Is Peak’s maneuver legal — or fair?
Don Day | February 28, 2009Both Peak Broadcasting and Citadel Communications announced they would slice paychecks for employees this month. PB said it would pull 10% from all non-sales employees, while Citadel Boise asked for a 5% slice.
Peak and Citadel are doing what they think the must to survive, and clearly taking money from employees pockets is not an action taken lightly. However there’s a unique wrinkle here: the presence of personal service contracts. Employees – especially on-air talent – are asked to sign these agreements.
The bargain is simple: you sign a piece of paper guaranteeing you compenstation and a series of raises, and in exchange you promise not to work for a defined set of competitors. In some cases it is just the local market area, but in others it can apply to larger geographic areas or markets by rank (i.e. you can’t work for stations in anything smaller than market 50, for example).
Employers like this deal because it legally binds you from going to work across the street (disclosure: I am employed under a PSC). Employees don’t generally have a ton of choice in the matter since this is generally a requirement of employment — but they do provide some stability and a guaranteed raise each year.
Multiple source tell me that in Peak’s case, the company is requiring the contracted employees to take the cut. They have been told they must sign a document agreeing to the pay cut. However, it’s the other half of the deal that is at best problematic. Employees tell Idaho Radio News that they have been told if they did not sign the agreement, they are subject to immediate termination without cause.
Those employees have a contract – a piece of paper that guarantees them a job. Peak is telling employees that they must sign the pay cut addendum or be terminated. Experts I’ve talked to indicate this could be tricky for PB if an employee chose to challenge the tactic. A check of court filings shows no current lawsuits by employees against the company.
Yahoo HotJobs has some excellent advice:
If you have an employment contract, you may be able to refuse the cut altogether or at least quit and collect unemployment, but only if the contract states terms of compensation and says that your employer cannot alter the terms without your consent. The pay cut could constitute a breach of contract and an attorney can help you negotiate the terms of your release or fight for your full pay.
Another avenue is to contact your local unemployment office. IRN regular Jim Smith has offered to talk to anyone with questions – wheter it is from Peak, Citadel or elsewhere in the state. Call your any Job Service office statewide and punch in extension 3283.
“If you have an employment contract, you may be able to refuse the cut altogether or at least quit and collect unemployment, but only if the contract states terms of compensation and says that your employer cannot alter the terms without your consent. The pay cut could constitute a breach of contract and an attorney can help you negotiate the terms of your release or fight for your full pay.”
So couldn’t an employer just include a clause in the contract stating that they can change the terms of salary or job description at anytime without prior notice or approval?
Seems like I’ve had a contract before that stated just that…
This exact situation started the demise of one of the West Coast longest standing formats a couple of weeks ago.
CBS Radio’s “KLSX/97.1 FM-Talk” flipped formats to “97.1 Amp Radio”, at Top 40 format that was being developed on one of CBS Radio’s HD channels after Tom Leykis refused to negotiate a pay cut in his CBS Radio contract.
CBS Radio asked the entire KLSX air staff to take a 10% pay cut using the economy as “the issue” to institute pay cuts across the board. Everyone on the KLSX staff agreed except for Tom.
Tom’s stance on the situation was that CBS as a company had signed him to a “no-cut” multi-year contract. CBS had planned and made a budget with Tom’s 1.5 million dollars a year contract to do Afternoon Drive on KLSX. They signed the contract and in turn should have been prepared to pay out the agreement. His contention was that CBS was going to pay him his guaranteed contract anyway, no matter what the economy was like because they had already budgeted his deal into operating costs for KLSX.
Tom refused the pay cut then Westwood One, A CBS Company and Tom’s syndicator, informed Tom then paid out a settlement of his multi-year syndication deal.
2 days later CBS told him that KLSX would be flipping formats due to budget constraints.
The point is if any talent signed a contract before all of this mess called “the economy” started messing up the game, The broadcast companies should have planned better to maintain their talents contracts. They should have to pay you, as a contracted performer, every penny agreed to in your agreement.
It’s my point that anyone with a signed deal should seek advice from an attorney before they agree to any type of pay cut.
Tom is now sitting out the rest of his deal until March 31st, 2012. Getting paid 1.5 million per year to sit at his ranch and do nothing.
Do you think when the economy improves any of these salaries will be reinstated? There is no way. The company just got you to agree to a pay cut, why would they ever change that?
I was once told to sign a paper that said “if you say anything on the air to cause an FCC fine, you will pay the fine, our company has no responsibility.” I refused to sign it and they did nothing about it. I wonder if these companies will actually make good on that threat? It would be interesting to watch..
Wild Bill, neither party to a contractual agreement “just includes” a paragraph without the consent of the other. If it has “that paragraph” and you sign the agreement, then you are saying, “Sure. No problem. Change at will.” If you don’t like that Idea, don’t sign the contract with it in.
Tom L denies that story…..that HE was the cause and would not take a pay cut
If memory serves me right…IF you dont like some clause in a contract you mark it out….prior to signing….and it is no longer part of the contact or will cause one side or the other to re-consider the agreement….?