An employer’s decision to reduce your work hours or pay can bring financial strains and stress to an employee’s life. Yet an employer might claim the changes are necessary.  

“Some employers push back and say they have no way to schedule employees far enough ahead of time. The counterarguments are that employees have childcare responsibilities—or maybe they are in school and have set schedules,” says California employment law attorney Eric Kingsley.

“For an employer to call you up at the last minute and cancel a shift or add another one—and that if you don’t show up you get fired—puts employees in an untenable position where they’re having to balance their livelihood against other responsibilities in their life. So it seems to make a lot of sense from a public policy standpoint to require some advance warning.” 

If you are an employee who has experienced an hour or pay reduction, you might be wondering if the changes were legal and if you have any options for dealing with it.

The first thing to know is that most private-sector employees in the United States work at will. At-will employment means employers can change an employee’s status at any time and for any reason that doesn’t violate federal or state law.

So, employers are generally free to reduce an employee’s hours or pay. But if an employer does reduce hours or pay, they must follow relevant federal and state laws.

This article will cover some of the important rules employers must follow when changing employees’ pay or hours and a couple of exceptions to at-will employment. It’s essential for both employers and employees to understand the law around wages and hours to avoid legal issues and defend their rights.

Exceptions to At-will Employment

At-will employment is the norm in the United States. But there are a couple of important exceptions to at-will employment. If one of these exceptions applies to you, you may have additional protections against reductions in hours or pay:

• Employment contract: An employment contract may protect you from wage or hour reductions or set notice requirements for any work schedule changes. If your employer violates the terms of the contract in taking any adverse employment action—including firing, furloughs, or pay reductions—you may have a breach of contract claim. If you aren’t sure what your contract says, a lawyer practicing wage and hour law can help you understand it.
• Union contract: If you have a union contract, also called a collective bargaining agreement (CBA), you may be protected from wage or hour cuts or have various notice requirements under the terms of the contract. If an employer violates the terms of the CBA, there is typically a review process within the company to settle disputes. If internal procedures do not solve the issue, employees can take legal action against the violation of the contract.

Wage and Hour Laws

Beyond the specific exceptions to at-will employment mentioned above, there are a few laws that may protect you from some wage or hour cuts.

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a federal law that, among other things, sets requirements for minimum wage and overtime pay:

• Minimum wage. Employers must at least pay employees the federal minimum wage, which is currently $7.25 an hour. Some states have set minimum wage rates higher than the federal requirement. An employer in a state with a higher minimum wage must pay the higher rate in accordance with state law.
• Overtime pay. Employees are entitled to overtime pay for every hour over 40 hours they work per week. Overtime pay is 1.5 times your regular rate of pay.

There are two general categories of employees under the FLSA: exempt and non-exempt. Your employee rights depend in part on which kind of employee you are.

Non-exempt Employees

An employee is “non-exempt” if the FLSA’s minimum wage and overtime requirements do apply to them. In other words, these employees are not exempt from the FLSA’s provisions.

So: under the FLSA, employers can reduce non-exempt employees’ wages or hours as long as they don’t go under minimum wage requirements.

Exempt Employees

An employee is an “exempt employee” if one of the FLSA’s requirements does not apply to them. Some workers are legally exempt by definition—for example:

• Commissioned sales employees
• Drivers
• Mechanics
• Farmworkers
• Recreational employees

Some exempt workers, including farmworkers, have neither overtime nor minimum wage protections. Other workers, like drivers and mechanics, have minimum wage but not overtime protections.

Employees in executive, administrative, or professional roles are also exempt from both minimum wage and overtime standards if they meet the following requirements:

• They are paid on a salary basis
• As of January 1, 2020, they are paid at least $684 per workweek
• They perform exempt job duties, such as:
  • Managing or directing others (executive)
  • Non-manual labor related to general business operations (administrative)
  • Tasks requiring advanced knowledge or skill (professional)

The salary requirement means employees have a fixed pay rate regardless of the number of hours worked. So, even if salaried employees have their hours cut due to lack of work, they have to get paid the same amount.

However, the Department of Labor has said that employers can reduce exempt employees’ salaries as long as:

• The reduction is permanent, reflecting the business’s long-term needs. For example, an employer can’t change an employee’s salary from week to week, but they can make a one-time reduction in anticipation of future business trends, such as an economic downturn.
• The reduction must not go beneath the salary requirement of $684 a week. If it does, the exempt employee becomes non-exempt and is subject to minimum wage and overtime requirements.

Worker Adjustment and Retraining Notification Act

The Worker Adjustment and Retraining Notification (WARN) Act is a federal law that requires employers to give employees a 60-day notice in the event of plant closings or mass layoffs.

The 60-day notice requirement of WARN applies to:

• Companies with 100 or more employees
• The company’s plant closing or mass layoff will result in employment loss. Employment loss includes a 50% reduction in an employee’s work hours for each month in a six-month period.

So, for some employees, WARN guarantees advance notice of hour reductions. If you have questions about whether WARN applies to you, consider speaking with an experienced wage and hour lawyer.

State Laws

In addition to the federal laws that cover aspects of wage and hour cuts, many states have laws that require employers to give notice of wage or hour reductions.

A few states, including Alaska, Missouri, New York, and North Carolina, set specific timeframes for notice, ranging from 24 hours to 30 days ahead of time.

However, most states that require prior notice of pay or hour reductions don’t set specific timeframes for giving notice. In this case, the specific time varies but should provide employees with reasonable advance notice.

If your employer cut your pay or hours without notice, they may have violated your state’s laws regarding advanced notice. A wage and hour attorney in your area can give you the best advice about state law and strategies for bringing a claim.

Cutting Hours or Pay as Retaliation

Subject to federal and state laws, employers can, in some cases, reduce the pay or work hours of at-will employees. However, employers cannot cut hours or pay to retaliate against employees. Some situations when employers may try to retaliate include:

• Medical leave. The Family and Medical Leave Act (FMLA) and some state laws allow employees to take extended absences for their severe medical conditions or sick family members. It is illegal for your employer to fire you for taking leave under the FMLA or state law.
• Filing claims against your employer. It is illegal for your employer to retaliate against you for filing claims for workplace discrimination or other working conditions.
• Filing workers’ compensation. Suppose you have filed a workers’ compensation claim for injuries you got while working. In that case, it is illegal for your employer to retaliate by taking an adverse employment action, such as reducing pay or hours or terminating your employment.

If you think your employer retaliated against you, resulting in lost wages or hours, consider contacting a wage and hour lawyer for further guidance.

Questions for an Attorney

Should you pursue legal action against your employer for reduced hours?

“[Wage and hour] statutes generally refer to ‘an adverse employment action,’” Kingsley says. “Generally speaking, most attorneys aren’t taking a case unless it’s a wrongful termination. However, if [the adverse employment action] is a big demotion or cut in what an employee is paid, that might be a viable claim. If it’s a question of someone who was working six hours a day and is now working five hours a day, that’s technically a demotion and could theoretically be pursued as a claim. However, from a practical perspective, it will be challenging to get a lawyer to take that case unless the damages are really significant.”

Because the viability of a claim is highly fact-dependent, speaking with an employment law attorney for legal advice is advisable. Many attorneys provide free initial consultations to prospective clients. These free consultations allow the attorney to hear the facts of your case and for you to determine if the attorney meets your needs.

To see whether an attorney is a good fit, ask informed questions such as:

• What are your attorney fees, and what billing options do you offer?
• What are the costs of suing my employer?
• What is your experience as an employment lawyer?
• What are my state’s wage and hour laws?
• What kind of damages could I get in my case?
• What are the chances of a settlement in my case?

Finding the Right Attorney for Your Needs

It is essential to approach the right type of attorney—someone who can give you legal help through your entire case. You can visit the Super Lawyers directory and use the search box to find a lawyer based on your legal issue or location. 

If you think your employer cut your hours illegally, consider looking for a wage and hour attorney.