Legal Definitions - backpay award

A backpay award is a formal decision made by a court, government agency, or other authorized body, determining that an employee or former employee is legally entitled to receive wages, salary, or benefits that they should have been paid in the past but did not receive. This award compensates the individual for financial losses incurred due to situations such as wrongful termination, discrimination, misclassification, or violations of wage and hour laws.

• Example 1: A factory worker was unjustly fired from their job. After filing a complaint with the National Labor Relations Board (NLRB), the board investigated and ruled that the termination was illegal. The NLRB then ordered the company to reinstate the worker and pay them for all the wages they lost during the period they were unemployed until their reinstatement.

  Explanation 1: In this scenario, the NLRB, acting as a quasi-judicial body, issued a backpay award. This award compelled the company to provide the worker with the wages they accrued but did not collect due to the wrongful termination, covering the period they were out of work.

• Example 2: A large retail chain was found by the Department of Labor to have incorrectly classified several of its assistant managers as "salaried exempt" employees, meaning they were not paid overtime despite regularly working more than 50 hours a week. The Department of Labor ordered the retail chain to pay these employees the overtime wages they should have received over the past two years, along with any associated benefits.

  Explanation 2: Here, a government agency (the Department of Labor) made a backpay award. This decision mandated the employer to provide the uncollected overtime wages and benefits that the employees were legally entitled to, correcting the past misclassification and underpayment.

• Example 3: An employee sued their employer for gender discrimination, alleging they were consistently paid less than male colleagues performing the exact same job with similar experience for several years. After reviewing the evidence, a court found in favor of the employee and ordered the company to pay the difference between what the employee earned and what they *should have earned* if not for the discrimination, along with any associated benefits, for the entire period of underpayment.

  Explanation 3: This judicial decision constitutes a backpay award. The court mandated the employer to compensate the employee for the wages and benefits they accrued but were denied due to discriminatory practices, covering the historical period of unequal pay.