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  1. #1
    Join Date
    May 2017
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    26

    Default Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    My question involves labor and employment law for the state of: North Carolina

    Hi all, thanks in advance for your help. Background about my situation: I am a vendor employee working for a "Management Consulting Firm" (as described by Google). A vendor employee is similar to a contractor in that I am assigned to a specific account (client), do all of my work for that client, and like a contractor I am an hourly employee.

    Today I received an email from my consulting firm that they have instituted a 15% rate cut for all of their affiliates working on accounts (so not for their full-time employees but specifically for people like me assigned to specific clients).

    The first thing I did upon receiving this email was speak to my bank manager (the client I work for is a bank). My bank manager, who also happens to manage the relationship with my consulting firm, had no idea that this rate cut had happened, so the bank is still paying my consulting firm the same amount for my services, but my consulting firm just unilaterally decided to keep more of that money for themselves because, in their own words/email, they have lost a lot of money this year due to COVID-19 and need to take extreme measures.

    I would understand it if the bank/client cut my rate because they needed to cut costs, and I am a producer on the bank account, but is it legal for my consulting firm to do this? I was never told by my consulting firm that they can unilaterally change my rate at their discretion. Also, I have received multiple increases in my rate. Each time, the client was required to approve the increase. On one occasion, the client even voluntarily gave me an increase due to my exceptional performance. Why would the opposite not hold true - a decrease in my rate should also be approved by the client?

    Can anyone please advise on this situation from a legal standpoint? Can a consulting firm take this action? Should they have been required to disclose upon hiring me about the possibility of a rate change at their discretion?

  2. #2
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,384

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    Who actually issues your paycheck? The bank or the consulting firm?

  3. #3
    Join Date
    Nov 2013
    Posts
    6,887

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    You are an IC by definition but you may be a misclassified employee.

    Can they cut your rate of pay? They can by virtue of the fact that they did.

    Do you have a contract?

  4. #4
    Join Date
    May 2017
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    26

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    Quote Quoting cbg
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    Who actually issues your paycheck? The bank or the consulting firm?
    The consulting firm issues my paycheck.

    Quote Quoting budwad
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    You are an IC by definition but you may be a misclassified employee.

    Can they cut your rate of pay? They can by virtue of the fact that they did.

    Do you have a contract?
    The client/bank has a contract with my consulting firm that covers me and all the other affiliates on the account. I do not have an individual contract.

    To your other point, a lot of companies and people do things they can't necessarily legally do and get away with it, so I'm not convinced by this answer For example, I do a lot of strategic work for my client and have been told by both my client and account manager that I technically should not be doing this type of work based on the contract because due to co-employment risk, I can sue the bank. But everyone closes their eyes to it because it's convenient.

    Whether or not it's legal, frankly a 15% pay cut to all the producers on accounts seems like horrendous business sense to me. If the company has mismanaged their assets so badly that they're already broke a few months after COVID-19, that means the management team is inept.

  5. #5
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,384

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    I disagree with bud. You are not an IC, you are the employee of the consulting company.

    Unless you have a legally binding and enforceable contract that expressly says otherwise, your employer (that's the consulting company) can lower your wage with the qualifications spelled out here.

    https://www.labor.nc.gov/workplace-r...eduction-wages

    And that's straight from the source.

  6. #6
    Join Date
    Mar 2013
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    17,916

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    Quote Quoting BobStanley
    View Post


    Whether or not it's legal, frankly a 15% pay cut to all the producers on accounts seems like horrendous business sense to me. If the company has mismanaged their assets so badly that they're already broke a few months after COVID-19, that means the management team is inept.

    Since you don't have an individual contract with your employer why not see if the bank will put you on its own payroll as a full time employee so you can quit the chiselers?

  7. #7
    Join Date
    Nov 2013
    Posts
    6,887

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    Quote Quoting budwad
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    You are an IC by definition but you may be a misclassified employee.
    Quote Quoting cbg
    View Post
    I disagree with bud. You are not an IC, you are the employee of the consulting company.
    You may be correct if OP is receiving benefits from the consulting company such as workman's comp, health benefits, payroll tax, vacation and PTO. But if all OP gets is the hourly wage, then the consulting company is treating him/her as an IC.

  8. #8
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,384

    Default Re: Can a Consulting Agency Reduce Rate of Contractors and Pocket More for Themselves

    Workers comp, unemployment and any payroll taxes, yes. The others are not necessary to prove employment.

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