Many employees are considered “at will,” which means that their employment can be terminated at any time and for any reason, or for no reason at all. Generally, these employees work without a written contract. But not having a contract that governs the term of employment is slightly different than the issue of whether there is a contract governing an employee’s compensation. Just about every employee has some sort of an agreement, verbal or otherwise, the governance their compensation. For many, the agreement may be as simple as specifying an hourly wage or a percentage commission. For others, the agreement can be quite complicated, involving bonus, compensation, revenues, profit sharing and more.
But can the employer change the compensation agreement after it has commenced? The answer is… Yes but. As a general matter, an employer can specify the terms of the compensation agreement prospectively. This means that, so long as the employee has advance notice of the compensation he or she will earn, the employer has the right to specify what it will be. Conversely, the employer cannot unilaterally, change the compensation agreement after the employee has already earned compensation.
If your employer balks at paying you, compensation that you have already earned, or attempts to modify a compensation agreement midstream, it may be time to seek legal advice.