AUSTIN (KXAN) – While Congress was working out the details on a bill that would provide Americans with stimulus checks, at least one Austin company was looking for ways to save payroll.
“The form says they are preemptively deducting funds from our paychecks. That number is based on what they’re anticipating the government relief fund to be,” a worker for the company told KXAN. The worker asked not to be identified in this investigation so as not to impact his company’s ability to continue doing business.
The worker said his company emailed a form titled “Employee Acknowledgement of ‘Government Assistance’ Pay Reduction” to some staffers on Wednesday. “In response to the economic crisis that is affecting all of us due to the coronavirus pandemic…(company name redacted) are hereby enacting the Employee Emergency Compensation Fund,” the letter stated.
The agreement would put workers under a “temporary compensation reduction that is in line with the assistance that it receives from the federal government related to the COVID-19 pandemic.” By signing the agreement, the company’s employees would have their paychecks between April 6 and April 20 cut by 100% of any money received under the stimulus bill.
The company would also take half of the $500 stipend allotted for dependents under the bill.
The worker told KXAN the company laid off a quarter of its workforce this week. He believed the company was using the salary cuts as a way to meet payroll. But, he thought the company hadn’t explored all options before making a “knee-jerk” response.
“The company that I work for is a national company and they make hundreds of millions of dollars in profit a year and instead of making sacrifices at the higher levels, they’re passing it on down to everybody else,” the worker said.
“I think that this violates at least one law that we know of out there,” Austin labor attorney Austin Kaplan told KXAN. We sent Kaplan the salary reduction agreement to find out whether he believes the agreement was legal.
Kaplan said since Texas is a right-to-work state, workers who are not under contract have very little room to fight this.
“Employers can lay them off or fire them for good reason, bad reason or no reason at all as long as it’s not for an illegal reason with no notice whatsoever,” said Kaplan.
“From a legal standpoint, in Texas, the law isn’t as strong in employee rights as I would like it to be, but there is a federal law called the ‘Fair Labor Standards Act,” Kaplan said. “That law says that employees have to get at least minimum wage from the employer during their regular pay period.”
The act, which was signed into law in 1938, also established the employment classification for exempt and non-exempt employment in the United States.
Kaplan said he believes the company would be in violation of that law if it docked some paychecks to the amount described in the agreement.
“What they’re trying to do here, it looks like, is take people down to zero for at least one pay period and the law wouldn’t permit that,” Kaplan told KXAN. “It also just looks like a bad idea. I think employers have other options that they can do than something like this — I haven’t seen something like this before.”
Those options would be layoffs or furloughs — options that would allow workers to receive unemployment insurance benefits. Kaplan said even a reduction in hours would have allowed the workers to seek unemployment benefits to cover those reductions.
“If I was advising the employer, I always say don’t put your hands in the employees’ pockets,” said Kaplna. “And this just doesn’t seem right to me.”
The agreement, if signed, would also allow the company to continue the salary cuts indefinitely.
“The deduction will happen as many times as the government decides to make these types of distributions,” the company wrote in the agreement.
“I have no ill will toward the company. In fact, I’ve chosen to keep this anonymous because I have friends who work there, and I don’t want any harm to befall any of them,” the worker told KXAN.
“The whole reason for this is because if one person thought it up, it’s likely others have as well. So I want to make sure that there’s awareness that this could potentially happen with other businesses as well.”
This worker said he will not sign the agreement, despite the chance he could lose his job over it.
He’s asked his company’s human resources for the implications for not signing the agreement. The man said his company told him they likely would be sending out an amended form in the coming days.
“I would much rather sit in the unemployment line and be proud of my decision to leave a company that’s making these kinds of requests or demands, than hate myself for going along with it because I don’t agree with it,” the man said.