Payroll Client AccessCan I cut an employee’s pay in Wisconsin?
Employers in Wisconsin can legally reduce an employee's pay if they provide advance notice.
While Wisconsin state law doesn't explicitly require a written notice, implementing a pay cut without any form of notice is illegal. Pay cuts cannot be retroactive and must comply with state and federal minimum wage laws.
Pay cuts may be further restricted by employment contracts or collective bargaining agreements. Reducing pay in response to protected activities (like filing a complaint) or discriminatorily is illegal.
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Salary Pay Cuts Vs. Hourly Pay Cuts
The process and implications of pay cuts differ for salaried and hourly employees in Wisconsin. In both cases, employers must provide advance notice, but changes to salaried employees' pay often face more scrutiny and may trigger contractual provisions.
For hourly workers, employers can reduce the hourly rate or cut scheduled hours, provided they maintain at least minimum wage.
Salaried employees' pay cuts are typically implemented at the start of a new pay period and must not reduce the salary below the federal minimum per week. If a pay cut brings an employee’s salary below the Federal threshold, the employee may lose their exempt status and become eligible for overtime pay.
Workplace Wage Policies & Procedures Consulting
Every employment situation is unique, and the legality of pay cuts depends heavily on specific circumstances including employment contracts, company policies, and the timing and manner of implementation. While some pay reductions are straightforward, others may expose employers to significant legal risks or employee relations issues.
Before consulting an employment law attorney, talk with our HR experts who can review your specific situation, help evaluate potential risks, and guide you through best practices for policy development and implementation. Our team can help ensure your wage changes are both legally compliant and strategically sound for your business.