Breach of contract
i'm in sales, and i signed an offer letter that stated salary plus commission at 3% with no minimum amount. then my employer comes back stating that i have to get 25,000 a month to bonus. I finally do that and then they say that the 25000 is to just keep my job, now i have to get 20% of my annual salary to bonus and they know that will never happen. can they just change my compensation without a new offer letter? They sent us an email that stated it was changing. Can they do this?
1 answer | asked Mar 18, 2008 3:48 PM [EST] | applies to Arizona
Answers (1)
employment at will leaves employer free to alter compensation
I begin with the assumption that your employment is terminable at will. That is the general rule in private sector employment unless you have a contract that provides some kind of job security. If your employment can be terminated at will, your employer is free to alter the terms of employment at will. The only exceptions to this as far as your pay is concerned are two concepts: First, once you have earned wages under an agreement, you are entitled to those wages regardless of any subsequent change in terms of employment. Second, your employer breaches the implied covenant of good faith and fair dealing if it changes the terms so as to deprive you of something you have essentially earned. For example, having a bonus structure under which you work for a period of time (say a quarter) and then changing it during the last week of the quarter and calculating a quarterly bonus based upon a new formula. From the facts you have described, I cannot tell whether the employer deprived you of money already earned, or whether the employer simply changed the bonus structure for the future to a less adventageous one. If the change only applies to the future, you are probably out of luck and might want to look for a better employer to work for.
posted by Francis Fanning | Mar 18, 2008 4:55 PM [EST]
I begin with the assumption that your employment is terminable at will. That is the general rule in private sector employment unless you have a contract that provides some kind of job security. If your employment can be terminated at will, your employer is free to alter the terms of employment at will. The only exceptions to this as far as your pay is concerned are two concepts: First, once you have earned wages under an agreement, you are entitled to those wages regardless of any subsequent change in terms of employment. Second, your employer breaches the implied covenant of good faith and fair dealing if it changes the terms so as to deprive you of something you have essentially earned. For example, having a bonus structure under which you work for a period of time (say a quarter) and then changing it during the last week of the quarter and calculating a quarterly bonus based upon a new formula. From the facts you have described, I cannot tell whether the employer deprived you of money already earned, or whether the employer simply changed the bonus structure for the future to a less adventageous one. If the change only applies to the future, you are probably out of luck and might want to look for a better employer to work for.
posted by Francis Fanning | Mar 18, 2008 4:55 PM [EST]
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