moneydowndrainCompanies sometimes have to cut costs and expenses left and right especially during an economic downturn and this includes cutting employee wages or hours. Sometimes it is unclear to employees whether this is legal and wondering whether a company can cut your pay lawfully.  Sometimes employees are too afraid to ask, in fear that they’ll be fired.

Depending on your situation, it may not be legal for your employer to cut your pay. It all depends on whether you are an hourly wageworker or a salaried employee, but how do you know?

Hourly Workers

If you get paid by the hour, then your boss is allowed to cut your hours and cut your pay, so long as he or she compensates you for the time you actually work. They can lower your hourly rate, too. However, the limitations are that the hourly rate cut still meets the applicable minimum wage laws and overtime pay is honored.  Federal minimum wage is at $7.25 now, but fortunately for many workers, states are often times higher than this. In California, minimum wage is currently $10/hour, but is set to be increased to $15 an hour by 2020. As long as you are being paid minimum wage, it is technically not illegal for an employer to cut your pay.

Exempt Workers

When you are on salary, it’s a different story. Certain employees are exempt from the hour and wage laws if they are paid at least $455 per work and regardless of how many hours are worked, it’s the same salary paid each week. Companies could change your exemption status by changing your pay or they start varying your pay dependent on their business needs. Basically when your employer starts paying you and it seems more and more like they pay you hourly, they can inadvertently change your exemption status to non-exempt by their actions. This would then mean your employer needs to follow the laws for an hourly wageworker and be sure to compensate you for any overtime hours worked.

Pay Cut as Retaliation, Discrimination, or Harassment

in California, it is lawful for an employer to cut hours, cut pay, or reduce the total compensation being paid to an employee….. Unless the move is being done as a form of retaliation, discrimination, or harassment. In California it is unlawful to harass, discriminate, or retaliate against certain types of employees for certain reasons. These can include employees who have a medical condition, have returned from leave, have become pregnant or return from maternity leave, who are of minority background, skin color, national origin, or are of diverse sexual orientation. It is also unlawful to undertake adverse employment actions simply because of an employees language, religion, political party, or other unlawful characteristic. California’s Fair Employment and Housing Laws provide a number protections for employees to have their pay cut as a form of retaliation. How can you tell if the pay cut is legal, or unlawful retaliation? It is a case-by-case basis. We recommend that you contact AXIS Legal Counsel and we will be glad to speak with you further about whether your pay cut rises to the level of an unlawful action by your employer.

readreviewssgAXIS Legal Counsel is a labor and employment law firm representing clients in a variety of labor and employment issues, including the requirements of California’s labor laws.  AXIS Legal Counsel is experienced in the field of employment and labor law and focused on providing high-quality legal service.

For information on retaining AXIS Legal Counsel for any labor or  employment matter, contact or call (213) 403-0130 for a confidential consultation, or visit our Employee’ Rights Practice Area, or Individual Rights Portal.


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