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Retroactive pay cut

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tgmilr

Junior Member
What is the name of your state (only U.S. law)? Michigan
I signed an at will show cause year contract in August 2009 and in Jan 2010 my employer informed me that I will be getting a pay cut which is retroactive back to August. Can they make a retroactive pay cut? Can they take money you already did the work for?
 


swalsh411

Senior Member
This is not allowed in Michigan. (or in any other State to my knowledge)

They can lower your pay down to minimum wage but they can't make it retroactive. If they actually do take back any wages, file a complaint with the Wage & Hour Division.

http://www.michigan.gov/dleg/0,1607,7-154-27673_27856---,00.html]DELEG - Wages & Fringe Benefits

Wage Rate Change

Agency: Energy, Labor & Economic Growth

A wage rate may be raised or lowered provided the employee is given notice of the change prior to the effective date of the change or working any hours at the new rate. An employee's approval is not required.
 

pattytx

Senior Member
Although the wage and hour law does prohibit retroactive pay decreases, the state DOL could only enforce from August until the date you were notified.

Take your contract to a local attorney experienced in contract/employment law to see what, if any, your recourse might be. You might have a better result.
 

tgmilr

Junior Member
So, what I am understanding is that it is illegal to take back the money I already earned but they can fire me if I don't agree to give it back? I am willing to take the pay cut as of when I was informed but I have been told that if I don't sign the new contract that will be back dated they will assume I do not want to work there. If the new contract is dated Jan 1 I will sign other wise I won't because to me it is like stealing the money I already made and spent. Can they really do that?
 

swalsh411

Senior Member
If they want you gone for not agreeing to this, they will find a reason to fire you. Probably not an employer you want to be working for anyway. If you're fired, you should be able to collect unemployment while you look for a new job.
 

pattytx

Senior Member
What does your contract say regarding compensation?

No, since retroactive increases are prohibited, they CANNOT legally make you pay the money back. If they fire you for not doing so, file another complaint of retaliation with the DOL.
 

jdm2008

Junior Member
What is the name of your state (only U.S. law)? Michigan
I signed an at will show cause year contract in August 2009 and in Jan 2010 my employer informed me that I will be getting a pay cut which is retroactive back to August. Can they make a retroactive pay cut? Can they take money you already did the work for?
Remove your direct deposit authorization, if you have one.
 

pattytx

Senior Member
Remove your direct deposit authorization, if you have one.
That makes absolutely zero difference. Net pay is net pay, no matter what method is used to pay. The employer could (although illegally) produce a net payment with the deduction with a check as easily as they could with a direct deposit.
 

cbg

I'm a Northern Girl
Also, having a direct deposit authorization does NOT, despite the many fearmongers who make the claim, mean that the employer can make withdrawals from your account.
 

swalsh411

Senior Member
Also, having a direct deposit authorization does NOT, despite the many fearmongers who make the claim, mean that the employer can make withdrawals from your account.
Most direct deposit forms I have seen have language something like "employee agrees that employer may reverse via EFT any payments made in error to this account." In fact the American Payroll Association advises this be on the form.
 

cbg

I'm a Northern Girl
Yes, I agree that a direct deposit can be reversed, within the limits of banking laws. That is not the same thing as reaching into the employee's account and taking money out.

For one thing, banking laws put a strict time limit on how long after a DD is made, it can be reversed. It also allows for ONLY the reversal of the exact amount. If $500 goes in, ONLY $500 can come out. Not any other amount. Not $499.99 or $500.01.

What most people appear to be afraid of, and the way I interpreted the instruction to stop the DD, is that the employer will take out any amount they want that they feel is due them. That cannot be done with a DD authorization.
 

pattytx

Senior Member
Plus the fact that the bank can refuse the employer's request for reversal of a direct deposit entry; they don't often, but they legally can as there is no law requiring them to accede to the request.
 

tgmilr

Junior Member
But what happens if I refuse to sign the changed contract? Does that mean I am fired, go to work at the old rate, or they take that as I quit? The contract says if not signed and returned by the date on the paper that it would constitute that I reject the contract. What does that really mean?
 

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