Can You Be Fired for Making Too Much Money?

Jun 14 2023

Amanda DeMatteis: Hi, Josh.

Josh Goodbaum: Hi, Amanda. What are we talking about today?

DeMatteis: I thought we would talk about an employee that comes in and they say, “I’ve been laid off. It’s because I make too much money, and that’s discrimination. Help me.” What do we tell that person?

Goodbaum: I tell them there’s a short answer and a long answer to this question.

Here’s the short answer: It is not illegal to terminate somebody because they make too much money. Period. There is no law that says you can’t be laid off because you’re highly compensated or because your employer wishes that they paid you less. And that’s true even if the reason that you earn that higher salary is because you’ve been there a long time, which necessarily means you’re an older worker.

That leads us, in turn, to the longer answer to our question, which is: I want to explore whether the termination purportedly because of your high level of compensation is covering up for something. So if you’ve been terminated, but one of your colleagues who’s much younger has not been terminated, even though you make the same amount of money or a similar amount of money, that might be age discrimination.

Likewise, if you’ve been at the employer a long time, but you have a colleague who’s much younger than you that hasn’t been there very long, even if that person makes less money, maybe your employer could come to you and say, “Hey, we need to cut costs, and we’re looking at you and thinking you’re overcompensated. Would you be willing to take a pay cut in order to stay?” And if an employer doesn’t want to have that conversation, that might be because they have a particular bias about an older worker. And of course, we know that age discrimination is illegal.

So there’s a short answer to this question, which is that pay discrimination — discriminating against somebody because they make too much money — is not illegal. But it is possible that saying that you’re terminating someone because they make too much money or even terminating someone because they make too much money might be covering up for something unlawful. And that’s something I would want to explore with that potential client if they approached me.

DeMatteis: Really good advice, Josh. Thank you so much, and thank you for watching. We’ll see you next time.

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josh goodbaum discussing if an employee can be fired for making too much money

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