Lowing worker pay is often a last resort for an employer looking for ways to cut costs and keep a business alive. Workers impacted by wage cuts may be forced to look for part-time employment or a new higher-paying position. It is legal to lower what workers are paid if the employer goes about it properly.
It is legal to demote an employee as a punitive action for poor work performance or as a disciplinary action for infractions such as customer complaints. The demotion may also reduce the employee's pay since lower-ranking positions typically have lower salaries or hourly wages. This demotion may be a temporary measure until the employee proves his worthiness or it can be permanent. That is not to say the employee won't be promoted in the future --- just that he won't automatically be restored to his former position.
Equal Pay Act
The Equal Pay Act requires that men and women earn the same wage for the same worked performed. It is illegal to pay a man a higher wage than a woman for the same position and vice versa. It is also illegal to lower the wage of a single worker when all other workers are still earning the higher wage. For example, if the prevailing wage of workers in your business is £6 per hour, it is illegal to select a single worker of either gender to earn less than other employees for the same work.
It is legal for an employer, without being discriminatory, to lower the wages of his workers performing similar jobs to the federal or state minimum wage. The employer is required to give written notice to his employees of his intent to lower wages across the board. A large-scale lowering of wages nearly happened in 2008, when California Governor Arnold Schwarzenegger threatened to lower the salary of all state workers to the minimum £4.2 an hour unless a budget agreement could be reached.
Change in Job Description
If an employer redefines the job description of certain positions in his work force, it is legal for him to change the salary or hourly rate of people working those positions. For example, the integration of technology may require workers to perform less manual labour. Since the employees are doing less, the employer can pay them less though he is still required to comply with federal equal pay laws and not discriminate against any gender, ethnic group or other protected class when determining pay cuts. When a contract exists detailing employee pay, such as a union collective bargaining agreement, an employer must go back to the negotiating table to alter the wages of workers.