What Is Back Pay?
What's back pay, and how do you collect it if your employer hasn't paid all your wages? Back pay is the difference between what an employee was paid and the amount the person should have been paid. Withheld wages may be from actual hours worked, pay increases or promotions, or bonuses. If an employee was 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.
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.
However, other times, you might believe you deserve to pay that you have not yet received, and your employer thinks you do not. In these cases, you might have to collect back pay yourself, sometimes through legal action.
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 was determined.
For example, say a company fired an employee on May 1, 2014. 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, 2017. The employer is liable for back pay for three-and-a-half years.
Keep a Record
If possible, keep documentation of your payments, including copies of your pay stubs and time sheets 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 retroactively claim unpaid wages if you can document when you worked and what you were owed.
Keeping a record of when and how much are paid is a good idea regardless, helping you spot any errors in your paychecks.