Can an Employer Decrease Your Pay?

Short answer: in California, yes, an employer can usually reduce an at-will employee’s pay going forward, as long as it gives notice before the change and the new rate is still at or above the applicable minimum wage. What an employer cannot do is cut pay retroactively for work already performed, reduce pay below the minimum wage or below the salary threshold required for an exempt employee, cut pay for an unlawful reason such as discrimination or retaliation, or break a contract or collective bargaining agreement that sets your pay. This post explains where the line is and what to do if your employer crossed it.

When a pay cut is legal in California

Most California employees are at will (Labor Code section 2922), which means the terms of employment, including pay, can be changed by the employer for the future. A pay cut is generally lawful if:

• it applies only to work performed after you are told about it;
• the new rate is at least the applicable minimum wage, which is $16.90 per hour statewide in 2026 and higher in the City of Los Angeles, unincorporated Los Angeles County, West Hollywood and many other cities, and higher for fast food and many healthcare workers;
• if you are classified as exempt, the new salary is still at least twice the state minimum wage for full-time work, which is $70,304 per year in 2026; a salary below that threshold means you become non-exempt and are owed overtime;
• it does not violate an employment contract, an offer letter that promises a rate for a fixed term, a commission plan, or a union contract;
• the reason is not unlawful.

An employer that reduces pay must also give written notice of the new rate. Labor Code section 2810.5 requires written notice of any change to the pay rate within seven days of the change, unless the change appears on a timely wage statement.

When a pay cut is illegal

• Retroactive cuts. Wages you have already earned are vested. An employer cannot reduce the rate for hours you already worked or take back earned commissions or bonuses (Labor Code sections 221 and 224).
• Below minimum wage. No agreement can waive the minimum wage (section 1194).
• Discriminatory cuts. Reducing pay because of race, sex, age, disability, pregnancy, national origin or another protected characteristic violates the Fair Employment and Housing Act, and paying employees of one sex less for substantially similar work violates the Equal Pay Act (Labor Code section 1197.5).
• Retaliatory cuts. Cutting pay or hours because you complained about wages, safety or discrimination, requested leave or an accommodation, or filed a workers’ compensation claim is unlawful retaliation (Labor Code sections 98.6, 1102.5, 6310 and 132a; Government Code section 12940(h)).
• Cuts that breach a contract. If a written agreement sets your pay for a period or requires notice, the employer is bound by it.
• Unlawful deductions. Charging you for cash shortages, breakage, uniforms or mistakes is not a “pay cut” the law allows (sections 221 and 2802).

Cuts in hours and demotions

An employer may also reduce hours or reassign an employee to a lower-paying job for the future. The same limits apply: it cannot be done for a discriminatory or retaliatory reason, and a significant cut in hours or pay imposed to force an employee to quit can be treated as a constructive discharge. Employees whose hours are cut may be eligible for partial unemployment benefits through the EDD.

What to do if your pay was cut

1. Get the change in writing, with the effective date and the new rate.
2. Check the date. Any reduction applied to hours already worked is recoverable.
3. Compare the new rate to the state and local minimum wage and, if you are salaried, to the exempt salary threshold.
4. Ask yourself what happened right before the cut. A cut that follows a complaint, a leave request, a pregnancy announcement or a workers’ compensation claim is evidence of retaliation.
5. Keep pay stubs and time records. Wage statements must show your rate and hours (section 226).
6. File a wage claim with the Labor Commissioner or talk to a lawyer. Unpaid wages can be recovered for three years, and up to four under the Unfair Competition Law; discrimination and retaliation claims under FEHA must be filed with the Civil Rights Department within three years.

How Abdi & Associates can help

Abdi & Associates, Inc. helps individuals with unpaid wage, retaliation and discrimination claims throughout California. If your pay was cut unlawfully, we can evaluate the claim, calculate what is owed, and explain your options. Call (888) 772-2529 for a free consultation. See also our pages on unpaid wages and employee retaliation.

Reviewed by Shawn Abdi, Esq., Abdi & Associates, Inc. Last reviewed: September 4, 2026. Attorney advertising. This page is general information, not legal advice about your specific situation. Legal deadlines have exceptions; confirm the deadlines that apply to your case with a lawyer.