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Back Pay

What is Back Pay?

Back pay is the rectification of wrong done, if any, in terms of any unrewarded or unpaid work of an employee and the employer has to pay it back to the worker.

Employee back pay is the financials to be paid back to the worker by an employer for any unpaid work done by the employee in past, or anything which the employee would have performed if the circumstances had not been that could have not been done, or the compensation would have been made otherwise in any form under any different conditions.

Back pay is the portion, sometimes, which was unpaid earlier for the jobs which were already done by the employees. Or the pay increase which was in the payroll but could not be provided on time due to the financial constraints locally till the funds transferred are from the head offices.

At times, if the errors had been there in the previous months’ salaries, thereafter the rectification is made in present salary as payback or back pay. Other times, if any overtime pay had been the target of mistakes by payroll then doing the things back right needs back pay or back payments to the workers to an improvement and compensatory measure. 

Other types of back pay, except for mentioned above, are commissions, benefits, paid time off, any misclassification (putting an employee of the hourly wage slab into the salaried slot of employee), and bonuses – if any.

What is the difference between the back pay and retrospective pay?

Back pay is, as discussed above, the last reminder of any pay portion. While retrospective pay is the rectification of the error for any incorrect payment in the past. Simply to understand if something remains to be paid (unpaid amounts) due to not a mistake is back pay and when mistakes put their part in payrolls are retrospective or retro or retroactive pay.

Unpaid wages or payments in any financial heads due to retirements or resignations or even firing of an employee, also are under the domain of back pay/back payments/paybacks.

What is the way the back pay works and regulations of FLSA – Fair Labor Standard Act in the United States

Under the United States Fair Labor Standard Act (FLSA) if an employee receives unfair wages according to the job s/he is in or the task(s) has done, s/he can claim the lesser benefit even against the Government-run / public sector organization. The employees can claim back pay via the following mentioned:

For lawsuits, the judgments may cover the liquidated damages on part of the employer - if any, legal fees, and any compensation applicable.

How back pays should be practiced as best practice?

As far as the Organizational best practices are concerned in terms of back pay, you should follow the below-mentioned tips: