Can a company cut your pay or hours?

1. Can a Company
Cut Your Pay or
Hours?

2. What is a Pay Cut?
§ A pay cut is a reduction in an employee's salary.
§ Pay cuts are often made to reduce layoffs while saving a
company money during a difficult economic period.
§ A pay cut may be temporary or permanent, and may or
may not come with a reduction in responsibilities.
§ Some pay cuts also affect an employee’s raises, bonuses
and benefits.
Dr. Magdy Abdelsattar
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3. When a Company Can Cut Your Pay?
§ Your employer doesn’t need a reason to cut your pay or
reduce the hours you are scheduled to work.
§ Unfortunately, employers can, in most cases, cut your
pay or reduce your 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,
and have hours reduced or pay lowered at the
company's discretion.
Dr. Magdy Abdelsattar
3

4. Pay Cut Laws
§ A pay cut cannot be enacted without the employee being notified.
§ If an employer cuts an employee’s pay without telling him, it is
considered a breach of contract.
§ Pay cuts are legal so long as they are not done discriminatorily
(i.e. based on the employee’s race, gender, religion, and/or age).
§ To be legal, a person’s earnings after the pay cut must also be at
least minimum wage.
§ 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.
§ In those situations, an employer cannot arbitrarily cut your pay or
change your hours.
Dr. Magdy Abdelsattar
4

5. How Much Can Your Paycheck be Cut?
§ If you're an employee who isn't protected by a bargaining
agreement or employment contract, there is no set amount
that you have to be paid.
§ However, employers cannot reduce wages to a level which is
lower than the minimum wage in their state.
§ There are some exceptions to the minimum wage rules, but
you cannot be paid less than the minimum wage rate for your
classification in your state.
Dr. Magdy Abdelsattar
5

6. Discrimination Issues
§ When employers reduce wages, they are required to do it in
an equitable manner.
§ 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.
Dr. Magdy Abdelsattar
6

7. What else you need to know:
§ Can an Employer Change Your Job Description?
Dr. Magdy Abdelsattar
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