What is Back Pay?
Back pay is a term that describes the difference in wages between what an employee was paid and what they should have been paid. This usually occurs when an employer has violated wage laws.
Back pay is money that an employer owes an employee for work that was performed in the past. This can happen for a number of reasons, including:
- The employer didn't pay the employee for their work
- The employee wasn't paid the proper amount for their work
- The employee wasn't paid on time
Whatever the reason, back pay is money that the employer owes the employee, and it's important that the employee receives the money they are owed.
Back Pay vs. Retroactive Pay
Back pay is compensation paid to an employee for work-related services performed prior to when a company fired or laid off the employee.
Retroactive pay is compensation paid to an employee for work-related services performed after a company fired or laid off the employee.
The difference between back pay and retroactive pay is that back pay compensates an employee for lost wages due to termination, whereas retroactive pay compensates an employee for lost wages due to layoff.
