Can My Employer Reduce My Pay Without Notice?

Pay reductions can be stressful and confusing, especially when they seem to come out of nowhere. If you are working in California and your employer has cut your wages, you may be wondering whether this is legal. California has some of the most employee-protective wage and hour laws in the country, and employers must follow strict guidelines when changing pay rates. This article provides a clear overview of when pay cuts are legal, when they are not, and what steps you can take if your pay was unlawfully reduced.

For additional information regarding wage-related claims, visit our Wage & Overtime Violations page.

Introduction to Wage Reduction Laws in California

California law requires employers to pay employees no less than the minimum wage and to compensate them according to agreed-upon terms. While employers can change an employee’s wages, they must follow certain procedures. Wages cannot be lowered retroactively, and any changes must be communicated clearly and in advance.

The California Labor Code governs wage regulations, and the Division of Labor Standards Enforcement (DLSE) enforces these laws. Violations can lead to significant penalties, including compensation for unpaid wages and interest, civil penalties, and attorneys’ fees.

When Pay Cuts Are Legal

Under California law, there are situations where an employer may legally reduce an employee’s pay, but certain conditions must be met:

• The new rate must not fall below California’s minimum wage.
• The pay reduction must only apply prospectively, never retroactively.
• The employee must be notified of the new wage before working at the reduced rate.
• There is no change to the terms of an employment contract that fixes the wage unless mutual consent is obtained.

For at-will employees without a contract, employers can generally change pay rates at any time with adequate notice, so long as the change is not discriminatory or in retaliation for protected activity.

When Pay Cuts Are Illegal

Employers violate California wage laws if they reduce pay in the following situations:

• Reducing wages without giving prior notice to employees.
• Applying the new, lower wage rate retroactively to hours already worked.
• Cutting wages in a way that results in the employee earning less than minimum wage.
• Reducing pay in response to an employee’s complaint about labor violations.
• Lowering pay based on unlawful discrimination (e.g., based on race, gender, age, or disability).

Additionally, employers cannot reduce exempt salaried employees’ wages below the minimum required salary threshold. As of 2024, this threshold is $66,560 annually for an employee working full-time at an employer with 26 or more employees.

How to Respond If Your Pay Is Reduced

If your employer reduces your pay without notice or violates any of the legal requirements, here are the steps you should take:

• Request clarification from your employer in writing regarding the reason for and timing of the pay cut.
• Check your employment contract or offer letter to see whether it limits your employer’s ability to reduce pay.
• Keep a record of your hours worked, pay stubs, and any communications from your employer.
• Consult with an employment attorney to understand your legal rights and options.

It is important not to sign any documents or agreements under pressure without seeking legal advice. Some employers may try to get employees to waive their rights to past wages. These waivers are often invalid, but having legal counsel helps protect your interests.

Legal Remedies and Filing a Claim

If you believe your employer violated California wage laws by unlawfully reducing your pay, you may be eligible for compensation. Legal remedies include:

• Recovery of the unpaid portion of wages.
• Interest on unpaid wages.
• Waiting time penalties (up to 30 days of wages if final wages were not timely paid).
• Attorney’s fees and court costs.

You may file a wage claim with the California Labor Commissioner’s Office. This process involves:

1. Filing a claim using Form DLSE 1.
2. Participating in a settlement conference, which may lead to a resolution.
3. Attending a hearing, if no settlement is reached.
4. Receiving an Order, Decision, or Award (ODA) from the Labor Commissioner.

Alternatively, you can pursue a lawsuit with the help of an employment attorney. If multiple employees are affected, a class action may be appropriate to recover unpaid wages for the entire group.

Contact Miracle Mile Law Group

If your employer reduced your pay without notice or in violation of California law, you have legal rights. The attorneys at Miracle Mile Law Group are experienced in handling wage and hour violations, including unlawful pay reductions. We offer compassionate, strategic representation and are dedicated to protecting California workers.

Schedule your free consultation today.