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Can your employer reduce your hourly rate?

On Behalf of | Jan 17, 2025 | Wage & Hour Laws

Employers are obligated to pay at least the minimum hourly rate to those they employ. Unfortunately, many employers only pay that. Hence, you may be happy to have secured a job where the employer promised you more.

It could happen that after some time working for the firm, where your employer paid you as promised, they announce that they can no longer pay this rate. They tell you that they need to cut wages because business is not going well lately. Are they allowed to do this to you?

They can apply cuts to future hours

Your employer cannot retrospectively announce that last month was a bad month so they will be paying you less than they had promised for it. They can, however, tell you that they are going to drop your wages from next month forward. In fact, they can typically tell you that they will be cutting your wages from tomorrow. The key is that they can only cut wages for hours that you have not yet worked. This gives you the chance to turn around and refuse to work those hours for that rate, even if it involves quitting altogether.

Remember, Indiana is an at-will employment state, so your employer can generally fire you without reason whenever they want, and you can typically quit without reason whenever you like. So they could inform you of the upcoming drop in your hourly rate and you could quit if you don’t like it, or they can just end your employment if you refuse to accept the cut.

There may be exceptions to this general rule in some cases. For example, some employees may have contracts that require certain periods of notice to be given before either party ends the relationship.

If you feel your employer has acted illegally, consider seeking legal clarification. That way you can also examine what options are available if they have acted improperly.

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