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Mar15

demotion and pay cut

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Can an employer demote a salaried manager employee, relocate him and decrease his pay in Illinois?

Although there may be a business reason for an employer to transfer an employee to another location, demotions and/or reductions in pay are usually imposed due to performance issues. In the absence of a contract that states otherwise, an employer may hire, fire, transfer, promote, and demote an employee at will, as long as the employment action is not based on race, gender, national origin, age, religion, disability, or any other legally-protected class.

Employers may also reduce the pay of exempt or nonexempt employees as long as federal and state minimum wage requirements are met. Additionally, if a pay reduction brings an exempt employee’s salary below the $455 per week threshold for overtime exemption, the employer may need to re-classify the employee as nonexempt.

Employers are required to notify an employee in advance of any change to the pay rate or other pay terms. In Illinois, there is no specified advance notice period, but it must be given prior to the work being performed.

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This entry was posted on Thursday, March 15th, 2012 at 6:16 pm and is filed under
Compensation, Human Resources Management, Labor Laws, Performance Management.
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