According to About.com, an employer can legally cut the pay of an employee as long as the employer is not violating any employee discrimination laws. Employers cannot cut pay if an employee is under an employment contract that prohibits it.
Employers are not allowed to cut the pay of an employee for reasons of race, gender, age or other protected classes. It is also not legal for employers to cut the pay of employees taking FMLA leave of absence, according to CBS News. However, employers do have discretion to cut pay legally for any reason that is work-related. For instance, an employer can decide to slash hours to rearrange a work schedule, which is perfectly legal.