Employers have the right to establish the pay of their workers, provided they do not violate minimum wage and civil rights laws. So it is possible an employee could receive a reduction in pay depending on circumstances at work. However, a pay cut should not be retroactive in nature.
An employer rescinding a raise or docking the pay of an employee is not always illegal. A potential legal problem could arise if the employer reduces wages in a way that unfairly deprives a worker of promised pay.
How retracting a raise should work
According to Chron, sometimes an employer will promise a raise to a worker but later inform the employee that the raise will not go through, perhaps due to an inability to fund the pay increase. There may be an interval of a few days between the promise of the raise and the rescission.
Since the worker was working for a few days under a promised higher rate, the employee should receive the increased wages for those days. From there, the worker will earn the reduced pay rate unless the employer changes the rate again.
The legality of retroactive pay cuts
The Texas Workforce Commission states that raises are not protected by state or federal laws unless a minimum wage increase mandates a raise. However, an employer can run afoul of the law by putting a raise into effect and then retroactively withdrawing it. The TWC website makes it clear that an employer must implement pay cuts going forward or risk a violation of the law.
Employees should understand that they will receive specific pay for the work they perform. Retroactive pay cuts are just one example of how workers may suffer an unlawful loss of wages.
