What law can allow companies to cut pay for employees?

I am just curious. When employees and employers sign the agreement to define the annual salary or hourly rate, how can employers cut pay for employees?

What law can allow companies to pay cut for employees? Does it mean the agreement the employee signs is useless?

If employees don't agree, is there any action they can take?

It depends on the terms of the contract. Read it - all of it - as it might contain a provision allowing the employer to cut wages.

I think you are getting a contract and an agreement that is subject to change confused with each other. Most states are at-will states, which means they can set your salary, or hourly rate, set your hours, and hire you or fire you for any reason they see fit without discriminating against you on the basis of the discrimination classes (race, religion, gender, etc.).

The agreement is subject to change at any time the employer feels the need. If you don't agree with what your employer is cutting your pay down to, your only option would be to find a new job. In this market, good luck doing so.

The only law that can be enforced is the minimum wage law. If the employer can't pay all the employees minimum, then a sufficient number will be laid off until the employer can meet the payroll.

You can hire an attorney to determine if a contract that was signed guaranteeing wages is legally binding.

Bottom line -- if the employer cuts your wages and that doesn't sit well then the next step would be to let people go.

A contract is a contract.

Is that what you signed? If it is not, then yes they can pay you what ever they want, and you are free to find a new job.

Cutbacks are happening everywhere though.