When California businesses are confronted by financial difficulties like decreased sales or increased expenses, they typically explore ways to cut down on costs. Lowering employee wages is one option that many companies choose, but there are instances when cutting pay is not legally acceptable. If you are currently facing the prospect of having your regular pay cut, here are some legal considerations that you should keep in mind.
According to Monster.com, your employer must generally have a legitimate business reason for lowering wages in order for such conduct to be legal. In the event that your employer lowers wages by an excessive amount, you may not only be entitled to collect unemployment benefits but you could also have an employment law claim. Another factor that can determine whether your employer’s decision to cut your salary is legal is the existence of an employment contract. Attempting to alter the terms of your existing employment agreement could be considered a breach of contract in some cases.