united-states employment
Can an employer apply one-off pay cuts via forced contributions?
<p>Are US employers allowed to unilaterally cut the pay for an employee, specific team or all employees through a one-off measure? Are forced contributions to charity, pay reductions during an economic crisis, fines for not meeting performance goals, and others legally above board?</p>

<p>From my limited understanding of US labor law, an employer is free to reduce pay going forward for any reason that isn't covered by specific anti-discrimination laws. And as a company-wide measure applied to future pay this also doesn't seem like it could be construed as an illegal deduction. But I'm not finding a straight answer.</p>

<p>This question was inspired by <a href="https://workplace.stackexchange.com/questions/157513/">this question about an employer reducing pay to buy the CEO's book</a> and <a href="https://www.askamanager.org/2018/11/my-employer-fined-me-90-for-being-late.html" rel="nofollow noreferrer">this off-site article</a> about an employer fining people for being late.</p>

<p><strong>Can an employer apply what are effectively one-off pay cuts</strong> through enforced contributions, fines or other measures? </p>

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  <p>Can an employer apply one-off pay cuts via forced contributions?</p>
</blockquote>

<p>No. This type of issues pertains to state law, and many (if not all) jurisdictions in the U.S. have statutes prohibiting forced deductions that are neither ordered by court, nor pursuant to bargaining agreements, nor as <em>required or expressly permitted by law</em>. See, for instance, <a href="http://www.legislature.mi.gov/(S(urifoxdxvwxdbsl321wg2lo5))/mileg.aspx?page=getObject&amp;objectName=mcl-408-477" rel="noreferrer">MCL 408.477</a> and <a href="http://www.legislature.mi.gov/(S(urifoxdxvwxdbsl321wg2lo5))/mileg.aspx?page=getObject&amp;objectName=mcl-408-478" rel="noreferrer">.478</a>.</p>

<p>The case of the CEO's book sounds in clear violation of MCL 408.477(2) since the user who asked on Workplace SE mentions that the employees did not consent to that deduction.</p>

<p>Even if an employee consents to the deduction, it is important to discern between (1) his <em>altruistic</em> consent, and (2) his concession for the sake of continuation of employment. Unless the consent is altruistic, the clause(s) allowing for the deduction might be rendered null and enforceable by virtue of <a href="https://www.fbcoverup.com/docs/library/1981-Restatement-Second-of-Contracts-1981.pdf" rel="noreferrer"><em>Restatement (Second) of Contracts</a> at § 178(1)</em> in relation to the aforementioned statutes.</p>

<p>Any form of deductions as a permissible sanction (as fining when the employee gets late to work) would have to be provided in the agreement between employer and employee. Otherwise it is unlawful.</p>

<p>When you accept a job offer, it comes with certain terms. Even if there is no written agreement, certain terms are explicitly talked about, such as what and when you do, and how much you get paid for it.</p>

<p>Now, if employer cuts your pay by way of something that has never been agreed — that is a breach of contract. You can, in theory, get what you were deprived of back through the court. Of course, unless you are a valued, important, hard-to-replace employee, you would be fired should you just open your mouth about that breach: what you get through the court would only be worth the pay you were deprived of until the day of firing.</p>

<p>When pay cut takes effect immediately (as opposed to you being advised of it some time in advance), your silence and continued work <a href="https://www.tannerdewitt.com/can-an-employee-continuing-to-work-amount-to-acceptance-of-a-unilateral-variation-of-terms-in-an-employment-contract/" rel="nofollow noreferrer">constitutes</a> acceptance by conduct: you essentially agree to lower the pay by not objecting it. So, basically, the answer boils down to whether you are ready to raise your voice, risk firing and go through the trouble of job search again.</p>
