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Yes, it's legal. No, you don't really have much of a case, unless you have a pre-existing contract that specifies a higher amount.

If you think you have earned a higher raise, you have two options; talk to your boss and persuade him that because of the value of what you have done, you have earned more. Or you can look for a different job, which may not be the easiest thing to obtain in this economy.

Have you really done something so much better than your co-workers? Another Opinion:

Employment is "at will" but still a contract, if you have a contract stating 5% then the employer is in breach of that contract. Without a contract you would have to prove an "agreement" (a type of contract that is not written - but may exist if you can show performance).

In any case however, if you were to sue for this then the company would (most likely) find another reason to terminate you (wrongful termination because of a suit can be brought then) and you may win in court (in the end) but would still most likely be out of work. My suggestion is you find an employment lawyer in your area who should give you a free consultation on this (to find the merit of your case).

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Q: Your employer is telling you that they are just giving a maxium of 3 percent this year for your merit raise Its suppose to be 5 percent Is this legal or do you have a case?
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