Can My Boss Cut My Pay?

Unfortunately for U.S. workers, employers are generally allowed to reduce wages at any time, given that certain conditions are met. If you’re wondering whether or not your boss can cut your pay, continue reading and speak with a Marquette wage & hour lawyer today.

Why Would My Employer Reduce My Wages?

Your employer could decide to reduce your wages for a variety of reasons depending on the specific situation. For example, if the company is having cashflow issues it may be a necessary evil to allow the business to stay afloat. If the choice is between laying people off or cutting back salaries most people would choose the latter.

There may have also been changes to your position or role. If you have been reassigned to a different role that does not have as much responsibility or is not in the same scope as your previous position, your pay may reflect that change. You may have also chosen to move to a different department or title due to personal reasons.

Is it Legal for My Boss to Cut My Pay?

Regardless of the above reasons, yes, it is legal for your boss to cut your pay given that certain requirements are met. Because most jobs are categorized as “at-will” employment, there is very little that your employer cannot do. At-will employment refers to the relationship between the employer and the employee. This means that the employer can fire the employee or adjust the terms of their employment at any time and for any reason, and the employee can quit at any time and for any reason.

Employers have to abide by federal and state employment laws. The FLSA (Fair Labor Standards Act) says very little about pay cuts. Michigan state law allows employers to reduce pay under certain conditions including with notice to the employee before the new wages take effect.

When Would it Be Illegal to Receive a Pay Cut?

While employers can generally alter the terms of employment in any way, the following are some circumstances that would make a pay cut illegal.

• If it is retaliatory or discriminatory. Salary and wage decisions cannot be made based on any protected characteristic such as race, religion, sex, etc. Additionally, employees cannot be retaliated against for reporting illegal activities or sexual harassment. If the pay cut came about because of any of these reasons it is illegal.
• If it violates minimum wage laws. Michigan’s minimum wage is $10.33/hour. Your employer can reduce your wages but they cannot lower them so much that you begin making less than the state minimum wage. This may not apply to exempt workers.
• If it is retroactive. While employers can reduce pay at any time, it only applies to work that has not yet been done. Your boss cannot decide that your hours from the past month should now be paid at the new lower wage since you worked that time while under a different payment agreement.
• If it violates the employment contract. If you have a contract with your employer, meaning your employment is at will, they must abide by the agreement within the document. Whatever salary or wage is stated in the contract must be paid to you for the duration of the contract agreement.

If you feel like your employment rights have been breached contact an employment attorney today for skilled assistance.