Can an Employer Give You a Raise and Then Take It Away?

by Phil Altshuler, studioD

Employers give raises for several reasons. Some are because of a written agreement with an individual employee, or part of a collective bargaining agreement with a union. They can also be based on merit, or because an employer wants to keep up with market rates. If market conditions deteriorate and profits shrink, employers may find it necessary to temporarily or permanently rescind raises to stay in business.

At Will

Unless employees are working under a written contract, they are "at-will" employees. That means they are free to leave their employer at any time, and the employer is free to terminate its employees at any time. Employers are also free to pay all of their employees any wage, as long as it is at, or above, any minimum wage required by law. This allows them to increase or lower wages as circumstances dictate.


Laws prevent employers from discriminating against any individual or group of individuals because of race, ethnicity or any other discriminating factor. If another group performs the exact same function, the law says that it should receive an identical wage. While this is the law, it can be difficult to prove.


If an employer gives a raise to an individual based on merit and his performance drops significantly, the employer can rescind the raise or terminate the employee at the employer's discretion. If a specific group or class of employees receives a raise, the employer cannot cancel the raise for some, but not all, employees in the group without extenuating circumstances. This would be prejudicial, but in most cases, the cost to contest the action would be prohibitive. The employee's best solution would be to find different employment.


Unemployment is high in 2011. If you are lucky enough to have a job, you may have had your income reduced. In many cases employers have had to reduce wages or lay off employees. High unemployment and reduced wages are forcing people to reduce spending. This spending drop results in more layoffs and higher unemployment. It is a difficult cycle to break.

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