Can an employer give you a pay raise and then take it back later?

I was given a pay raise about a month ago. Then yesterday, I was told it was mistake and I will go down to my prior pay rate. I have a voicemail and my co workers have emails where it was stated it is NOT a mistake, but now they are saying it was a mistake. It wasn’t just me either, it was everyone that I work with. Is this legal?

Asked on April 26, 2017 under Employment Labor Law, Indiana

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Unless you have an employment contract or union agreement that protects you against such an action, taking back a raise is legal. The fact is that in "at will" employment, a company can set the conditions of the workplace much as it sees fit (absent some form of legally actionable discrimination). However, just for all work going forward. Such a salary reduction cannot be retroactive. In other words, it cannot apply to hours that have already been worked.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Yes, it is legal, unless the raise was guaranteed in an actual written employment contract. Otherwise, without a contract, as part of "employment at will," an employer has complete freedom to set or change employee compensation at any time, for any reason: they can give you a raise, then take it back. (It you did have a contract, you can enforce it in court, by a lawsuit, if necessary.)


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.