Back pay definition and meaning
Back pay is any type of unpaid financial compensation that an employer owes to an employee, which may be the result of an improper change in salary, wages, wrongful termination, or in some cases, other legal action.
More about back pay and its purpose
Other times when an employee may be eligible for back pay are scenarios such as restitution for an employer violating a labor code, hours that didn’t make it into a timesheet on time to be included in payroll, or hours that should have been counted as overtime hours instead of regular hours.
What’s a back pay award?
A cash award made to an employee that generally results from legal action to remedy a violation of federal or state wage-hour or employment discrimination laws.
Scenarios where back pay can be due
Sometimes human error is the culprit during and falls on both the employee and employer. For example, a manager forgets to approve paid time off (PTO) in a payroll system, or the employee incorrectly enters hours worked on a time card, such as putting time worked as 10:00 a.m. through 10:30am instead of the actual shift running from 10:00 a.m. – 10:30 p.m. There can even be times when a payroll administrator accidentally skips over an employee when going through a list of employees who are receiving bonuses.
In rare instances, technology can be a factor, such as when a company’s payroll system does not immediately process a pay raise during the payroll process after an employee earns a promotion. In some cases, workers can request back pay after a job termination if they believe it is unjust.
