Retroactive pay, also known as “back pay,” is compensation owed to an employee for work they have done but have not been paid for correctly per their employment contract and federal, state and local law. California law requires employers to correct any payment shortfalls resulting from errors or violations of state labor laws. The money owed can include more than just hourly wages and may also include unpaid bonuses, commissions, and other forms of compensation.
A lawyer consultation with a California lawyer would help a person understand what retroactive pay is and when it is owed to an employer.
How Does Retroactive Pay Work in California? How Do I Calculate Retroactive Pay?
In order to be able to claim retroactive pay, an employee must keep track of their hours, their pay rate and the other benefits to which they are entitled in their place of employment. An employee must review their paychecks and pay stubs carefully to ensure that they have been paid correctly.
Retroactive pay is often claimed because the employer has violated federal, state or local minimum wage regulations. If a working individual believes that their employer has made significant errors in calculating their pay, they should consult an employment lawyer for guidance regarding when to hire an employment lawyer.
If an employer pays an employee less than the federal, state or local minimum wage, they remain obligated to pay the required amount retroactively. They must pay their employee the difference between what they paid and the required minimum wage for all of the hours they have worked. Many cities, towns and counties in California have local minimum wages and employers are legally bound to pay those wage rates if they operate in those locations.
For example, a person who works in the city of Cupertino, California, should be paid a minimum wage of $18.20 per hour. This is the municipal minimum wage in that city. If an employee has been paid an amount that is less than that, then they are owed the difference for every hour they have worked and been paid less than the Cupertino minimum wage.
Another pay issue that often leads to claims for retroactive pay is unpaid overtime. Both federal and California law require that non-exempt employees be paid 1.5 times their regular hourly wage for any hours they work over 40 in one week or for the first 8 hours on the seventh consecutive day of work on which they work. This assumes that the employee qualifies for overtime pay.
For work exceeding 12 hours in 1 day or 8 hours on the seventh consecutive day, the overtime rate goes up to double the regular rate. If an employer fails to pay the correct overtime rates when it is due per the regular pay period, they must pay it retroactively.
California law requires employers to pay 1 additional hour at an employee’s regular pay rate for any meals or rest breaks that an employee misses. Employers are mandated to provide employees with meal breaks of 30 minutes and a rest break of 10 minutes for every shift. If an employee misses either of these in a workday, they are owed 1 hour of pay at their regular rate. Of course, if both are missed, the employer would owe the employee 2 hours of pay.
California law defines an employee’s regular rate of pay as their hourly wage plus any other compensation the employee receives, such as non-discretionary bonuses and sales commissions. Bonuses and commissions are considered wages in California.
Another source of claims for retroactive pay is misclassification of employees. Employers have been known to categorize employees as “exempt” from overtime or as “independent contractors” in order to avoid paying the employees overtime and providing required meal and rest breaks.
An employer who has been misclassified may be owed retroactive pay for any overtime that was never compensated correctly. In some cases, the retroactive pay that an employer owes an employee has covered several years of pay.
California has deadlines, known as “statutes of limitations,” for filing a claim for retroactive pay. wage claim. Failure to file a claim within the time allowed by the statute of limitations could bar a person from collecting the back wages they are owed.
An employee has 3 years from the date of the pay violation to file a claim related to a violation of a state statute, such as one that applies to the minimum wage rate, overtime, or meal and rest breaks. An employee has 4 years to file a claim if their employer has violated a written employment contract. For claims based on an oral contract, the employee has 2 years to file their claim.
What Is the Difference Between Back Pay and Retroactive Pay in California?
There is no difference between back pay and retroactive pay in California. They are essentially two different terms for the same thing, i.e. pay that an employer owes an employee that has not been paid when owed.
What Are the Federal Regulations Regarding Retroactive Pay?
Retroactive pay obligation arises when an employer owes an employee additional compensation for work they have already done if they were underpaid or not paid at all. Federal authorities note that retroactive pay is often owned because mistakes are made when the following occurs:
- The employer makes errors in calculating pay.
- Increases in pay are delayed.
- Overtime is not calculated correctly.
- Hours are not classified properly.
- An employee has been promoted or changed jobs.
- Employment contracts have been changed.
It is in situations such as these that employers may calculate an employee’s pay incorrectly and when this happens, retroactive pay is owed. The employer is legally required to correct mistakes and issue retroactive pay promptly.
In fact, the federal Fair Labor Standards Act (FLSA) requires that retroactive pay be issued no more than 12 days after the end of the pay period in which an error was made. In addition, under the federal Equal Pay Act (EPA), employers must offer equal pay for equal work. If an employer has not done this, they may need to issue some retroactive pay.
In fact, under federal pay laws, an employer should ideally pay the back wages in the next paycheck issued after the check from which it was missing.
Under federal law, employers are obligated to document missing pay that is owed. A business needs to maintain adequate records, track missing wage payments and issue back payments when made. These rules mean that a business must pay close attention to how it tracks employees’ hours and calculates their pay.
When Do I Need To Contact a Lawyer for an Issue With Retroactive Pay in California?
If you believe that you have not received the pay that you have earned under federal, state, local laws and your contract, you want to consult a California employment lawyer. Your attorney can help you determine exactly how much you should be paid in the California location in which you work and whether your employer has failed to pay you what they owe. You have worked hard for your wages and you want to make sure you are paid what you are owed under the law.
