California Labor Laws for Demotion in Pay

California employers cannot charge their employees for cash drawer shortages.
California employers cannot charge their employees for cash drawer shortages. (Image: Creatas/Creatas/Getty Images)

The California Department of Industrial Relations oversees the state’s wage and hour regulations. As an employment-at-will state, California allows employers to demote their employees by reducing their wages for any reason. However, they must comply with the state and federal anti-discrimination laws governing illegal demotions. Furthermore, employers cannot reduce an employee's wage below the state's minimum salary or hourly wage.

Although California is an employment-at-will jurisdiction and employers can terminate their employees without cause or reason, they must comply with the state’s sick leave policies allowing employees to use leave to seek treatment for domestic violence and to care for sick family members under the California Family Kin Care, California Paid Family Leave Insurance Program or federal Family and Medical Leave Act. If an employer demotes an employee by reducing her work hours or pay as retaliation for using her allowable leave under federal or state leave laws, the employer is guilty of illegal discrimination or illegal retaliatory conduct. Additionally, an employer cannot demote an employee solely in retaliation for filing a lawful workers’ compensation complaint. Employers may, however, reduce an employee’s pay for tardiness limited to pro-rata deductions proportionate to the tardiness.

Minimum Salary Requirements

California imposes minimum salary and minimum hourly wage requirements on employer. Employers who demote their salaried employees cannot reduce their salaries to below two times the hourly minimum wage rate. In other words, current as of 2011, as long as an employer pays his salaried employees at least $33,280 annually, he may demote them by cutting their pay.

Minimum Hourly Wage Requirements

The minimum hourly wage in California is higher than the federal minimum wage of $7.25, effective July 2009. In California, the minimum wage is $8 per hour, effective January 2008. As long as employers do not demote their employees by reducing their wages below $8 per hour, they may demote them for poor performance or without cause. However, the state does not allow employers to demote their employees by reducing their work hours for less pay if the reduced wage is below the state’s minimum wage.

Equal Employment Opportunity Laws

In addition to complying with the federal Equal Employment Opportunity Commission’s anti-discrimination regulations, employers must comply with the state’s equal opportunity laws. Californians are protected by more than two dozen equal employment opportunity regulations. Included among the expansive equal employment laws in California are the anti-discrimination laws protecting employees using medical leave, leave for domestic violence, leave under the state’s Family Kin Care program, and protection from retaliatory discrimination for filing safety complaints against their employers or for filing equal employment violations against them.


Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.

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