When Can Promised Employee Benefits Be Changed Legally?

When a person goes to work for an employer, he will generally make an agreement in which the employer agrees to provide him with a set amount of cash and benefits in exchange for his labor. However, in certain cases, an employer may attempt to change the terms of the person's employment. He is only allowed to do this in certain cases and can never withdraw benefits retroactively.

Employment Agreement

When a person agrees to work for an employer, he makes an agreement, either verbal or written, with the employer outlining his compensation. Although state laws differ on the requirements of an employee and employer in such a relationship, all states agree that, after an employee has completed the work he is contracted to do, an employer must pay what he agreed to pay. The terms of the provision of benefits can never be altered retroactively.

At-Will Employment

It is easier for an employer to alter the terms of benefits when an employee is working at-will. This means that the employee and the employer agree that either part can change the terms of the agreement at any time. An employer can fire the employee whenever it likes, and the employee is not obligated to stay at the job. So, with at-will employment, an employer can change an employee's compensation package with relative ease.

Contractual Employment

It is much more difficult for an employer to change the terms of employment with an employee with whom it has a written contract that promises the employee specific benefits over a specific period of time. In such a case, the employer can only change the terms of the contract with the employee's permission. Failure to receive an employee's permission first can leave the employer liable for a breach of contract lawsuit.

State Laws

Many employment laws, particularly laws related to the provision of benefits, are made at the state level. Some states specify instances in which an employer cannot withhold benefits, while others allow the employer more flexibility. Therefore, in order to determine exactly when an employer is allowed to change the benefits he provides an employee, an attorney with experience in employment law in your state would have to be consulted.