You do technically have the right to reduce an employee’s pay as their employer. They may not be happy about it—and they may have preferred to get a raise—but that doesn’t mean you’re violating their rights. The amount you pay your employees is largely up to you, and you can increase or decrease that amount as you see fit.
That said, there are some potential mistakes that could get you into legal trouble when doing so. It’s important to know how these work so you can avoid them.
Reducing pay for past hours
To start with, never reduce an employee’s pay for hours they have already worked. If you do, they could accuse you of wage theft. All you can do is reduce the pay rate that they will receive in the future.
Reducing pay below minimum wage
Additionally, always remember that you must pay at least the higher of either the state or federal minimum wage. Minimum wage rates change from time to time, but as long as you adhere to the current standard, you’ll know you’re paying a legal amount.
Reducing pay for discriminatory reasons
Finally, make sure that it doesn’t appear that you’re cutting an employee’s pay as a form of retaliation or discrimination. There are many protected classes to be aware of, such as age, religion, race, and gender. Reducing pay based on a protected characteristic could open the door to a serious legal claim.
If you do find yourself in a dispute with employees over wage and hour issues, it’s time to carefully look into all of the legal options at your disposal.