What Is Back Pay?
What is back pay? How do you collect it if your employer hasn't paid all your wages?
Back pay is the difference between the pay due to an employee and the amount they received. Withheld wages may be from actual hours worked, pay increases, promotions, or bonuses.
Laws Regulating Payment of Back Pay
The most common occurrence of back pay involves the misclassification of workers as exempt from overtime laws, when they were actually entitled to time-and-a-half of their regular rate of pay for any hours worked over 40.
However, in other cases you might believe you deserve pay that you have not yet received, and your employer thinks you do not. In these cases, you might have to initiate an effort to collect back pay yourself, sometimes through legal action. It is usually advisable to exhaust all options for directly addressing your concerns with your employer prior to taking legal action.
There may also be state laws regulating the payment of back pay in your location. Check with your state department of labor for information. When state law differs from federal law, an employer must comply with the standard most protective to employees.
Employers can’t withhold a portion of an employees’ pay without permission, as a punishment or if they have ceased working at the establishment. Workers should be paid their final check no later than the usual pay date for the last pay period worked.
More Reasons Employees Are Eligible for Back Pay
In addition to simply not being paid overtime or for the work you did, there are other reasons why a worker might be eligible for back pay.
When You Couldn't Complete the Job
If an employee was unfairly prevented from completing a job for some reason, they might also be eligible to collect back pay. For example, if an employer unlawfully fires an employee, the employee might be due back wages for the time he or she was not allowed to work.
Change From Hourly to Salary Employment
Sometimes you will receive unexpected back pay from your employer. For example, if you transition from hourly to salaried employment (or the other way around), you might end up receiving some additional pay from your employer based on your prior category of employment.
Retroactive Compensation for a Pay Increase
Union members might be eligible for back pay if there are retroactive stipulations for pay increases when new contract agreements were delayed beyond the expiration date of a prior contract.
Employer Doesn't Pay Minimum Wage
Another common back pay issue surrounds the failure of employers to pay at least minimum wage to the growing number of workers covered by state minimum wage laws.
Back wages also are available for underpayments including holiday pay and/or vacation pay for government contract employees under the Davis-Bacon and Related Acts and the Service Contract Act, among other laws enforced and administered by the Wage and Hour Division.
How to Collect Back Pay
The FLSA provides several methods to recover unpaid minimum and overtime wages:
- The Wage and Hour Division or the Secretary of Labor might supervise the payment of back wages, sometimes through litigation.
- The Secretary of Labor might instigate a lawsuit for back wages and an equal amount as liquidated damages.
- An employee can file a private suit against an employer for back pay plus attorneys' fees and court costs. In some cases employees can also request that benefits be included in the total back amount to be repaid.
- The Secretary of Labor can obtain an injunction to restrain an employer from violating the FLSA. This violation can include unlawfully withholding proper minimum wage and overtime pay.
An employee may not bring a suit under the FLSA if back wages were received under the supervision of the Wage and Hour Division, or if the Secretary of Labor already filed suit to recover the wages.
There is a two-year statute of limitations on recovery of back pay. Thus, an employee who has not addressed the issue of withheld wages within two years of the incident cannot file suit.
However, in the case of willful violations, a three-year statute of limitations applies. Willful violation means the employer intentionally disregarded or was indifferent to the requirements of workplace policies and laws.
Back Pay After Wrongful Termination
Back pay may also come into play after wrongful termination as the amount of salary and benefits that an employee claims to be owed after being improperly fired. Back pay is usually calculated from the date of termination to the date a claim was finalized or judgment determined.
For example, say a company fired an employee on May 1, 2018. The employee thought that the termination was unwarranted and filed a claim against the company. During the case, it was revealed that the plaintiff's manager had a personal problem with the employee and fired him for reasons other than his conduct and performance. The court required the employer to reinstate the employee and rendered the judgment on November 1, 2019. The employer is liable for back pay for one-and-a-half years.
Keep a Pay Record
If possible, keep documentation of your payments, including copies of your pay stubs and timesheets or a log of your hours. If you ever have to claim back pay this information will come in handy. It will be easier to claim unpaid wages retroactively if you can document when you worked and what you were owed.
Keeping a record of when and how much you are paid is a good idea regardless, helping you to spot any errors in your paychecks.
The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law.
U.S. Department of Labor. "Back Pay." Accessed Jan. 24, 2020.
U.S. Department of Labor. "Fact Sheet #70: Frequently Asked Questions Regarding Furloughs and Other Reductions in Pay and Hours Worked Issues." Accessed Jan. 24, 2020.
U.S. Department of Labor. "Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA)." Accessed Jan. 24, 2020.
U.S. Department of Labor. Wage and Hour Division. "Resources for Workers." Accessed Jan. 24, 2020.