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Should I Accept a Reduced Salary Right Now?

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As Texas employers plot their courses back to business, we’re getting questions from employees and job candidates about whether or not to accept a reduced salary, hours, or benefits for exempt white-collar jobs. In normal times, doing so is a very slippery slope to climb, but these aren’t normal times.

“Employers are doing all they can to stay in business and to have a job for you to go back to in the long run, which means sacrifices across the organization may still be necessary,” says The HT Group CEO and Founder Mark Turpin.  

Employers can legally reduce salary for exempt employees for a significant period during what the U.S. Department of Labor (DOL) calls “a business or economic slowdown.” For salaried (not hourly) employees, this reduction doesn’t need to come with fewer hours or responsibilities, either. However, some standards should be met to keep the request both ethically and legally appropriate. Ask yourself:

  1. Does the salary still exceed the requirements for exempt status? If your job is exempt, any reduction in compensation must still meet or exceed the minimum salary basis, which was raised to $684 per week in 2020. Also, be sure that salary reduction doesn’t inadvertently affect benefits like health insurance.
  2. Has a plan/timeline been communicated to you? Don’t expect the timeline to be set in stone, but clear communication is critical. “The reduction will last until September 1, at which time, we will re-evaluate,” is better than no plan at all. “Indefinitely” is not an acceptable plan.
  3. Is it unbiased? A reduction of exempt salary during an economic slowdown cannot be tied to what the DOL defines as “quantity or quality of work performed.” The Equal Pay Act can also come into play if salary cuts seem to be tied to gender, race, religion, or other federally protected class.

And when it comes to negotiating salary for a new job right now, prepare to enter some unprecedented waters. You may be convinced to take a lower wage due to the circumstances, but you still need to know your worth and your rights, Turpin points out.

“While you may need to agree to a temporarily reduced starting salary, there needs to be a clear agreement and timeline that gets you to your desired starting salary as soon as possible. If you start with a reduced salary with no documentation to prove it’s temporary, you’ll have a difficult time catching up in the long run,” he says. “Your recruiter will be invaluable in these types of situations because they can help you navigate and negotiate.”