Is It Illegal for an Employer to Pay a 12 Month Salary in 14 Months?

[olimits7a]

What is the name of your state (only U.S. law)? New Jersey

I'm working with a bookkeeper at my company, my pay schedule use to be the following; June ‘16 used to be my period 12 and July ’16 would start pay period 1 again, however, they want to move us so Sept ’16 will be pay period 1.

So this bookkeeper just took my salary and divided it by 14 months, so by Sept ’17 my department would be on the same pay schedule as everyone else, however, this seems illegal to me!

My argument is you can't take my new salary contract which is for a 12 month salary and stretch it to 14 months just so I'm on the same pay schedule as everyone else. So basically they are paying me for month 13, 14 but taking it from my existing 12 month salary instead of these payments coming from the company's pocket.

Is there any legal documentation explaining how the calculation they are using is not legal because they are stretching my salary to 14 months?

Thank you!

 

[cbg]

No, quite frankly, there isn't. The Fair Labor Standards Act, which is the primary law regarding wages in this country, doesn't give two hoots how you get paid on an annual basis. If you are paid the higher of state or Federal minimum wage for the time that you worked and overtime when you work more than 40 hours in a week (if non-exempt) or $455 per week or more (if exempt), as far as the law is concerned you were paid correctly. They don't care a rip how it adds up in a year - the law does not think in terms of "annual salary" at all. Each week stands alone.

Now, if you have an ACTUAL contract (most people don't - what many people think is a contract actually isn't) and it expressly states that you are to receive x amount over no more than 12 months, then maybe an attorney would be interested in writing your employer a nasty letter. But the DOL (neither state nor Federal) is going to care.

 

[olimits7a]

Thank you for the quick reply!

Yes, I sign a new contract each year and in my contract it states that my salary will be X amount for the year and that it will be paid in 12 months.

The thing that drives me crazy is how they don't take ownership that they used the wrong calculation to calculate my weekly payments.

If my yearly salary is $60K for a 12 month pay period from January to December; which would come out to $5K a month. But then they say we want March to be my new contract start pay period and just divide my $60K by 14 months coming to $4.3K a month that seems very illegal to me.

Thank you!

 

[cbg]

It is NOT illegal. As I said, the law does not recognize "annual salaries" as a legal wage element and does not care how such an entity is divided as long as minimum wage and OT regulations are followed.

It MIGHT be a breach of contract IF what you have is actually a contract AND depending on the EXACT wording of that contract, if it is.

Only an attorney in your state who has read the full document in question can say.

 

[olimits7a]

Thank you for your reply!

Maybe "illegal" is the wrong word I should be using but if I'm owed $60K for a 1 year's worth of work but then they stretch this $60K to be paid to me in 1 year + 2 months that doesn't sit well with me. Because that means in year 1, I would have only earned $51.4K ($60K / 14 mths) and then in year 2 I would finally get back to my normal $60K salary; so they paid me $8.6K less in year 1 when my contract states I should receive $60K.

I know you said the law doesn't recognize "annual salaries" as a legal wage element and does not care how such an entity is divided, but maybe this falls under a "business ethics" category because I'm basically working 2 months for free in year 1 because of this ridiculous 14 month division.

Thank you!

 

[adjusterjack]

I know you said the law doesn't recognize "annual salaries" as a legal wage element and does not care how such an entity is divided, but maybe this falls under a "business ethics" category because I'm basically working 2 months for free in year 1 because of this ridiculous 14 month division.

This has nothing to do with ethics nor do ethics win lawsuits.

This is a contract issue, and only a contract issue.

If your contract says one thing, and the other party does something that breaches the contract you have a remedy under contract law.

Consult a business, contracts, or employment lawyer. Might not take much money to get this resolved with a scary looking letter from a lawyer.

Unless you do that, your employer has the upper hand and will do what he wants with impunity.

 

[cbg]

If you have an actual, legally binding and enforceable contract that says you get $60,000 over 12 months, then you have recourse.

If you do not have an actual, legally binding and enforceable contract that says you get $60,000 over 12 months, then you don't. I don't know how much more clear I can make it.

ONLY an attorney in your state can say whether the document you are calling a contract actually is one. There are certain elements that every agreement has to have before it can be considered a contract, and we have no way of knowing if they have been met. I do know that many, many people come here thinking they have a contractual agreement who do not.

Show it to an attorney. Contract law is the only law you may have on your side, and even contract law is not a sure thing. Wage and hour law does not give a damn.

 

[olimits7a]

Thank you for your replies!

I took a closer look at my contract last year and compared it to my contract this year, and I see there is a 2 month gap due to moving me to this new pay schedule.

- Last year contract: July 2015 to June 2016
- Two month gap: July 2016, August 2016
- Current contract: Sept 2016 to August 2017

However, I continued to work during July 2016, August 2016; so I'm not sure if I have any leverage now since technically I wasn't under any contract. I've been with this company for over 5 years under the same July 2015 to June 2016 term but this year they decided to change this.

I guess I'll reach out to a lawyer to see what they have to say, but thank you for all your help thus far!

 

[eerelations]

Just because a contract time frame is dated from X date to Y date does not in any way whatsoever mean that the annual amount to be paid must be paid within that timeframe.

So it looks like you don't even have a contract violation.

 

[cbg]

If you got paid during those two months then you were not, "working for free".

 

[olimits7a]

If you got paid during those two months then you were not, "working for free".

Yeah, I did but they pulled the money from my Sept. 16 - Aug. 17 contract that I signed; so instead of getting paid $60K per my contract terms I'm only getting paid $51.4K which seems like a contract violation to me.

 

[LdiJ]

Yeah, I did but they pulled the money from my Sept. 16 - Aug. 17 contract that I signed; so instead of getting paid $60K per my contract terms I'm only getting paid $51.4K which seems like a contract violation to me.

I honestly understand where you are coming from. What your company should have done was give you a two month contract to cover the change, and then a 12 month contract for the new period of time. However, that isn't what happened. There are basically a few explanations for that. Either the bookkeeper is a bit of an idiot and decided that spreading one contract over 14 months was the only way to handle it, or the CEO of the company is a bit of an idiot and decided that was the only way to handle it, or (an the most likely explanation) is that the company is experiencing a bit of a cash flow crunch and decided that the best way to handle it is by cheating some employees out of some pay.

Bottom line however its not illegal. It might violate your contract but you won't know unless you run your contract by an attorney.

 

[olimits7a]

I honestly understand where you are coming from. What your company should have done was give you a two month contract to cover the change, and then a 12 month contract for the new period of time. However, that isn't what happened. There are basically a few explanations for that. Either the bookkeeper is a bit of an idiot and decided that spreading one contract over 14 months was the only way to handle it, or the CEO of the company is a bit of an idiot and decided that was the only way to handle it, or (an the most likely explanation) is that the company is experiencing a bit of a cash flow crunch and decided that the best way to handle it is by cheating some employees out of some pay.

Bottom line however its not illegal. It might violate your contract but you won't know unless you run your contract by an attorney.

Exactly, what I was thinking! I'm not the only person that has had issues with this bookkeeper in the past, so a bit of an idiot is spot on!

Yeah that's exactly what they should have done and issued me with a "two month contract" to cover this change.

At the time, when the bookkeeper and CEO were explaining this to me it seemed legit and I've been with the company so long and have a great relationship with the CEO I didn't think whey would try to screw me out of money; that was my mistake and I should have done more due diligence before signing it. However, I do think that the bookkeeper is a bit of a space cadet and didn't know how to properly handle this and the CEO was just trusting in her bookkeeper that she did this properly.

It seems like the only legal leg I have to stand on is telling them they can't extend my 12 months contract that I signed any longer than 12 months, but on that "2 months lapse in contract" it doesn't seem like I have any legal advantage.

I guess, the only thing I can do is try to talk to the CEO and explain how this bookkeeper did not take into consideration this "2 month lapse in contract" when I was moved to this new contract term date and if she values my employment will do something to resolve this issue for me.

Thank you!

 

[cbg]

You are, of course, assuming that there is actually a contract. That has not yet been established.

And I don't think the OP is yet fully grasping that the term, "annual salary" has no legal meaning or status.

 

[LdiJ]

You are, of course, assuming that there is actually a contract. That has not yet been established.

And I don't think the OP is yet fully grasping that the term, "annual salary" has no legal meaning or status.

Unless there really is a contract and its part of the contract. Teachers have contracts that show an annual salary so its not unheard of.