Can an Employer Give You a Raise and Then Take It Away?

Whether a raise is big or small, it puts more money in your pocket, and you start to feel entitled to those earnings. However, at most jobs, the hard truth is that a raise can evaporate as quickly as it was tacked onto your paycheck. Employers can cancel a pay raise in most states without violating labor laws. If you are a member of a union, you may have some recourse, and circumstances regarding the revocation of your added compensation also may give you a foothold to file a complaint to regain your increase.

Immediate Revocation of a Raise

In all states except Montana, employees work "at-will," meaning they can be let go at any point without a business incurring legal liability, provided the termination itself is not rooted in an illegal reason for dismissal. In Montana, employers must show cause for dismissing a worker after a probationary employment period of six months elapses. The same concepts also carry over to wage laws in the United States. If a worker is paid at least minimum wage, additional compensation is at the employer's discretion.

When a raise is given to a worker and immediately taken away, there are few options for addressing the removal of the pay increase because the raise isn't protected by law. For example, assume your widget manufacturing rate exceeds your goal by 5 percent and your boss offers you a raise of 5 percent based on this. If he stops by your desk two weeks later to say he can't afford the raise, you may be stuck at the lower pay rate. However, you are entitled to receive the promised rate for any hours or days you worked before the pay raise was rescinded. Say your boss promised you the raise with an effective date of Monday and took it away on Wednesday – your time Monday through Wednesday should be compensated at the higher rate.

Always ask for communication regarding raises or hourly increases or decreases in writing so you can substantiate any future claims regarding funds owed before a raise was removed. Contact the Wage and Hour Division of the U.S. Department of Labor to file a complaint regarding any compensation problems. You may also pursue civil litigation against your employer if need be.

Long-Term Pay Cuts By an Employer

Pay cuts also happen after years in a pay grade. They are often based on overall company cuts, but trickle down to individual jobs when responsibilities are reassigned and your overall role reduced. Some states, such as California, require a company to follow policies in an employee manual or handbook when rescinding raises. If your job provides a guarantee for 40 hours per week and a set rate of pay, you are entitled to that pay rate and can pursue a claim through the Department of Labor or civil court. When you are a member of a union, your local steward may also assist you in filing a grievance through the union. In states without provisions regarding established company policy, your raise is typically gone.

Discriminatory Salary Reductions

Salary cuts rooted in discrimination, whether direct or indirect, can be challenged through Equal Employment Opportunity Commission claims. An employer cannot cut your salary based on race, color, religion, pregnancy, gender identity, sexual orientation, national origin, age, disability or genetic information. If your salary is cut and you feel it is based on your race, gender or age, discuss it with an EEOC counselor and file a claim. Discrimination of a protected class of employee may occur during a routine company review of positions and salary downgrades and upgrades if your salary is cut while other workers at your level or in your position retain their full rate of pay. Discrimination also occurs if your raise is taken away based on your taking breaks for prayer or requesting a reasonable accommodation due to a disability.

Pay Cuts After Family Emergencies

Pay cuts in retaliation for your taking unpaid leave through the Family and Medical Leave Act are also prohibited by federal law. FMLA leave entitles you to up to 12 weeks of unpaid leave in a work year for a personal medical emergency or to assist with medical problems of an immediate family member.

When you return from FMLA leave, you should retain the same job you held previously, or an equivalent position. The pay as well as benefits must be the same, and the job should have the same employment terms. If your compensation was lowered because of a job switch or based on a decline in performance while you were out on FMLA leave, file a claim with the Wage and Hour Division of the Department of Labor, and consult with a lawyer.