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Employers putting the squeeze on workers

More employers are using the recession as an excuse to rollback employee benefits, force unpaid time off or fire workers.
Duane Hoffmann /

“Sorry to gouge you, working stiff. Blame the recession.”

More employers are using the recession as an excuse to roll back employee benefits, force unpaid time off or fire workers.

“This is the worst I’ve ever seen it,” said Lewis Maltby, president of the National Workrights Institute, about the number of employers “squeezing” employees in the name of a bad economy.

“Employers in financial trouble are tightening their belts and squeezing employees,” he said. “In other cases, profitable employers are taking advantage of a dismal job market to squeeze workers harder.”

Employers are increasingly looking to employees, a major item on the expense column, as a way to shore up profits. Clearly, some choose to lay off workers: The unemployment rate last month hit 8.5 percent, with 663,000 jobs lost.

And for those left behind, it seems like a death by a million cuts.

Cost-cutting measures
In the last six months, 15 percent of employers implemented salary reductions, without a requisite reduction in hours, according to a recent poll by the Society for Human Resource Management. The survey also found that 24 percent were likely to do the same in the next half of the year.

That’s on top of other cuts already made in the last six months. The study found:

  • 78 percent of surveyed employers reduced employee health care coverage and 22 percent froze employee health care coverage.
  • 72 percent reduced, 24 percent froze and 3 percent completely eliminated health care coverage for spouses/dependents.
  • 47 percent reduced, 32 percent froze and 21 percent completely eliminated an employer match in a defined contribution retirement savings plan.
  • 44 percent reduced paid time off.

The fear of losing a job is making many workers more accepting of a host of cost-cutting measures in the workplace.

Over the past three months, an increasing number of workers “have warmed to salary cuts, unpaid leave and lost vacation” rather than lose their pay check, according to a survey by career Web site

  • 40 percent are now willing to take a pay cut, compared to 30 percent last quarter.
  • 34 percent are willing to take unpaid leave, compared to 24 percent during the same period.

Even though employees are the ones who generate profits for a company, some firms are more concerned about declining share prices in the near term than holding on to employees, said Kathy McKee, professor of labor law at Regent University. But the practice ends up hurting morale and the company in the long term, she added.

Some firms also are taking advantage of the recession to hard bargain with employees, she said, and that creates a lose-lose situation for workers.

“The reality is, in some ways, it’s a buyer’s market for employers,” McKee said. “And workers are frightened because they hear how people are out there looking more than a year for the next job.”

But fear shouldn’t keep you from questioning whether layoffs, furloughs or cuts in benefits are within the boundaries of labor laws or employment agreements, according to McKee.

The key is figuring out if your company is justified in making such drastic moves, or if they are going too far, even thwarting labor laws.

Most workers in the United States are so-called “at will” employees who can be fired, demoted or have their hours cut back for any reason, said Eric Berezin, an employment attorney with Duane Morris in Atlanta that represents employers. The exceptions are workers in unions with collective bargaining agreements that spell out parameters for changing work rules and employees that have employment agreements.

You cannot, however, be laid off or otherwise adversely impacted because of your race, gender, age, national origin or religion. Nor can you be laid off because you have a disability and your managers have not attempted to make reasonable accommodations to help you stay in your job, he added.

Employers also risk running afoul of labor laws if they furlough or cut back hours for salaried employees who are not entitled to overtime, according to the Department of Labor.

Also, if you have accrued vacation or any other benefits as part of your agreed-upon compensation, an employer may not be able to take those away retroactively. But the laws vary depending on where you live. (One of my past columns gives you a rundown on what you’re entitled to when you’re laid off.)

Layoffs, unpaid expenses
Here are some answers to recent questions from readers:

Q. I have a herniated disc and nerve damage in my left leg. Been going to the doc for shots, but he seems to think surgery is going to be needed. The company I worked for doesn’t care. They threw me to the wolves. Can I sue the company? Their excuse is the economy, but until I got hurt on 1/21/09, I had no problems in 16 years until I got a new product supervisor. I’m also 51 years old and now on workers’ comp. Yet they chose me to lay off.
— MCG, Charles Town, W.V.

A. If you believe you were singled out because of your injury or for filing a workers’ compensation claim, you may have legal recourse.

Under the Americans with Disabilities Act, certain injuries and disabilities fall into a protected category, so employers have to make a good-faith effort to accommodate your disability at work. (Here’s a list of protected disabilities.)

Also, depending on your state, there may be laws on the books regarding workers’ compensation insurance. If you were fired for filing a claim, you may be able to bring a retaliation charge against your former employer. (Contact your local department of labor to find out the laws in your state.)

Q. My company is making changes, and one of the changes being made is that our vacation pay will now only be paid at 75 percent of normal pay. Is that legal? So they are telling us, yes, you can take your vacation but only at 3/4 of your pay, and if you choose to not take your vacation, you lose everything. Why is it when you work a full week you get full pay but not if you go on an earned vacation?
— D.G.

A. The key here is if your employer is retroactively cutting your vacation pay. If you accrued the vacation days over a certain period of time and now your managers want to pay you less than you’ve accrued, you may be entitled to 100 percent of your normal pay.

Again, the laws in this regard vary by state, so contact your local department of labor’s wage and hour division.

Q. I have almost $1,000 of business expenses that the company that laid me off still owes me. Over $400 that they still have not reimbursed me for, I turned in to them back in September. They are telling me that they will probably reimburse me, but that business expense reimbursement is very low on their list of priorities, and they can’t say when I’ll receive reimbursement.
— L.C., St. Louis

A. If you racked up expenses that were work-related, you’re entitled to be reimbursed in full even if you’ve been laid off.

Most states see business expenses as wages, and employers can be penalized for not paying wages in a timely manner.

Your first step should be to check the laws in your state through your department of labor. You can also take the case to small claims court if you get nowhere with the local government.