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Reducing wages must be done prospectively

On Behalf of | May 27, 2024 | Wage & Hour Claims |

When an employer wants to reduce an employee’s wages, it is very important for both parties to understand how this should happen. It needs to be carried out in the correct fashion or it could be a violation of the employee’s rights. It may also qualify as a form of wage theft.

One of the most important things to remember is that it can’t be done retroactively. An employer cannot tell an employee that they will now be earning minimum wage for the last two weeks’ worth of work when that employee was under the impression that they were making $50 an hour. If the employer wanted to reduce an hourly wage from $50 an hour all the way down to minimum wage, they could only inform the employee about that change as it pertains to future work. Any hours that have already been logged need to be paid at the previous (higher) rate.

Are there any other limitations?

Naturally, the reduction in wages also needs to be fair and in line with state laws. An employer may be allowed to reduce wages, but they can’t reduce them below minimum wage, for example.

Additionally, the wage reduction cannot be made for a discriminatory reason. For instance, an employer cannot decide to reduce the wages of all female employees, while allowing all male employees to have their pay rates stay the same. Workers also cannot reduce wages as a form of retaliation against a whistleblower.

These are just a few of the regulations to be aware of when wages are changing. When disputes arise, those involved must be well aware of the legal options at their disposal.