Opinion ID: 1984383
Heading Depth: 2
Heading Rank: 2

Heading: Reduction in Pay as Good Cause

Text: The Commission also concluded that a mere reduction did not constitute good cause. In this case, the Commission found that before the layoff Boucher was earning $10.00 per hour and upon recall from the layoff was earning $3.35 per hour. This constitutes a 66.5% reduction in pay. The Commission determined that this mere reduction is proper because the employer is free to structure labor costs to keep his business viable. Under 26 M.R.S.A. § 1193(1)(A) (Supp.1982-1983), [3] an employee who voluntarily without good cause terminates his employment is not entitled to receive unemployment benefits. See Therrien, 370 A.2d at 1389-90. It is clear that mere dissatisfaction with wages generally does not constitute good cause. Smith, 440 A.2d at 1039 (citations omitted). We have not to date determined whether a substantial reduction in pay constitutes good cause under 26 M.R.S.A. § 1193(1)(A). See id. at 1039 n. 4 (we did not determine conditions under which changes in terms of employment made unilaterally by employer may constitute good cause within meaning of section 1193(1)(A)). In McAllister v. Maine Department of Manpower Affairs and Colonial Coach Estates, No. CV-78-465 (Me.Super.Ct.Ken.Cty., Mar. 21, 1979), the Superior Court held that a significant reduction in the claimant's compensation falls within the ambit of the term good cause. Under the weight of authority, a substantial reduction in pay constitutes good cause. See Bunny's Waffle Shop v. California Employment Commission, 24 Cal.2d 735, 743, 151 P.2d 224, 228 (1944) (25% reduction); International Spike, Inc. v. Kentucky Unemployment Insurance Commission, 609 S.W.2d 374, 377 (Ky.App.1980) (21% to 32% salary reductions); Scott v. Photo Center, Inc., 306 Minn. 535, 536, 235 N.W.2d 616, 617 (1975) (per curiam) (25% reduction); Johns-Manville Products Corp., 122 N.J.Super. at 367-71, 300 A.2d at 573-75 (reduction in wage rate from $4.17 to $3.21); Edwards, 35 Pa. Cmwlth. at 647-50, 387 A.2d at 510-11 (50% reduction); LaRose v. Department of Employment Security, 139 Vt. 513, 515, 431 A.2d 1240, 1242 (1981) (40% reduction); see generally Annot., 95 A.L.R.3d 449 (1979). Boucher had a skill level which earned him approximately $10.00 per hour before the layoff. Upon recall, Boucher was asked to accept wages of $3.35 per hour. Under the circumstances of this case, a 66.5% unilateral reduction in pay constitutes good cause within section 1193(1)(A). The Commission erred in ruling that Boucher's new rate of pay was a mere reduction of wages which did not constitute good cause. [4] He is, therefore, entitled to unemployment benefits. The entry is: Judgment reversed. Case remanded to the Superior Court for entry of an order reversing the decision of the Commission. GODFREY, NICHOLS, VIOLETTE, JJ., and DUFRESNE, A.R.J., concur.