In Wisconsin, the employment relationship is at-will. The employer and employee determine the terms and conditions of employment and, absent a promise of employment for a certain period of time, the relationship and its terms can end or change at anytime. Because of the at-will relationship, an employer may take a raise back without violating the law. What it may not do is to take pay back for work already performed at the rate under the pay raise. It’s a matter of expectations. Where an employee works for an agreed upon wage, even if it was the result of an unexpected pay raise, the employee is entitled to get paid at that rate. Once the work is performed, the employer may not modify the rate of pay for that work already performed. Taking pay back or failing to pay the wage at the rate agreed upon when the work was performed will violate the employee’s contractual rights and state wage laws. Deducting future paychecks for any such retroactive reduction in the wage rate also violates Wisconsin law.
“Employment at will” is a legal principle that essentially means both the employer and employee are free to enter and leave the employment relationship at anytime. There is no contract of employment for any specified period of time. The only obligation, absent some specific agreement, is for the employer to pay an employee for the hours or days worked according to the agreed upon wage at the time. What it means for an employee in particular is that the employer can hire, fire, discipline, increase or decrease a wage, and change any other term or condition of employment for a good reason, a bad reason or even for no reason at all. The only limitations are that the employer may not take such actions doing so violates some written law like the federal or state employment discrimination laws, wage laws, medical leave laws, and the like.
Whether the “employment at will” applies depends on state law. Wisconsin, like majority of states, is an employment at will state.