There are times when employers may want to reduce an employee’s pay or feel it is necessary to do so. For instance, in lieu of layoffs, an employer may decide to reduce pay rates in order to keep everyone on staff.
That does not mean employees will be happy with the pay reduction, however. They may believe that it is a violation of their rights because it feels very unfair. Here are a few things for employers to keep in mind.
Many pay reductions are legal
To start with, in many scenarios, employers can legally reduce an employee’s pay. The employees may not be happy with the arrangement, but that does not mean it is a legal violation of their rights. The employer does retain the right to decide how much they pay out.
One thing to think about is if the employee has a contract. If they are an at-will employee, their pay can likely be changed at any time, as long as it is at least minimum wage. If they have a contract that stipulates exactly how much they should be paid or how pay reductions must be carried out, however, then the employer does have to follow that contract.
Finally, an employer can only reduce pay for future hours that the employee has not yet worked. A retroactive pay reduction is illegal and could be a form of wage theft. This way, the employee is never forced to work for a lower rate than they agreed to. If they do not agree with the pay reduction, they are free to leave their job before working any hours at the lower rate.
Legal disputes
Employees may find themselves in disputes with their employers over wage and hour issues like this. It is important to understand exactly what legal steps to take.