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COVID-Related Salary Cuts/Adjustments

Hello everyone, our company recently announced on Thursday July 30th that due to COVID every salaried employee would take a 10% salary reduction effective August 1st, temporary but indefinite based on leadership discretion. The option was a salary deferral from August 1st through December 31st, with no 10% reduction. This sounds to me like an interest-free loan to the company.

We had to submit our decision by Friday 31st, so I've already made my decision, but curious what everyone thinks or if anyone is going through the same issue. I guess I'm tired of being told to be thankful that I have a job. I've heard that long enough.

Chris Zeller's picture

Hi JL,

A lot of my clients have made similar decisions, with those earning the most taking the largest % decrease, either by job level or salary band. I see it more in industries that have been hit hard by the virus.

In every case, they've adopted these measures either to delay/limit full-blown layoffs or because their company is facing existential risk and may not survive. There's something to be said for everyone sharing in a little bit of pain so that no one person has to go through intense pain.

Etiher way, it's an indication that your company isn't flush with cash and may not be the best shape from a income statement/balance sheet standpoint.

From a logical consistency standpoint, this is enitrely appropriate if the company has ever handed out bonuses or had a profit-sharing plan. If you expect to share in the bounty when times are good, then you ought to be willing to tighten your belt when things get tough.

jl_herrera's picture

Thanks Chris & completely agree with sharing the pain. However I just received a $30k invoice for new furniture for a C-level office. I guess when the PPP loan had to go towards their bonus, we all had to shell out for a $4k sculpture among other things.