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Back pay calculator.
Back Pay: Definition, Eligibility, and How To Calculate
What Is Back Pay?
Back pay is the amount of salary and other benefits that an employee claims that they are owed after a wrongful termination or another improper change in salary status.
Back pay is typically calculated from the date of termination to the date a claim was finalized or judgment was rendered.
How to calculate back pay for hourly employees
Key Takeaways
- Back pay is the amount of salary and other benefits that an employee claims that they are owed by an employer.
- The most common reason to claim back pay is for wrongful termination.
However, employees who have been underpaid, discriminated against, or passed over for promotions may also be eligible for back pay.
- Employers who are responsible for back pay must repay the employee's salary and benefits as if the employee hadn’t been terminated.
- Companies may insure against the risk of owing back pay to wrongfully terminated employees through employment practices liability insurance policies.
- The statute of limitations for back pay is two years, or three in the case of willful violations.
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