Can a Company Just Reduce Your Salary

Your next step would be to contact the human resources department as well as your boss`s boss. After exhausting all your internal possibilities, you should call your Ministry of Labour before taking legal action. If you believe that your wage reduction or hours of work were illegal, you may have the right to recover the compensation to which you are entitled as well as other damages. Swartz Swidler`s lawyers have experience dealing with employment issues and illegal actions of employers, including illegal wage cuts and reductions in working hours. They are dedicated to the protection of workers` rights and can thoroughly assess what has happened. Lawyers can explain whether your claim is well-founded. If they agree to accept representation, lawyers will work to recover the compensation to which you are entitled. Contact us today to arrange a free and confidential consultation by calling us at 856.685.7420 or by filling out our online contact form. To prevent injustices related to wages and working conditions, each State establishes its own norms and rules on these issues. The minimum wage set by the RSA is currently $7.25 per hour. However, each state has established its own minimum wage laws; In addition, the employee is entitled to the higher of the two salaries.

There are a few exceptions to these guidelines. The first is that an employer may have a rule that the last week of employees` wages is paid at a lower rate, not lower than the minimum wage, if workers leave without notice. As long as it is a written agreement signed by the employees (or included in a manual that the employees have confirmed), this is considered sufficient notification for the salary reduction, since the decision to leave without notice is under the control of the employees. Another important exception to all the above guidelines is that most workers are entitled to at least one minimum wage (as long as they are not exempt from the minimum wage requirements). Thus, even if it is a situation where it would otherwise be legal for an employer to reduce an employee`s rate of pay, that rate cannot be lowered below the minimum amount that the employer must pay under Michigan law and federal law. Does this mean that if your boss says, “I`m cutting your salary,” you can say, “No thanks, I`m going to continue with the higher rate of pay”? Not quite, but what you can do – is stop – before you do a job at the lower rate of pay offered. This is legal and may make the most sense for you if your employer is trying to cut your salary. Moving to a job with fewer responsibilities in your workplace will often come with a pay cut. If you are demoted and your previous salary is much higher than what others earn in your new position, you will likely have a reduction in your salary. If the payroll department insists that your paycheck is correct, ask your supervisor what`s going on. Tell them that it is illegal for the company to reduce your salary without notice. If it still doesn`t work, file a complaint with HR and your boss`s supervisor.

If you exhaust all your internal capabilities, it may be time to file a legal complaint. Since a wage cut is detrimental to employees, it is imperative that if the boss has to lower wages for financial reasons, he receives the same percentage of wage reduction. Another example of cases where it is appropriate to reduce an employee`s salary would be when there is a significant job change. If there is a demotion and the previous salary is significantly higher than what other people in the new position receive, a pay cut might make sense. Is it illegal for an employer to reduce your salary or hours of work for no reason? Workers who have collective agreements or individual employment contracts are protected from wage cuts as long as these agreements are in force. If you work under a contract or collective agreement, your employer cannot arbitrarily reduce your salary or hours of work. Aside from labor and labor laws at the federal and state levels related to falling employee wages, there is a factor in employee relations to consider when lowering employee wages. Employees rely on their salary to meet their obligations and maintain their lifestyle, and they often make the decision to join one company rather than join another based on their salary. Reducing an employee`s salary could have devastating effects in some households and, just as importantly, it can lead to employee mistrust. Distrust often leads to increased staff turnover, low job satisfaction, and ultimately a lack of productivity and reduced profitability for the employer. While federal law does not prohibit lowering workers` wages, the employer should weigh its options to determine whether it has alternatives to resolving cash flow or staffing issues that may be behind the decision to cut wages. If you learn of the pay cut after you`ve already quit your job, you can file a complaint with your State Department of Labor.

However, if you are still employed, you should try to solve the problem internally. You can do this by clarifying with payroll if reducing payroll is a mistake, as payroll can easily correct the error. If your employer cuts your wages or hours of work for no reason – or perhaps in an attempt to force you to resign – you may be wondering if you can file a wage and hourly claim against your employer. That said, your employer can legally reduce the hours of work of your full-time, part-time and lower employees, and reduce your wages as much as they want – as long as they never violate the Fair Labour Standards Act (FSL) by falling below the minimum wage (at the federal or state level, with the lower threshold). Even if you work overtime during your payment time, you are still entitled to an hour and a half. The federal minimum wage is $7.25, which is equivalent to Pennsylvania`s minimum wage. However, the minimum wage in New Jersey is $10 per hour as of July 1, 2019. This means that in New Jersey, a wage cut cannot drop your salary below that level, even if you agree to lower it below the minimum wage. There is no federal law requiring employers to notify their team after making changes to an employee`s salary, but many state laws require it. Although the Fair Labour Standards Act of 1938 is the federal law that imposes wages, overtime pay, hours of work and child labour, it does not contain provisions on lowering employees` wages.

The federal government only says that employers cannot lower the hourly wage by an hourly wage below the hourly minimum wage, any more than an employer can lower the threshold to fill the employee exemption. At the time of publication, the hourly minimum wage is $7.25 and the minimum wage rate is $455 per week. Yes, but only if there is an employment contract or collective agreement. If you don`t have a contract, your employer can legally reduce your working hours or reduce your salary, and you may not have recourse. In some scenarios, an employment contract or collective agreement may contain a compensation clause, which means that a wage reduction by an employer would constitute a breach of contract. Even then, it`s possible that the same contract includes a change clause that allows your employer to submit a new employment contract that reflects lower wages. Union contracts tend to be better protected when it comes to wage cuts (in addition to overtime and vacation pay). This is the most important rule when it comes to wage cuts. The employer must pay you the agreed wage for the work already done. Bosses can absolutely lower wages, just as they can raise wages. But what they can`t do is cut your salary without telling you in advance, and you (the employee) have to accept that. The other time it is appropriate to reduce an employee`s salary is when there is a significant job change.

They always think about promotions when the salary goes up. But sometimes people are degraded. If there is a demotion and the previous salary is significantly higher than what other people in the new position earn, a pay cut makes sense. The materials available on this website are for informational purposes only and not for legal advice. You should contact your labour lawyer for advice on the legality of a particular problem or problem. The use of and access to this website or any of the e-mail links contained on the website does not constitute a customer relationship between us and the user or browser. While we wish no one would ever be put in a situation where they would have to lower an employee`s salary, the harsh reality is that business owners are sometimes forced to lower wages to make sure they stay in business.