May 28, 2020

FAQ: Compensation Reductions

As of May 28, 2020 – may be amended as necessary 

Fiscal Impact on Employees
President Byerly’s May 28 Message  |  FAQ: Retirement Contribution Suspension |
FAQ: Furloughs

For the coming academic year, July 1, 2020 through June 30, 2021, all faculty and staff will experience a salary or wage reduction of between zero and 6 percent depending on their annual compensation level, with those earning less than $37,000 receiving no reduction. More than three-quarters of the College’s employees will see a reduction of under 5 percent, and the average reduction is just slightly over 3 percent.

Faculty and staff will be notified of their individual compensation for the coming year by their supervisor and letters will be sent on or about June 24. 

For members of the union, the College will be negotiating with the union the members’ participation in these reductions before they become effective.

Compensation Reductions FAQ

When will the salary or wage reduction be effective?

July 1, 2020.

Why is compensation being reduced?

The pandemic has resulted in a very unfavorable economic climate for the College. While reductions outside of compensation have already been implemented, compensation is our largest single expense. The approach the College is implementing focuses on reducing compensation across the workforce rather than eliminating positions. It requires some sacrifice from everyone, but asks the most of those who earn the most.

How much will my salary or wages be reduced?

Pay reductions will be on a progressive scale (see image below), from zero to 6 percent, based on income levels. Employees earning less than $37,000 will not have their salary or wages reduced.

progressive salary reduction structure

 

Will I receive a letter with my new salary or wage rate?

Yes. Letters will be mailed on or about June 24.

Are any cost-cutting measures to compensation anticipated beyond those being announced today?

At this time, there are no other reductions to compensation that are being contemplated, but we cannot guarantee that further reductions will not be necessary.

Will these actions be reviewed if circumstances change?

We will review this decision in November in light of key factors affecting the fall semester and projections for the spring semester. Changes before or after that time are possible, but November will be a checkpoint for reporting to the community on our progress in addressing the expected deficit.

Will my compensation be restored July 1, 2021?

The College expects to be able to resume retirement contributions July 1, 2021. We hope to readjust salaries and wages July 1, 2021 as well, though those decisions will be contingent on the economic climate at that time. 

What does this compensation reduction impact?

This compensation reduction can impact your tax liability, adjusted gross income, and the value of benefits that are based on your salary or wages, such as life and disability insurance.

Will there be changes in benefits, such as healthcare or tuition remission or exchange programs?

The College is eliminating its contribution to retirement plans for the coming fiscal year. There are no other benefit changes at this time.

How will my contributions to the United Way or my HSA plan be affected?

Employee contributions to the United Way, College and/or HSA plan will not be affected unless the employee chooses to reduce those contributions.

Will my vacation/sick time stay the same?

Yes. 

If I have additional questions regarding furloughs, salary reductions or the changes to the College’s retirement plan, who should I contact?

You can find information on the Human Resources website, call the Human Resources Office at 610-330-5060 or email us at hroffice@lafayette.edu.