An employer can generally cut an employee's pay or reduce their hours without cause as long as it is not done discriminatorily. This is because most employees are "at-will" and do not have formal employment contracts or union protections. However, pay cannot be cut below minimum wage and employees must be notified of any pay reductions. While pay cuts are legal, changing an employee's job description or targeting reductions based on protected attributes like race would be considered illegal discrimination.

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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