I get calls from potential clients all the time about situations where they THINK they are being offered a promotion but the sneaky employer is actually disguising the promotion when it is in in fact, a pay cut. Typically, I see this occur when an employee who is paid hourly but is also receiving overtime pay for hours over 40 is offered a “promotion” to another position that is salary BUT is exempt (not qualified for) from overtime. Employers will often sneak some language into the new paperwork stating that the new position is exempt from overtime and you may miss this until after you have accepted the position. The end result is that your pay has been cut and you didn’t even know it! That is where state law comes into play. The South Carolina Payment of Wages Act (“SCPOWA”) is one of my very favorite laws. I have written extensively about it in the past. Employers screw up applying this law all the time. Additionally, employers based out of other states but still doing business in South Carolina (and there are tons) often do not even know about it when they violate state law. I have argued the SCPOWA in both South Carolina state and federal courts and it often provides you great leverage in your case.
SCPOWA does all kinds of things. It covers situations where you are not being paid by your employer or where you are not issued your final paycheck after you quit or are terminated. It also has all kinds of notification rules and record keeping requirements for employers. The relevant part of the statute in the situation I am discussing today is the requirement that employers give you notification in WRITING at least SEVEN calendar days BEFORE the change in pay becomes effective, if it is going to decrease your salary. Now, the loophole in the statute is that it also says that “this section does NOT apply to wage increases.” Employers always argue that because it is a wage INCREASE (at least in your base pay without accounting for overtime) that they did NOT have to give you 7 days written prior notice. Nice try! I often create detailed graphs, spreadsheets, and charts showing how the alleged increase was actually a decrease (and therefore, triggering the written notification requirements), especially when you account for the overtime issue.
So what can you do if you are offered a promotion? Before jumping up and down with excitement, sit down for at least a day and think about it. Examine whether you were getting overtime before and whether you will still be permitted overtime with the new promotion. If the answer is “no” then you need to crunch numbers to make sure that with the loss of overtime, you will still be making more money. You can always turn the “promotion” down!