Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 1 down vote favorite

This question is not directly related to a creating or running a startup, but I guess this is one of the things that can happen at a startup and I'd love to hear responses from both sides of the situation. They startup that can't pay the entire payroll, and the employee working for a startup that is being told he or she is going to receive a pay cut.

My story is pretty simple. I'm on a two week pay period cycle, I'm a salary employee and I've been at this 2-3 year old startup for just under a year. I was told today that I might be getting a 50% pay cut on my next check and the one following. I'm your typical 25 year old that lives life and every paycheck to the fullest and I'm not prepared to take the cut, but its been stated as if I have no choice or option to agree or disagree.

I would like to hear what the startup owners would have to say if they were in the position of my boss and I more importantly would like to hear what I should do.

share|improve this question
6  
sorry to hear that. very bad luck. Depending on your local laws (you don't give your country/state are so no-one can advise you of your legal options) you may have some recourse. But if there is no cash left then you won't get paid at the end of the week. That said, it is very sloppy management to not advise employees of a looming cash flow crunch and give them a chance to plan for it. So start updating your resume. Good luck. – james May 8 '12 at 2:54
2  
Time to walk... – Steve Jones May 8 '12 at 7:34
2  
I think it is illegal. But time to get out in any case. – TimJ♦ May 8 '12 at 14:03
Im trying to get out and have been for a while, I've just been looking for a position thats not gonna put me in the same boat. Thank you guys for all your comments and help! – Peter May 8 '12 at 22:23
1  
Don't wait. Chances are if up against the wall, they'll change. Make sure it's one of the first things you say to potential employers, it'll get sympathy and consider saving some (small samples) of your code now as that is usually needed for software jobs. This only applies if you are in a technical/IT position (not specified but common). – Michael Durrant May 9 '12 at 15:39
show 3 more comments

2 Answers

up vote 10 down vote accepted

Take lawyer. Sue company.

It is illegal to cut a paycheck and not pay on a contract - the notification may already constitute fraud.

They can let you go and offer you a another contract for less money. For that they FIRST have to terminate your contract lawfully, which means in proper wording and according to the law (which in the US may mean "now", in other civilized countries can mean within a month or two). But unless they do that you have a right to fullfillment of the contract.

I'm your typical 25 year old that lives life and every paycheck to the fullest and I'm not prepared to take the cu

Then you are an idiot, sorry. FIrst, as a responsible male you should have reserves and be saving first - not "build a house" style, but "Have 3-6 months reserves on the account". I hear most people in the US Live "check to mouth" so to say - but you are in a high income professiona and having some reserves is a must. Especially if you should live in the US where the social network seems to be hardly existent by standards in most of the civilized world.

But the second thing is total bullshit. You either agree or they let you go (according to the law). Who cares what you are prepared to accept if you are not in a position to enforce it?

BEST you could do is accept it, then look for another job.

But you are always in a position to agree or disagree. It is called "Taking a lawyer" or "walking away". You can terminate. Saying you have no choice would put you into the position of a slave - and sorry, even he has a choice.

OR: are they just asking you to wait for time for the other 50%? In that case I would like a personal liability note by all management ;) But there still is the other issue...

I would like to hear what the startup owners would have to say if they were in the position of my boss

Either your boss is an idiot, or there are sides we do not see. See, what I do not like here is the "I was just told". No clue the startup is running out of money? As a boss he just lost all credibility. Been in the same position once or twice, just folded the company.

I personally would start walking. Not so much for the money, but either you were ignorant (i.e. ignoring all the talks - then it is your fault), or they kept that hidden, and in that case - sorry - zero trust left to actually provide me with income. You do not run out of money overnight all of a sudden.

share|improve this answer
1  
Thank you for your insight and explanations NetTecture. I certainly feel like an idiot now. I'm right now a "check to mouth" US citizen, but I've learned my lesson. The owners didn't get any of us any kind of heads up what so ever. Thank you again for everything you said. I will contact an attorney right away. – Peter May 8 '12 at 22:22
1  
No heads up - then my advice is fix the situation but STILL look to walk. Seirously. THis is a "you guys are not sinere with me, so I work for someone else" situation. – NetTecture May 9 '12 at 4:51
1  
And start saving. Really. You are not a low wage earner. YOu can not imagine how different the life is when you want to buy some land to build a house, for example, and the "how about your credit rating" question is one you answer with "cash". Or when you can live some years without working - and choose what to do. 3 months is minimum in my eyes, 6 better. Then the world is a lot easier to navigate. – NetTecture May 9 '12 at 4:54
I've got a lineup of interviews already and I'm already working on a small plan for savings that I'll implement ASAP. Thank you again NetTecture! – Peter May 9 '12 at 22:12
up vote 0 down vote

No employer has the legal right to reduce a W-2 employee, exempt or non-exempt, without the employee be notified in writing and signing a statement acknowledging receipt of the notice.

The employer should have called a meeting to explain the situation; not because the law requires they do that, simply to communicate what is happening and answering questions. Chances are very good that many of you will leave, which can hurt the businesses' future success.

Ignore the posts that call you an idiot. Sure, an an ideal world, all of us would have at least six months' income in the bank. It is the owners and managers that are the real idiots here for the way they are handling this.

Go to the owners and ask them to have a meeting with everyone, not just you, where they can explain in detail what is happening, what caused it, what the future plans are. If they are unwilling to do that, it's time to leave . . quickly. Chances are, things will not get better.

On the list of top ten reasons employees leave, poor or n communication from management.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.