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When a Company Can Cut Your Pay

Information On When a Company Can Reduce Salary


Can a company cut your pay? Unfortunately, employers can, in most cases, cut your pay or reduce hours since most employees are "hired at will". Employment at will means that when workers don't have a formal employment contract or are covered by a bargaining agreement they can be terminated, demoted, have hours reduced or pay lowered at the company's discretion.

Workers with individual employment contracts or protections under union contracts are normally shielded from salary or wage reductions during the periods covered by those contracts.

However, companies cannot target workers for wage reductions by race, age or any other protected class under discrimination statutes. Wage/salary reductions for reasons which are in opposition to public policy are also not legal e.g. punishment for taking time off for jury duty or to serve in the National Guard or whistle-blowing regarding an employer's that are actions harmful to the public.

Employers cannot reduce wages to a level which is lower than the minimum wage regulations in their state. The Department of Labor has a State Minimum Wage Rates chart you can use to find the minimum wage in your location.

Read More: Wage and Salary Information | Comp Time | Overtime

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