Salary Cuts

Troutman Sanders ‘Temporary’ Salary Cut is Retroactive

Troutman Sanders logo.jpgLast week, we reported that Troutman Sanders instituted a 10% associate pay cut based on performance. Those salary cuts were supposed to be temporary. The pay cuts apply from August through December — though we don’t know if that pay will automatically bumped up on January 1, 2010.
Notwithstanding the definition of “temporary,” it now appears that the Troutman cuts are retroactive. A tipster explains it this way:

What they’ve neglected to say is that the cuts are retroactive to January 1, 2009. They will be taking the entire ten percent (or in some cases higher percentages) out of the remaining paychecks for the rest of the year. So if Troutman Sanders cuts a first year associate’s salary by 10%, they will not be taking 10% off of each individual pay check, but rather taking out the entire $14,500 in just the last ten pay periods. This is the first firm I’ve heard of to do retroactive cuts like this, and it just seems very disingenuous to present these cuts as only 10%.

We can’t know for sure if Troutman is the first firm that has done its salary cuts this way. But we are sure that this is the first time that associates have squealed about this kind of retroactive pay cut.
Which is not to say that other firms haven’t been trying to creatively get at the same problem. More details after the jump.
This information has been updated and corrected. Please click here for continuing coverage.

Some firms that have been late to the salary cutting party have been struggling with how to get the most money back from their associates. When Kaye Scholer cut salaries in June, the firm cut salaries by 20% (for low billing associates). But there the firm was explicit that it was cutting salaries by 20% half way through the year in order to effectuate a 10% cut of the full year salary.
In May, DLA Piper also tried to get a 20% salary cut through. But in the end the firm relented and decided to make a 10% cut.
So is Troutman Sanders the first firm to make its pay cut “retroactive”? Maybe. But it certainly isn’t the first firm to try to reap the benefits of a full year pay cut, despite making a late decision about associate salaries.
This information has been updated and corrected. Please click here for continuing coverage.
Earlier: Troutman Sanders: Mystery Meeting Follow Up
Nationwide Pay Cut Watch: Kaye Scholer Lowballs Low Billers
DLA Piper Gives Back 10% of the Salary Cut

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