Employees rarely expect to have their pay cut. If anything, an employee is hoping to receive raises and pay increases the longer they have been with the company. News of an impending pay cut can be met with concerns and questions about whether or not this is even legal.
In many cases, a pay cut is legal. Employers do have the right to raise or lower pay, regardless of what was offered at the time that the person took the job. But there are some issues to look out for that could mean it is an illegal pay cut.
It goes under minimum wage
To start with, an employer cannot reduce someone’s pay so far that they are making less than minimum wage. While employers do have the ability to change pay rates, they are still bound by state law.
It applies to hours that were already worked
Furthermore, if an employee has already logged hours, they deserve to be paid the amount they expected when they did that work. In other words, a pay cut cannot work backward, reducing pay for hours that are already on the books. Instead, the employer can only inform the employee that they will be making less money moving forward, giving the employee a chance to agree to the new terms.
It is based on discrimination or retaliation
Finally, a pay cut can never be discriminatory, meaning it is based on a protected class like age, gender, religion or race. Additionally, it cannot be a form of retaliation. If an employee reports discrimination in the workplace and the employer retaliates by cutting their wages, that is illegal.
As you can see, pay cuts can sometimes be legally complicated. Employees who believe their rights may have been violated need to know what steps to take.