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Progressive Discipline: An employee we hired is not performing to our expectations, and we’d like to move them to a different role and reduce their pay. Is this allowed?

Posted by Michael Zamora on June 19, 2019

A common challenge faced in the on-boarding process is on-boarding team members that are not performing to the employer’s expectations. This leaves many managers and owners faced with the difficult decision to terminate the team member, or to demote the employee to a more fitting role with a reduction in pay.

If the employer does not have a contract with the employee that guarantees the team member a certain position or rate of pay, the employee can transfer an employee to a different position and alternative pay-rate for which they’re better qualified. However, an employer must ensure that they comply with all notification requirements regarding a decrease in pay, if any.

For example, California does not have a law addressing when or how an employer may reduce an employee’s wages or whether an employer must provide employees notice prior to instituting a wage reduction. In contrast, some states do require at least a 24-hours of written notice for any reductions in pay or changes in wage benefits. In any event, a wage reduction can only be applied to hours worked after the change and cannot be applied to hours already worked.

Such employment decisions are at the employer’s discretion. However, demotions are not always the best course of action. An employer invests resources in hiring an employee and further invests in preparing the employee for the management role. Additionally, the demoted employee may feel embarrassed and even resentful. Therefore, if the employee could perform better with training or coaching, a little additional investment here might benefit the employer in the long run and earn good will from employees.

If you find that a job transfer or demotion is the only option, documentation of the events leading up to and after the transfer is imperative. Detailing performance issues, skills gaps, knowledge inadequacies, and the progressive measures taken towards the employee’s success will demonstrate the legitimate basis for the employment decision and thwart discrimination and constructive discharge claims.

The power of documenting such events are unbelievably powerful in defending against a complaint (or lawsuit) from a disgruntled employee.

If you feel your Practice may need assistance with any of the above information, please reach out to HR for Health and SCHEDULE A CALL, or call: 877.779.4747, or email: compliance@hrforhealth.com today!


HR for Health is one of the nation’s leading Human Resources Management Systems (HRMS) used by small to mid-sized practices. HR for Health has provided the following complimentary articles to ensure you have a game plan when addressing complex HR matters.

Topics: Demotion, New Hire, Demoting, Role reassignment, Unqualified