What Is Back Pay?
Back pay refers to money that an employer owes an employee for work that has already been completed but wasn’t properly compensated. This can occur due to wage miscalculations, wrongful termination, overlooked raises, or legal disputes involving employment laws.
Understanding Back Pay and Why It Matters
Back pay often comes into play when there’s been an issue with how an employee’s compensation was handled. For instance, it may be due to:
- A violation of wage or labor regulations
- Hours not logged in time to be included in the regular payroll run
- Overtime hours mistakenly paid as regular time
- Pay increases that were delayed in being processed
In short, back pay ensures employees are fairly compensated for all the time they’ve worked, even if those payments are delayed.
What Is a Back Pay Award?
A back pay award typically results from a court decision or legal settlement, where an employee is granted unpaid wages due to an employer’s failure to comply with labor laws, such as wage and hour rules or anti-discrimination regulations. These awards serve as both compensation for the employee and a corrective measure for the employer.
Examples of When Back Pay May Be Owed
Back pay can stem from simple mistakes or more serious legal violations. Here are a few common scenarios:
- A manager forgets to approve a PTO request, and the hours aren’t paid.
- An employee accidentally enters the wrong shift times, causing them to be underpaid (e.g., entering 10:00 a.m.–10:30 a.m. instead of 10:00 a.m.–10:30 p.m.).
- A payroll administrator unintentionally omits an employee from a bonus payout list.
- A promotion is granted, but the pay increase isn’t applied in the payroll system on time.
- After a termination, an employee claims they were unfairly dismissed and may seek back pay as part of a legal claim.
How Beyond Supports Back Pay Accuracy
Using modern payroll technology like Beyond can help reduce these kinds of issues. With automated workflows, employee self-service features, and built-in compliance tools, Beyond ensures hours are logged accurately, pay raises are tracked, and errors are caught before payroll runs, minimizing the risk of back pay situations.
In cases where back pay is still necessary, Beyond streamlines the process of calculating and issuing owed compensation, so employers can make corrections quickly and efficiently.