97. Thankful for AAM*

    Maybe it is time to say, I worry about opening us up to a discrimination claim if the cuts are not equal . . . gender, race, etc.

  98. Random IT person*

    I am guessing this company is sponsored by the letters W, T and F…

    Seriously – how do you undermine morale?
    I think this is about the fastest way you can do it – and still be ‘legal’.

    Once you can – find another place to work – this is just nuts.

  99. Captain dddd-cccc-ddWdd (ENTP)*

    With no other context I’d offer a pay cut of lets say 5% or so:.. why? Because we accept cost of living increases gladly but we are now going to be in a period of contraction of the economy. Generally people’s pay isn’t cut during a recession (why are COLA increases one-way-only?)

    5% or so is currently the figure I’ve seen that we are likely to retract by (after all this shakes out). Although I think it will be much more ultimately!

  100. Quiet time*

    I find myself wondering how this will play out if they don’t get enough volunteers to stave off layoffs. What happens if you take a 20% pay cut and then end up getting laid off in a month anyway, with less savings than you would have had at 100% of your salary? And will what you’re paid impact your eligibility for unemployment? (I’m in Canada; if you’re under the maximum here, your unemployment will be based on what you were earning before you were laid off). What happens if their revenues don’t recover in 4 months, 6 months, a year? So many reservations.

  101. Jeffrey Deutsch*

    Wow.

    When I studied Economics, I learned as an article of faith that employers hate cutting wages* and would much rather lay off some workers. Because cutting everyone’s wages hurts morale and your best workers decide to leave.

    [*] In nominal terms. During inflation, simply not giving raises or even only giving lower-than-inflation raises is considered much more acceptable.

    Whereas when laying off, you decide who stays and who goes. And the ones who stay don’t feel ripped off and therefore don’t slack off.

    (And for the same reason, employers generally don’t simply lay off people and then just replace them with people who offered to work cheaper.)

    Have things changed? And/or, have we missed something?

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