Coachella Valley Corporate Attorney Answers the Question: What Are the Proper Steps for a Company to Follow When Tasked with Informing Employees of a Decrease in Their Pay?

Question: What are the proper steps for a company to follow when tasked with informing employees of a decrease in their pay?

Answer: In this circumstance, the company’s formula for determining an annual increase in pay is based upon market share and employee tenure. The employee in question was not notified that their market share had declined before a decrease in their pay went into effect. The company’s compensation analyst claimed that the employee might have been verbally notified, but appeared uncertain of this fact. Neither the employee’s director, nor their manager stated that they were aware of the pay decrease. The Human Resources Department responded to the situation by issuing a memo to the Vice President and all directors, which included information regarding the date of the pay scale revision.

An employee must have a contract clause, which states that a specific level of pay is guaranteed over the course of their employment in order to claim wrongdoing. Without such a clause, his or her pay is subject to change at the discretion of the employer, and a Coachella Valley corporate law firm may assess the validity of such a contract. It is the responsibility of the employer to notify employees of a decrease in their pay prior to the date that any such pay scale revision goes into effect. This means that it is illegal to withhold information regarding a decrease in pay from an employee while the worker is still in the company’s employ.

A collective bargaining agreement may alter these conditions, but according to the information provided by this particular case, such an agreement does not appear to apply.

Any retroactive pay deduction is prohibited, and any circumstance where an employee’s pay has decreased without notification should legally result in the full compensation of all lost wages beginning from the date of the pay scale revision, and a Coachella Valley corporate attorney may be able to effectively evaluate such a situation.