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If an employer cuts an employee's pay without telling him, it is considered a breach of contract. Pay cuts are legal as long as they are not done discriminatory (i.e., based on the employee's race, gender, religion, and/or age). To be legal, a person's earnings after the pay cut must also be at least minimum wage.
If your hours or pay have been cut, you may still be eligible for partial unemployment compensation. However, most of what you earn will be subtracted from your benefit amount. Unemployment benefits are available to employees who are out of work temporarily, through no fault of their own.
You may file a claim for UI benefits if you are out of work or your hours have been reduced. To be eligible to receive UI benefits, you must be out of work due to no fault of your own and be physically able to work, ready to accept work, and looking for work.
When your wages decrease through no fault of your own, you may qualify for unemployment benefits from your state through the loss of work eligibility. This applies whether your employer significantly decreased your wages or you lost a job and had to take a job that paid significantly less.
It is illegal if an employer cuts pay for a contracted employee if the contract explicitly states the salary can't be reduced to a lower amount. Employers can't reduce wages to an amount lower than the state's minimum wage. Check with your state for your minimum wage rate before reducing salaries.
To be eligible for regular benefits, you must: Have worked the required number of hours in your area. You must have worked these hours within the last year. This number is usually 420-700 hours, but it depends on the unemployment rate in your area.
If your employer asks for your consent to reduce your pay and you do not accept they may opt to terminate your contract on notice. Your notice is set out in your contract. Your employer may then offer you a new contract, with the reduced salary, although this is not guaranteed.
At-will employment doesn't just cover firing, however: An employer can also change the status of an at-will employee -- including, for example, the employee's hours, salary, title, job duties, worksite, and so on -- without notice and without cause.
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