Is it Legal????

My employer gave all employees a pay increase in December, now the company that I work for is closing our department and offering transfers to other departments within the company. If we choose to accept another position we will loose our pay increase. Is this legal??

Possibly...what state do you work in? What does your employment agreement state? Have you checked your state's laws? Have you asked your state's labor department? You received the increase in DEC, when did it take effect??