Especially in the COVID era, more and more employers are allowing workers to work from home rather than at an office. There are some employers, though, that are choosing not to allow this and instead are telling employees they will need to take a pay cut should they choose to work from home. But is this legal?
Can Employers Legally Cut an Employee’s Pay?
Most of the time, yes. Since most employees are “hired at will,” that entitles the employer to make cuts without notice. You can tell if you’re an at-will employee by looking at your contract. If your contract does not outline at-will employment then review your company’s handbook or manual.
Because most employees are at-will, this allows employers to make changes for the employee without much notice. This not only includes pay cuts but can include termination. In Oregon, depending on the circumstances, an employer does not have a certain amount of notice they are required to give an employee prior to making a pay cut. This means the pay reduction can be announced verbally or in writing.
How Much of a Reduction Can an Employer Impose?
Employees who are not bound by a set number in a contract or bargaining agreement can face significant pay cuts. There is no set amount that an employer can reduce an employee’s pay. However, an employer is not allowed to reduce an employee’s pay lower than the state’s mandated minimum wage.
In Oregon, the minimum wage is:
- $13.25 per hour in the Portland metro area (including parts of Clackamas, Multnomah, and Washington counties within the urban growth boundary);
- $12 per hour is for counties in the state including Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco, and Yamhill, and the parts of Clackamas, Multnomah, & Washington counties outside the urban growth boundary); and,
- $11.50 per hour in non-urban areas including Baker, Coos, Crook, Curry, Douglas, Gilliam, Grant, Harney, Jefferson, Klamath, Lake, Malheur, Morrow, Sherman, Umatilla, Union, Wallowa, and Wheeler counties.
There are some exceptions to the minimum wage rule as not all employees are guaranteed the minimum wage. Those who aren’t necessarily required to make minimum wage include:
- Those who make tips;
- Workers under the age of 20 for their first 90 days (or if they turn 20, whichever happens first);
- Amusement park workers;
- Newspaper delivery workers; and,
When employers make pay cuts, they have to do it equally and not single out workers without a reasonable explanation. In particular, an employer could face serious consequences for reducing pay based upon age, race, or any other classification protected by discrimination statutes.
Employers are also not allowed to reduce pay for employees committing a public service. For example, if an employee is serving jury duty, an employer is not allowed to reduce that employee’s pay because of the employee’s service.
Retroactive Pay Cuts
An employer is not allowed to make pay cuts retroactively. Any pay cut that will happen is only allowed in the present day or future, not the past.
Choosing to Work From Home
For companies now allowing employees to work from home, there are workarounds that keep the employer out of trouble and the employees facing a pay cut. For example, an employer can tell employees that if they choose to work from home, they must enroll in a new program and that program, unfortunately, comes with a pay cut. While it’s not an ideal situation for any employee, this situation is often not unethical or illegal, depending on the circumstances.
If you are with a company that reduced your pay without notice or is discriminating against you, then you should get legal help right away. Our team of attorneys at Bullman Law Firm work for employees only — never employers. Reach out today for your free case review.