You certainly do not want your boss to reduce your wages. However, they seem intent on doing so. They do not want to fire you, but they do inform you that they are going to cut your pay.
Your question, then, is if this is even legal. Maybe the job was advertised as paying $40 an hour, which fits your budget, and that is why you chose that specific job. If your boss then reduces the pay to $25 an hour after the fact, it feels unfair to you because you probably would not have taken the job. But is it illegal?
Are you an at-will employee?
The first thing to consider is whether or not you have an employment contract. If you are an at-will employee, your boss can adjust your pay. If you have a contract, you must be paid in accordance with the contract.
When does it apply?
Another factor is whether or not your boss is lowering the wages you will be paid in the future or trying to retroactively pay you less for hours that you have already worked. A reduction to your pay can only apply to future hours, not past hours.
Is it discriminatory?
In some cases, a wage reduction could be seen as discrimination or retaliation. If your boss tries to reduce the pay for all African-American employees, for example, it’s a clear instance of racial or ethnic discrimination. It could also be an issue if your boss is just retaliating against you for a legally protected act, such as reporting sexual harassment.
You can see how complicated this situation may be. It is important for all employees to understand their rights and legal options.