Is it ethical for a company to lay off employees and rehire them at lower pay?

Full question:

A new management took over our company back in May 2009. In June 24 2009, they announced that they're letting us go, and our last day, is 06/30/09. During that meeting, they gave us a choice to apply for this new company to fill the positions open. Almost half of us didn't apply, including me. The other half applied, but some of them didn't get the position. Now, during the last two days before the lay-off (06/30), After realizing i didn't apply, the operations manager offered me to stay, with a higher pay. I declined. There were few of us that they've asked to stay, however, due to the hostile environment, and how this new management treated us, the key people in the company, declined the offer and left.Now, my previous employer only targeted me and reported to EDD, that...yes, there was a lay-off, but we offered her the position and she declined. I believe their main goal is to lay-off and offer lesser pay (i was told by those who applied), and after realizing almost half of us didn't apply. They panicked.Is that ethical to do? To lay-off and re-hire against my will after realizing they made a mistake?

  • Category: Employment
  • Subcategory: Employment Agreement or Contract
  • Date:
  • State: California

Answer:

If an employee is not protected by an employment or union contract, they are usually considered at-will employees. This means they can be fired or have their pay reduced for any reason or no reason, without notice. If a contract, like a collective bargaining agreement, applies, employees may need to be given fair warning about performance issues that could lead to dismissal, as well as a clear procedure for termination. Such contracts may also outline the terms for rehire after a layoff.

Generally, as long as an employee is not wrongfully discharged and the terms of a contract are not violated, the employer can fill the position with another employee at the same or a lower wage, unless restricted by wage standards under a collective bargaining agreement or prevailing wage laws.

Wrongful discharge can occur if an employee is terminated in violation of a contract, collective bargaining agreement, or for discriminatory reasons based on age, sex, race, religion, nationality, or disability. However, if an employee is not wrongfully discharged and lacks contractual rights regarding rehire or pay rate, they may not have grounds to claim against an employer simply for being replaced or having their pay rate reduced.

Whether the actions of the employer are ethical is often not considered in business decisions, as budgetary concerns typically take precedence.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Yes, a new management company can change your lease terms, but they must follow the original lease agreement. If the lease allows for changes or if both parties agree to new terms, modifications can occur. However, any changes must comply with state laws and cannot violate existing tenant rights.