“Compensation lowered; can I resign and collect Unemployment Benefits?”

Question: My employer recently lowered my commission plan without my consent, and now has threatened to also lower my salary by 16%. 

If I refuse to work for the lowered salary and commissions, can I collect Unemployment Benefits? Thank you for your help. 

Deer Park, New York 

Answer: Dear Rob: Many, many people worldwide are having their compensation cut, and so I am receiving many questions like yours. Unfortunately, as explained below, there is no simple, “black-and-white,” clear answer to your question, but let me give you my best explanation, from which you can make your best decision:       

1. Unemployment Benefits are provided to people who have either (a) lost their job without fault of their own, or (b) resigned with a truly good reason. As a general rule, Unemployment Benefits are reserved for people who lose their jobs due to no fault of their own, or who resign with a good-enough reason. They are not available for those who resign “without good reason.” So, we say to ourselves, “What is a good-enough reason to resign, and still collect Unemployment Benefits?”  

Well, surely you can collect unemployment benefits if you can show that, as examples, (a) your workplace is so dangerous that you truly feared possible loss of life or health if you remained; (b) you were frequently subjected to severe sexual harassment or physical abuse; (c) your job is still available to you, but requires you move your family 5,000 miles away, or to a different country; or (d) your compensation has been reduced from $50,000 a year to minimum wage per hour. These are extreme examples of “good reason”; the less severe changes – like yours – are less clear regarding whether they make you eligible to collect Unemployment Benefits.   

For great info and insight, consider viewing our 12-minute Sklover-On-Demand Video entitled “Unemployment Insurance Benefits – The 12 Basics You Need to Know.” To do so, just [click here.] 

2. In most states, a truly good reason is a “substantial violation or change in the terms of employment”; however, whether your situation qualifies as a “substantial violation” depends on your particular facts, events and circumstances. I often tell people that, in many instances, “In legal analysis, the facts are more important than the law, because quite often the facts determine which law applies and how it does so.” Your situation represents a pretty good example of that.  

Here are four actual case decisions made in the past by the Unemployment Benefits authorities in your State of New York:

a. Case Decision: Where an employer promised an employee an increase in salary commensurate with an employee’s newly-added responsibilities, but never paid it, and the employee resigned as a result, the employee was deemed eligible for Unemployment Benefits.

b. Case Decision: Where an employer promised a wage increase after promoting an employee to a more responsible position, but never paid it, and the employee resigned as a result, the employee was found to be eligible for Unemployment Benefits.

c. Case Decision: Where an employer promised a wage increase, but due to business conditions was unable to provide it, and the employee was already at the highest compensation for that position, and the compensation the employee was being paid was about the same being paid other such people in the industry, and the employee resigned, the employee was found not eligible for Unemployment Benefits.  

d. Case Decision: Where an employer promised to give a precise pay increase, and agreed with the employee on the precise date on which the pay increase was to begin, and failed to pay it, and the employee resigned as a result, the employee was found to be eligible for Unemployment Benefits.    

There are two “lessons” to be drawn from the case decisions noted above: (i) First, every different fact can make a big difference in the way a case is decided; and (ii) Second, Judges are people, too, and each Judge sees things a little differently than other Judges might see them. 

3. If your salary was lowered 16%, and your commissions were lowered, say, 20%, based only on those facts I would view your chances of being found eligible to be on the low side. It is simply impossible to predict with certainty whether or not you would be found eligible for Unemployment  Benefits.  

However, (a) if business at your employer was slow, and/or (b) you were not given any guarantee of compensation remaining the same, and/or (c) you were not given any new responsibilities, and/or (d) you are being paid commensurate with others in your company and your industry, then you would have a good chance of being denied Unemployment Benefits. 

On the other hand, (a) if you were given assurances of stable income and/or (b) you were given new responsibilities, and/or (c) you are being underpaid compared to others in your company and your industry, those factors would surely be in your favor. 

4. “Fairness” and “sympathy” can also play a significant role in these decisions.  In my experience I have seen other facts – which seem unrelated – play a big role in the decision of the Unemployment Hearing Judge or Administrative Law Judge who makes the ultimate decision. These include (a) if you are the sole financial provider for your family, (b) if your compensation reduction made you unable to provide for the welfare of children, (c) if you seem to be respectful and honest, or, on the other hand, (d) if you seem disrespectful, lazy and simply disinterested in working. As I noted above, it is important to remember that Judges are people, too. 

5.There is one alternative available to you that you may not have thought of: Consider requesting that your employer not contest your application for Unemployment Benefits.  There are many times and circumstances in which, for any number of reasons, it is just best for the employee to leave the job. In fact, it is just possible that this is really what your employer is seeking.  

For this reason, you might consider requesting, in writing, that your employer not contest your unemployment application if and when you leave. In order for an employer to reduce overall employee headcount, and not pay severance, this is sometimes seen as a WIN-WIN solution. Of course, you must be careful to be clear that this, in itself, is not a resignation.  

Want to apply for Unemployment Benefits, but afraid your former employer may oppose your Unemployment Benefits applications? Use our “Model Letter Requesting Employer’s Assurance Not to Contest Your Unemployment Application” with Ten Great Reasons. “What to Say, How to Say It.”™ To get your copy, just [click here.] Delivered by Email – Instantly!

 Rob, what you face is being faced by so many other people these days. While I can’t answer your question with precision, I hope this information helps you make your own decision regarding what to do. Please consider telling your friends, family and colleagues about our blog – we’d REALLY appreciate that!! Oh, yes, and tell them, too, that subscribing to our blog is free, fun and helpful. 

My Best,
Al Sklover

P.S.: Applying for Unemployment Benefits can be confusing! Eliminate the confusion, and make sure you don’t forget anything – use our 132-Point Guide & Checklist for Unemployment Benefits. To get your copy, just [click here.] Delivered by Email – Instantly!  

Repairing the World,
One Empowered – and Productive – Employee at a Time™

© 2014, Alan L. Sklover All Rights Reserved. Commercial Use Prohibited.

Print Article