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Reuse Request

Is there any statutory prohibition against reducing wages without prior notice to the employee, or retroactively reducing wages to the beginning of the pay period?

No single statute addresses this, but contract law applies. An agreed-upon wage (oral or written) is treated as a unilateral contract once the employee begins work.

Employers may reduce wages prospectively with notice. Employees may accept the change by continuing to work or decline by leaving. Retroactive reductions are not allowed — work performed before notice must be paid at the agreed rate.

Limits on reducing wages include union agreements, company policies, individual contracts, impacts on protected classes and minimum wage laws. Violations may create liability.

Employers should notify employees in advance, provide an effective date, document the change, and issue an updated Wage and Employment Notice for nonexempt employees.

Be aware that any reductions across the board for groups of employees, including exempt employees, such as a 10 percent reduction, may cause an exempt salary to dip below the minimum salary test that is required to maintain exempt status.

The same applies to current state or city/local minimum wage.

Read about Form of Wage Payment in the HR Library.

Q&As

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If the minimum wage rate changes mid-pay period or mid-workweek, do we pay the new higher rate for the entire pay period or workweek?
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