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Can I Reduce an Employee's Compensation Without an Agreement?

Reducing an employee's agreed-up pay is not something most people do lightly, but sometimes it is necessary.  Either there is a performance issue that requires it, or financial constraints for the business.


Assuming you do not have a written contract with an employee that guarantees a specific term of employment, you have the legal right to modify, and even to reduce, compensation on a going forward basis.  This is because where employment is "at will," you have no obligation to continue employing them, so you can present essentially a new employment package at the new rate, which they can accept by continuing to work or reject by resigning.

What you need to be careful about is that the change does not affect anything earned before you announce the change, whether that be wages or commissions.  Retroactive impact could put you in violation of the Wage Act, and put you at risk of a lawsuit.

Learn more here about the Massachusetts Wage Act.

Need Help With an Employee Compensation Question?

Call (781) 784-2322
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Schedule a Free Information Call
What should I do if an employee requests their personnel file?

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  • Home
  • Employment Law
    • Guide To Employment Law Content
    • Employment Contracts in Massachusetts
    • Discrimination in the Workplace
    • Employment Termination >
      • Massachusetts Paid Family Leave
      • Severance Pay
      • Unemployment in Massachusetts
    • Sexual Harassment at Work >
      • Sexual Harassment in a Small Business
      • Sexual Harassment and Non Disclosure Agreements
      • Sexual Harassment and Remote Work
    • Wage and Hour Laws >
      • Overtime Law >
        • Overtime Exemptions
        • Employee Travel Time
        • Federal or State Overtime Law
      • Massachusetts Wage Act >
        • Payment of Commissions
        • Wage Deductions
        • Late Payment of Wages
        • Paid Time Off
    • Independent Contractor Law
    • Non Compete Agreements >
      • Are non competes enforceable
      • Massachusetts Non Compete Act
      • Pre 2018 Massachusetts Non Competes
  • Estate Planning
    • Guide To Estate Planning Content
    • Legacy Protection
    • Why You Need an Estate Plan
    • Why You Don't Have an Estate Plan
    • Estate Planning Documents >
      • Children with Special Needs
    • Planning for Assisted Living
    • Probate Process
  • Business Law
    • Guide To Business Law Content
    • Small Business Law
    • Business Contract Basics
    • Civil Suit Defense
    • Legal Issues for Start Ups
    • Trademark Basics
    • How to Incorporate
    • Sale of Business
  • About
    • Reviews
    • Slnlaw Offices
    • slnlaw core values
    • Publications and Interviews
    • New Client Intake and Consultation
    • Contact
  • Attorneys
    • Emily Smith-Lee >
      • 2018 Lawyer of the Year
    • Jenna Ordway
    • Rebecca Rogers
    • Sharleen Tinnin
    • Elijah Bresley
  • Legal FAQs
    • Estate Planning FAQs
    • Probate FAQs
    • Small Business FAQs
    • Wage Act FAQs
    • Commission Pay FAQs
    • Overtime FAQs
    • Independent Contractor FAQs
    • Non Compete FAQs
    • Employment Discrimination FAQs
    • Employment Termination FAQs
    • Massachusettts Unemployment FAQs
    • Severance Package FAQs
    • Medical Leave FAQs
    • Sexual Harassment FAQs
    • Employer FAQs
    • Civil Lawsuit FAQs
  • Blog