Employment-at-will conditions apply to virtually every aspect of your working relationship, including employment status and pay. Therefore, your employer can demote you without notice. Even so, it's in the company's best interest to communicate with you about the change or it might lose a productive member of the staff and send a potentially demoralizing message to the rest of the company. Wrongful demotion claims are difficult to win, based on one, almost universal rule that employers hold the upper hand in the employment relationship.
Employers can make it perfectly clear that employees are deemed at-will by including the employment-at-will disclaimer on their applications and in their employee handbooks. Employment-at-will simply means that you or the employer can sever the employer-employee relationship at any time, for any reason or for no reason, with or without notice. With the exception of Montana, employers in all states and the District of Columbia embrace this employment-at-will doctrine.
If you have an agreement -- written or implied -- with your employer, it could shield you from being demoted. The exceptions to employment-at-will conditions include contractual agreements, labor union contracts and public policy. If your employment falls under any of these exceptions, it means you can't be fired, nor can the terms of your employment be altered if you are the party to an agreement that assures your continued employment. For example, suppose your employer said, "Mary, you've always got a job with ABC Company, and with your skills you can't go anywhere but up with the organization." You could claim that you have an implied contractual agreement with the company that includes not being demoted. If you're in one of the 38 states that recognize the implied-contract exception, you may be able to wage opposition to your employer's decision to demote you. Also, you can't be fired or have the terms of your employment status changed based on retaliation for exercising your rights under public policy.
Although employees have rights under the doctrine, your rights are relatively limited when you compare them to the employer's power to determine your employment status. Sure, you can decide whether or not you want to work for the employer. But you can't make any other unilateral decisions about your employment status unless you initiate a request for the company to demote you so you can assume fewer work responsibilities. And even then, if the employer values your work or doesn't have another position available, you're stuck where you are. You can either work in the same role or exercise your rights under the employment-at-will doctrine and resign.
Employer Best Practices
Unless there's an organization-wide push to cut wages or reconfigure staffing, telling an employee that she's going to be demoted can come as a shock and disappointment. Also, demotions in status and pay can be demoralizing. To preserve the employer-employee relationship, employers should rely on best practices to dictate how they select employees to be demoted as well as the most effective way to communicate the news to an employee that her position and, possibly her pay, will drop.
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