In several recent situations, we discovered that North Carolina employers implemented cuts in employee pay due to demotions or other business reasons without complying with state law notice requirements. While companies are generally entitled to change pay for at-will employees, state law mandates that employees be provided written notice of any decreases before they go into effect. No advance notice is required to increase pay.

Prior to 2021, state law required 24 hours advance notice of decreases in compensation. That year, the General Assembly amended state wage and hour laws to increase the notice requirement to one pay period. Presumably, this notice allows the employee to decide whether to continue working before the pay cut takes effect. North Carolina employers can establish their preferred pay period, as long as it does not extend beyond monthly pay.

While unclear under state law, employers in violation of the notice requirement could be required to pay workers the difference between their previous and new salaries for up to one pay period. Although a relatively minor penalty, companies can easily avoid this outcome by providing enough time between the pay decision and its implementation to provide notice. These notice requirements vary widely among states, and employers with multistate operations should check applicable legal requirements before implementing pay changes.

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