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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
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Experience:  Significant experience in all areas of employment law.
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I was hired as a salaried employee and now my employer says

Customer Question

I was hired as a salaried employee and now my employer says my position is being eliminated. They offered me an hourly position making $7K less. If I don't accept the lower wage can I still get unemployment?
Submitted: 4 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 4 years ago.

Hello and thank you for entrusting me to answer your question. I am very sorry to hear about this reduction in your pay.

Generally speaking, a claimant must prove that they are unemployed "through no fault of their own" in order to receive unemployment benefits. Where a claimant refuses a new position, they must demonstrate that the refusal was with "good cause" or else the EDD will reason that they are unemployed "through fault" (since they voluntarily passed up a decent opportunity) and deny the claim. "Good cause" for refusal can arise if the work was at a substantially reduced rate of pay, and to this end, the EDD states as follows in their Benefits Determination Guide:

"An employer is often forced to reduce wages for economic reasons. However, the fact that the employer's declining business necessitated reducing employee wages, does not impose a duty upon the employee to accept the reduction. In cases involving wage reductions, good cause is measured by the reasonableness of the claimant's actions in relation to the circumstances existing at the time of quitting.

Title 22, Section 1256-22(b), Comments provides:

. . .factors other than a pay reduction influence an individual's decision to leave the work, all such factors are evaluated to determine whether a reasonable person genuinely desirous of retaining employment would have left the work. . . . However, a pay decrease of 20% or more, taken alone, is a substantial reduction in pay to establish good cause for leaving work where the employee is notified of a transfer or demotion to another position with the employer. Pay includes the basic wage, shift differentials, board and room furnished by the employer and guaranteed overtime. Pay also includes fringe benefits such as vacation pay and insurance if such fringe benefits are currently available or set schedules and information to value fringe benefits for the former and other position are available."

As noted above, reductions in pay of more than 20% are a "substantial reduction in pay to establish good cause." Thus, if the $7,000 paycut you have been offered amounts to a reduction of more than 20%, refusal of this work would ordinarily be with "good cause," and so even if you quit you would likely remain eligible for unemployment.

However, if the $7,000 paycut does not amount to a 20% or more reduction, then you would need to argue that the paycut, in combination with other changes being made to your employment, were such that a reasonable person genuinely desirous of retaining employment would have left the work. That is a much harder case to make, and your unemployment benefits would be far from guaranteed.

Please do not hesitate to let me know if you have any questions or concerns regarding the above and I will be more than happy to assist you further.

If you do not require any further assistance, please be so kind as to provide a positive rating of my service so that I may receive credit for assisting you. Very best wishes to you and thank you so much for coming to Just Answer.

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