In the policy, it states that if a two week notice is not given, they will pay wages at minimum wage. I know they are hiring starting wages at $10-$12/hr. Is it legal to do what they have in their policy?
Unless an employer has a contract with its employees to the contrary, it is always free to adjust salary/hourly rates prospectively (ie into the future) and the employee can choose to work for those wages or not. However an employer is NOT free to adjust wages retroactively. Once an employee works the time, the employer is obligated to pay for that time at the previously agreed-upon rate.
With respect to the two week-notice issue, if there are hours that have been worked and not yet paid at the time an employee resigns without giving the two-week notice, the employer is not free to reduce the hourly rate it will pay for those hours. However if an employee gives a 1 week notice (or some notice less than two weeks) the employer is free to say that for the remainder of his time as an employee of the company he will only be paid minimum wage. The employee can then choose to work for the remining time or not.
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