According to a posting by Normal 0 false false false EN-US X-NONE X-NONE Barker Olmsted & Barnier attorneys at law, in the case of Singh vs Southland Steel, in California at least At Will Employment applies to all employment actions including demotions and compensation decreases. According to the court ruling the tennant of at will emplyment means that either party may terminate the relationship at any time, with or without cause, for any lawful reason or no reason at all (assuming, of course, that there was no violation of public policy involved). There is no requirement that the party terminating an at-will employment act in good faith or with good cause. Based on this line of thought the employer may apply the same logic to demotions or compensation.
There is an old adage that says as California goes so does the rest of the country. In consideration that the majority of states operate under the At Will employment relationship, it would seem that the same arguement could be brought across the country. Would suggest that you talk to your labor counsel for further determination as to whether this applies in your state.
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