Can a business lower my hourly rate because I elect health benefits?

UPDATED: Sep 30, 2022

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Can a business lower my hourly rate because I elect health benefits?

I was hired at an hourly rate and did not choose health coverage. A month later I changed my mind and elected health coverage. In addition to having to pay $800 per period for the coverage I selected, the company lowered my pay rate by 5 per hour because I elected medical benefits. Is this allowed? They retroactively went back to my original date of hire and dinged me $5 per hour for all the time I worked. Is that allowed? I am not actually eligible until 60 days after the first day of the month after my start date. Are they still allowed to hold back

the 5 per hour during this period of ineligibility?

Asked on October 7, 2016 under Employment Labor Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

They cannot retroactively change your pay: you already performed work in exchange for certain pay, and therefore to not pay you that amount is breach of contract (violation of the agreement, even if only an oral or unwritten one, pursuant to which you did the work; having done the work for an agreed upon amount of pay, you must be paid it). If they retroactively have refused to pay you at the rate then in effect, you could sue them for the money, such as in small claims court.
However, going forward or prosepectively, if you did not have a written contract guarantying your rate, your employer may change it at will, at any time and for any reason, such as to save on total compensation costs if you chose health benefits. So on a forward-looking basis, this is legal.

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 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.

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