Salary adjusted after not moving to the city

Question

I work in FAANG and I was hired 2 years ago. The plan was I would move to Seattle from the Midwest and I initially wanted to move there but no one came to the office so I didn't move. I even visited the office a few times and it was empty. Even my coworker who has been working for the company for some time works from home all the time. Fast forward to two days ago when I got an email from HR saying I didn't move to Seattle and my salary is due to be adjusted. My manager said because I didn't move, my salary needs to reflect the city I currently live in and if I move to Seattle, my salary will go back to what it was.

My salary went from ~$150k to $115k. It's very depressing because I feel like I am not being valued, but my manager and my teammates have been happy with my work. I even got a salary increase a few months ago.

My question is this normal or even allowed?

Answer 1

My question is this normal or even allowed?

Salary adjustments based on cost of living are very common. Otherwise you would not find people to work in many areas and grossly overpay others.

The "plan" was that you earn 150K in Seattle. It did not go according to plan. You did not move to Seattle. Given that Washington is an "at will" state, if you did not have a contract saying otherwise, that could be a reason to fire you. Where you live inside the US is not a protected class (unless it hints at other protected classes, I'm sure it would be different if they fired everyone living in an Indian reservation). Given that your employer still upholds the option to follow the original plan and is still willing to pay you what was agreed on if you do what was agreed on, I can see no discrimination of any kind.

Yes, this is demotivating, to see how you make a lot less on paper now, that your salary has adjusted to your new plan. But in fact, you simply made too much all the years and you got away with it. They don't want it back. Not so bad.

I suggest you actually calculate, how much money you can save each month after you have paid all the bills. I would not be surprised if you ended up with a net positive for not moving. If you need motivation, look at the amount of money you save right now versus the amount you would be able to save in Seattle.

It still is your decision, do you want that salary? Would you get more money with the original plan? It is available under the same conditions it was when you took the job.

Answer 2

I am a manager at a FAANG sized company in the Seattle area and had to steer an employee of mine through this when he moved out east at the start of the pandemic. It wasn't a fun thing to break the news to him about this either.

So yes, this is a legal and real thing to have a salary adjustment when an employee changes states or regions. Effectively, he had to sign another offer letter. He was effectively being offered a new job in a new state. There were other incentives to help offset the adjustment.

Something to know. The salary adjustment is not based on the cost of living of your location (as others on this page have erroneously cited). It is actually about getting paid the market rate for tech engineers in your region of the country.

That is, if you live in Nebraska, engineers probably don't make as much there as they would in San Francisco or Seattle. The company doesn't want to pay Seattle salaries if there is limited local competition for business that need your services. It just so happens, that cost-of-living is typically lower in these same regions. But that's not why the company is adjusting the rate. While companies are embracing remote workers, they are also taking advantage of it being less expensive for them.

As such, you likely have some sort of promotion or ladder level assigned to you (based on experience, past performance reviews, promotions, etc...). And the company sets the salary for your role and there's a matrix for what that level pays in each region. It's not your manager's fault, it sounds like they've been diligently giving you raises and promotions during your tenure - hence, they value your work.

So start with this in considering what you are worth:

• What do other tech companies in your mid-west city pay for equivalent skills and experience? Do they pay anywhere near the Seattle salary you had before?

• And would you be happier working there in your current city for a different company that might be slightly more, but not quite what the Seattle office pays?

• Consider the quality of life and cost of living in Seattle compared to your current location. It is indeed expensive to live in Seattle. Housing prices and rent have exploded in the past few years. Food and gas are expensive. And I've known several people who have visited and were aghast at the homeless population downtown. You might find that $150K here doesn't go as far as $115K where you are currently at.

Now, how can you overcome the pain of your salary reduction?

• Periodically, in an appropriate way without whining, advocate for promotions and have career discussions with your manager. Advocate for yourself and ask what you need to do to get to the next promotion level sooner. Express to your manager your disappointment with the pay hit you took. You need them to be your biggest advocate.

• Periodically scout out new employment in your area. Just having a profile in LinkedIn with the "Open To Finding a New Job" setting enable might get some recruiters contacting you. Do consider that a base salary from a local company might be higher than your current salary, but it probably won't compete with your periodic bonus and stock awards you get now.

• Consider moving to Washington State, but not downtown Seattle. You might find that the company's definition of "eligible for Seattle pay" is really anywhere in the state, and not just Puget Sound. (I believe that's the case with my company). Check with your HR department. Then consider if there's anywhere else around here that looks interesting.

You didn't say which company, but we might be co-workers. If you look me up and we work at the same place, feel free to hit me up for more insider tips.

Answer 3

Honestly, after reading and re-reading the question here and some of the responses to this, I feel like one very large angle is being overlooked in the morass of legality, ethics and at-will employment.

[My salary being reduced from ~$150K to $115K is] very depressing because I feel like I am not being valued but my manager and my teammates have been happy with my work. I even got a salary increase a few months ago.

You were tying the value you bring to the company directly with your salary. This...is a convenient way to do it, but is almost always an incomplete figure.

It has already been well-established in other answers that yes, this is perfectly legal and yes, this is perfectly allowed, and yes this is entirely on-pace with the nature of remote vs office work, in that the company is allowed to compromise with the desires of the employee and the need for them to fill the office space.

What you're not factoring in is the projected value and worth you're bringing to the company, which is resultant of a salary adjustment because of your ZIP code.

What I would encourage is a discussion with your manager about this. Be frank and open, but don't whine if you can help it.

• State your perspective on the matter. If you wish to continue working there, express that clearly. If you are thinking of looking around, do not lead with that since that will make you a flight risk to the company.
• Express your opinion on the value that you bring to the company. Cite recent projects, colleague accolades, and things that you have had a direct hand in improving around the place.
• Ask your manager if there's something there that can help reinforce the value you bring to the place, as the recent salary adjustment put the story in your head that you were less valued than before.

Having open and frank discussions like this with your management will help you charter next steps. It could be a title change for you; it could be a new job for you. Don't wallow in indecisiveness on talking with people about this, and don't let the salary adjustment that is orthogonal to your performance tell you that you are less than adequate at your job.

Answer 4

There are a few things to consider from the employer's perspective.

1. The pandemic has upended working practices, but many policies were written before the pandemic, and at least some businesses probably still hope to at some point return to pre-pandemic normal.
2. There are advantages to having an employee be local, even if they are not coming in to the office every day. Tools like zoom and teams are often a poor substitute for getting a bunch of people in a room together to thrash something out. Or when someone needs a peice of equipment they can just collect it rather than having to arrange shipping.
3. If you want to hire people in a high wage area, or convince people to move to a high cost of living area you will have to pay them more than you would for people of similar skill level in a lower wage, lower cost of living area.

Answer 5

If the employment contract or the job offer explicitly states that your salary is 150k with the condition that you move to Seattle, then unfortunately, the company can try to use that as an argument to reduce your salary.

Some companies allow employees to work remotely during the time of COVID. But, now, things have improved, and they want workers to go back to the offices.

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If you want to stay in the mid-west and work for this company, maybe you still can negotiate with them by saying that the salary reduction of $35K is too much. Maybe, you can try to ask them to reduce less than $35K.

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However, if the company's job offer does not say anything about your moving to Seattle as a requirement to get the salary of $150K, then you can talk to an employment lawyer.

Answer 6

Unless its written in the contract and you signed it, I would never accept this. I expect my salary to reflect the values I create - not the cost of my living. With "cost of living logic" a company should pay me a higher salary just because I got a new and more expensive car or bought a huge mansion. Thats not how it is, so it should be the same when you have reduced your cost of living.

Answer 7

is this normal or even allowed?

Yes it is normal. Very few workers in the United States have contracts that specify these things in detail. It is not unusual to hear of salary cuts. It happens when business slows or company income doesn't support the current pay scales.

If it is allowed, depends on the Labor laws in your state. In general at-will employment laws give your employer options:

• they can tell you no move or be let go;
• they can cut your pay, or
• they can decide to allow you to work remote at your current pay.

They are expecting that you will either move to Washington state, or they will fill your slot with somebody who will.

Answer 8

My understanding of US Employment Law (I am neither a lawyer nor an American) is that, in at-will employment, the employer is heavily favoured in almost everything. Can they cut your salary? Sure. For any reason (unless it's directly protected by the constitution, e.g. discrimination, or by your employment contract), by any amount. They can even cut it all the way down to zero, by terminating you without cause without delay (your boss can pull you into a meeting, say "you're fired", and that's all there is to it).

Is it legal? Sure. Is it normal? Well, consider that companies like to have people working for them, and they like to have skilled people working for them more. If the company wants to retain skilled talent, then it's not normal; if you are providing value, then they should appreciate your performance and pay you more (or at least not cut your salary by paying you less). Meaning, either you are not performing as well as you think you are, or your company does not appreciate you.

"Cost-of-living" is a red herring, as far as I'm concerned. The company may say they see it otherwise, but they don't. You "can" live on less money in Podunk than in Seattle, that's true. The company also "can" afford to pay you a Seattle salary even if you're living in Podunk, because they're a reputable and stand-up company who treats their employees well; the fact that you're living in Podunk doesn't suddenly impact the company's finances such that they have to cut your salary by 25% because they can't afford the Seattle salary.

Given that you mentioned that you are working for FAANG (which is only 5 companies, by definition) and that their office is in Seattle, I have a feeling I know which company this is. As an ex-Brazilian myself (by employment history, not geneology), I will tell you this is not a stand-up or reputable company, in this or any other way. If you're making 25% less of your salary, you should work 25% less and spend that 25% of your time finding another job.

Answer 9

Looking at the troubles that FAANG companies are facing recently (lower stock valuations due to higher risk-free rates, degradation of the profitability and other downgrades), they have to reduce their costs. However, it is not a good idea to tell openly to the public (stock owners) that the internal situation deteriorated, thus, they have to use indirect methods to reduce costs. One such a method is described very well in your post.

And, as someone pointed out, this is completely legal in US, but probably harder to achieve in Europe.