On April 24, 2020, George Constantine was quoted in CEO Update on associations implementing pay cuts. According to the article, layoffs and across-the-board pay cuts have struck the association sector, particularly at groups hardest hit by pandemic-related stay-at-home orders.
Many CEOs implementing pay cuts are not sparing themselves, sometimes cutting their own pay by a greater percentage. “Groups that are looking at pay cuts are very cognizant of it being fairly and proportionately applied, "said Constantine. “They're doing it in a way that shows sharing of pain at all levels."
But CEOs with contracts would have to voluntarily agree to reduce pay. Constantine advised such CEOs to amend their contracts with the association because the IRS could tax them on the amount stated in their contract.
Constantine added that by law, cuts in benefits must be applied fairly, he said.
"There are important steps to follow if you're cutting 401(k) or other benefits that are governed by ERISA and other federal laws," Constantine said. "You've got to maintain a structure that is not unfairly benefiting a few top employees."