According to the Fair Labor Standards Act (FLSA) your employer is not allowed to reduce your hourly rate of pay except under specific circumstances. If your employer reduces your hourly rate of pay they must give you advance notice of the change and the new rate must be reflected in your next paycheck. If you have questions or believe your employer has unlawfully reduced your hourly rate of pay you should contact the Wage and Hour Division of the U.S. Department of Labor.
The FLSA defines the “regular rate” of pay as “all remuneration for employment paid to or on behalf of the employee” with certain specified exclusions. 29 U.S.C. 207(e). The regular rate cannot be less than the minimum wage. Id. (The regular rate includes for example commissions piece-rate pay and non-discretionary bonuses see 29 C.F.R. 778.108 but excludes sums paid as gifts; for occasional periods when no work is performed due to vacation holiday illness failure of the employer to provide sufficient work or other similar cause; discretionary bonuses; and the cash value of meals and lodging furnished for the convenience of the employer.)
An employer who reduces an employee’s hourly rate of pay must adjust the employee’s regular rate of pay so that the employee still receives at least the minimum wage for all hours worked. For example if an employee who is normally paid $10 per hour is temporarily reassigned to a job that pays $9 per hour the employer must increase the employee’s regular rate of pay to $11.25 per hour (the minimum wage of $7.25 multiplied by 1.5) so that the employee still earns at least the minimum wage of $7.25 per hour for all hours worked. If the employee works 40 hours during the week the employer must pay the employee at least $450 for the week ($7.25 per hour multiplied by 40 hours).
Under the FLSA an employer is generally required to pay covered nonexempt workers at least the minimum wage for each hour worked as well as overtime pay at a rate of not less than one and one-half times their regular rate of pay for hours worked over 40 in a workweek. The FLSA does not require double-time pay.
A common question is whether an employer can reduce an employee’s hourly rate of pay. The answer depends on whether the employee is exempt or nonexempt under the FLSA.
Nonexempt employees are entitled to the minimum wage and overtime pay protections of the FLSA. An employer cannot reduce a nonexempt employee’s hourly rate of pay below the minimum wage even if the employee agrees to the reduction. For example if the federal minimum wage is $7.25 per hour an employer cannot reduce an employee’s hourly rate of pay to $5.00 per hour even if the employee agrees to the reduction.
Exempt employees are not entitled to the minimum wage and overtime pay protections of the FLSA. An employer can reduce an exempt employee’s salary but the salary must still meet the minimum salary requirements for the employee to remain exempt. For example if the federal minimum salary for executive exemption is $455 per week an employer can reduce an exempt employee’s salary from $500 per week to $400 per week but the employee would no longer be exempt and would be entitled to the minimum wage and overtime pay protections of the FLSA.
If you have questions about your rights under the FLSA or believe that your employer has unlawfully reduced your hourly rate of pay you should contact the Wage and Hour Division of the U.S. Department of Labor.
Can an employer reduce your hourly rate of pay?
In general an employer can reduce an employee’s hourly rate of pay as long as the new rate is equal to or greater than the minimum wage.
How much notice must an employer give before reducing an employee’s hourly rate of pay?
An employer must give at least 24 hours notice before reducing an employee’s hourly rate of pay.
Can an employer reduce an employee’s hourly rate of pay in response to a decrease in business?
Yes an employer can reduce an employee’s hourly rate of pay in response to a decrease in business as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a decrease in the employee’s productivity?
Yes an employer can reduce an employee’s hourly rate of pay in response to a decrease in the employee’s productivity as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s job duties?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s job duties as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s work schedule?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s work schedule as long as the new rate is equal to or greater than the minimum wage.
What are the consequences of reducing an employee’s hourly rate of pay below the minimum wage?
The consequences of reducing an employee’s hourly rate of pay below the minimum wage include back pay civil penalties and possible criminal charges.
Can an employer reduce an employee’s hourly rate of pay in response to a decrease in the cost of living?
No an employer cannot reduce an employee’s hourly rate of pay in response to a decrease in the cost of living.
Can an employer reduce an employee’s hourly rate of pay in response to a decrease in the company’s profits?
No an employer cannot reduce an employee’s hourly rate of pay in response to a decrease in the company’s profits.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s job title?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s job title as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s job location?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s job location as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s work hours?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s work hours as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s job responsibilities?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s job responsibilities as long as the new rate is equal to or greater than the minimum wage.
Can an employer reduce an employee’s hourly rate of pay in response to a change in the employee’s work schedule?
Yes an employer can reduce an employee’s hourly rate of pay in response to a change in the employee’s work schedule as long as the new rate is equal to or greater than the minimum wage.
What are the consequences of reducing an employee’s hourly rate of pay below the minimum wage?
The consequences of reducing an employee’s hourly rate of pay below the minimum wage include back pay civil penalties and possible criminal charges.
