Backpay

Backpay is wages that are owed to an employee but not paid by the due date. It covers money the worker should have earned for hours worked, overtime, bonuses, or other compensation that was incorrectly withheld, miscalculated, or delayed. It may arise after a payroll error, a wage violation, or a retroactive wage increase.

Common sources include unpaid or underpaid overtime, misclassification of employees, failure to include all hours worked, unpaid bonuses, and delays resulting from settlements or judgments in wage disputes. It also arises when a court or regulatory agency orders back pay as a remedy, or when collective bargaining agreements grant retroactive wage increases.

Calculation and remedies: Backpay typically equals the total amount of wages that were due but not paid, from the date the payment was due up to the date of payment, and may include interest, penalties, and statutory allowances. Overtime is usually charged at the applicable rate (for example, time-and-a-half or double-time, depending on law). Employers may be required to provide payroll corrections and notify affected workers; employees can file wage claims with labor departments or pursue civil actions, subject to deadlines.

Notes: Backpay differs from future wages in that it is payment for past work. It may be subject to payroll taxes and deductions. The availability and procedures for recovering backpay vary by jurisdiction.