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An employer can change its wage agreement with an employee at any time, regardless of what the original wage agreement was, without the employee's permission. There are certain requirements that an employer must meet to make changes in its wage agreements or wage benefits:
"Promised wages" can be an hourly rate that is more than the minimum wage, overtime or other premium pay for certain days worked, shift differential pay, commissions, bonuses, piece-rate, production pay, a weekly salary, a monthly salary, or mileage expenses. "Wage benefits" are benefits such as, but not limited to, vacation pay (including PTO and PDO leave), sick leave, and holiday pay.
An employer must pay its employees at least the minimum wage for all hours worked, and time and one-half overtime pay based on the regular rate of pay for all hours worked in excess of 40 in a workweek (unless the employee is exempt). This is all an employer must pay, at least under the federal Fair Labor Standards Act (FLSA). An employer is not required by the FLSA to give wage benefits such as vacation pay, sick leave, or holiday pay to employees, regardless of how many hours a week they work.
Once a promise is made, however, the employer must pay all promised wages, including wage benefits, accruing to its employees based on any policy, agreement, or practice that the employer has established. Such promises may be enforceable under state wage laws, or under state contract laws. An employer must comply with its own wage payment agreements until such time as the employer changes its policy in writing. Therefore, reductions to earned wages, including earned wage benefits, cannot be made retroactive without potentially running afoul of state laws.