What Is Retro Pay?

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What Is Retro Pay?

Retro Pay, or “retroactive pay”, refers to money that is owed to an employee for work that was done in the past at a much lower wage rate. Retro pay becomes a common workplace dispute when there is confusion over when new pay rates are to be applied. 

An example of this is where the employer promises to apply an increased pay rate to a past project, but fails to do so.  In some jurisdictions, retro pay is only available if the employer intentionally deprived the worker of the wages promised. That is, unintentional administrative errors may not always result in a retro pay award.    

Retroactive pay laws may also apply to an employer’s failure to render bonuses or commission as promised to the worker. In most cases, retroactive pay refers to a failure to apply overtime wage rates to work completed in the past. In such cases, the pay is referred to as retroactive overtime pay, or ROT for short.

What Is Retro Pay in Comparison with Back Wages?

Back wages are not the same as retroactive pay. Back wages, or back pay, refers to unpaid wages that are owed to an employee for a time period in which they were not paid at all. On the other hand, retro pay usually has to do only with a difference in wage rates.

A common example of back pay is where an employee is wrongfully terminated for the months of June to July. During this period, they did not receive any wages because they were not working. Suppose then that the employee then files a wrongful termination suit and gets reinstated to the original job position. The employer might then be required to pay the worker back pay for the entire months of June and July.   

When Am I Entitled to Retropay?

An employee may be entitled to retro pay based on a number of different violations. These can include:

Wage and hour laws may differ from state to state, but in general, most state laws cover at least retroactive overtime pay disputes.  In order to recover your retro pay, you may need to file a lawsuit or file a claim with an administrative government agency (usually the EEOC or Equal Employment Opportunity Commission). 

Do I Need a Lawyer for Assistance with Retro Pay Disputes?

Retro pay is an important part of most employment arrangements. Workers may lose a significant amount of pay that they are entitled simply because they don’t know how to file a retroactive pay claim. If you need assistance with a retro pay dispute, an experienced employment lawyer can help you file your claim. Retro pay is not available in all states, so you may need to consult with an attorney to determine your eligibility. 

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Last Modified: 03-13-2015 11:19 AM PDT

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