If your employer has cut your pay or reduced your hours, you might wonder whether it is legal. In many cases, it is legal for employers to reduce the hours or pay of employees. At-will employees usually are not guaranteed a certain number of work hours per week or that their pay will remain the same. Unless you work under a collective bargaining agreement or an employment contract, your employer is generally allowed to cut your hours and pay. However, there are some situations in which reductions in work hours and pay are illegal. The attorneys at Swartz Swidler can help you to determine whether your employer acted illegally when your pay or hours were reduced.
What is a pay cut?
Pay cuts are reductions in the hourly pay or salary of employees. These are often made to avoid layoffs and to save money when a company is going through difficult economic circumstances. Pay cuts may be permanent or temporary. They may also come with reductions in responsibilities. Pay cuts may also impact an employee’s bonuses, raises, and benefits.
At-will employees and pay reductions
Most workers are considered to be at-will employees. These workers do not work under collective bargaining agreements or employment contracts. At-will workers can have their pay cut and hours reduced whenever the employer wants with certain exceptions.
Employers are not allowed to cut the pay of their employees without telling them. Pay cuts cannot be retroactive. When companies do this, they are considered to have breached their contracts with their employees. Pay cuts and reductions in hours also may not be done for discriminatory reasons based on the protected status of the affected workers. Pay cuts are also not allowed if they reduce your earnings below the minimum wage.
Workers who have collective bargaining agreements or individual employment contracts are shielded from pay cuts while those agreements are in effect. If you work under a contract or collective bargaining agreement, your employer is not allowed to reduce your pay or hours arbitrarily.
Retroactive pay cuts disallowed
Workers must be paid their agreed salaries for the work that they have already performed. This means that employers are required to notify their workers when they intend to reduce their pay, and the employees must either agree to the reductions or quit their jobs.
Notification of pay cuts
Employers must tell their employees that they are cutting their pay before they work for one hour at the new reduced rate. Employers are not allowed to cut your paycheck simply because they are angry that you turned in your notice, or they are unable to meet payroll.
When employers can reduce pay
Some businesses are forced to reduce the pay of their employees to remain in business. Businesses that are having problems with cash flow may have a choice of closing their doors or cutting their workers’ pay. It can be demoralizing for employees to undergo a pay cut. Many employees in this situation start looking for a new job elsewhere.
Changes in job duties
Changing to a job with fewer responsibilities at your workplace will often come with a reduction in pay. If you are demoted, and your former salary is much higher than what others in your new position make, you will likely have a cut in your pay.
When pay cuts are illegal
Pay cuts are illegal in the following situations:
- When employees do not receive prior notice of the pay cut
- When employers cut pay in retaliation for engaging in a protected activity, including performing jury duty, taking approved FMLA leave, performing military service, or reporting sexual harassment
- When employers cut pay based on a discriminatory motive against workers of a protected class
- When pay cuts drop workers below the minimum wage
- When workers have employment contracts that specify their pay and hours
The federal minimum wage is $7.25, which is the same as 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 pay cut cannot cause your pay to drop below that level even if you agree for it to be reduced below the minimum wage.
What to do if your employer illegally cut your pay
If you learn that your pay was cut after you have left your job, you can file a complaint with the Department of Labor in your state. If you are still working at your job, you should try to work the situation out with your employer before you file a complaint. Check with human resources to find out whether they made a mistake during payroll. If it was an error, your employer should rectify it quickly.
If the payroll department insists that your paycheck is correct, ask your supervisor what is happening. Tell him or her that it is illegal for the company to reduce your pay without giving prior notice. If that still doesn’t work, file a complaint with Human Resources and your boss’s supervisor. If you exhaust all of your internal options, it may be time to file a legal complaint.
Get help from experienced employment law attorneys
If you believe that your reduction in pay or hours was illegal, you may have legal rights to recover the compensation that you are owed, as well as other damages. The attorneys at Swartz Swidler are experienced in handling employment issues and unlawful actions by employers, including illegal pay cuts and reductions in hours. They are dedicated to protecting the rights of workers and can thoroughly evaluate what occurred. The lawyers can explain to you whether your claim has merits. If they agree to accept representation, the attorneys will work to recover the compensation to which you are entitled. Contact us today to schedule a free and confidential consultation by calling us at 856.685.7420 or by filling out our online contact form.