Back pay is defined as unpaid wages for work performed during a previous pay period. This can occur due to various reasons, such as:
- Retroactive pay increases: If your pay rate is increased, and the effective date is set in the past, the difference between the old and new rates for the time worked during that period is considered back pay.
- Incorrect pay: If you were underpaid or not paid at all for some of your work, then your employer must provide back pay to correct the error.
- Legal settlements: In cases involving labor disputes or lawsuits, a court or arbitrator may order an employer to provide back pay.
- Suspensions or terminations: If you were suspended or terminated and later reinstated, you will be entitled to back pay for the time you were not allowed to work.
Back pay is typically provided in a lump sum or added to an employee’s regular paycheck once the issue is resolved. Back pay is also sometimes called “back wages.”
If you are owed back pay and wages, you can recover back wages by filing a wage and hour lawsuit.
Below, our California labor and employment lawyers discuss the following frequently asked questions about lawsuits for unpaid wages for California employees:
- 1. What is back pay?
- 2. How do I know if my employer owes me back wages?
- 3. How long do I have to file a lawsuit?
- 4. What about penalties and interest?
- 5. What is the interest on unpaid wages?
- 6. How can I file a claim?
- Additional reading
Back pay and wages are the amounts you should have been paid if your employer had not violated state or federal laws.
1. What is back pay?
Back pay is the amount of money owed to you for work completed but not paid by your employer. Back pay wages are similar to unpaid wages in California. However, back payment of wages is often money calculated after your employer is determined to have violated some wage or hour laws.
For example, if your employer improperly calculates your paycheck, you may have been underpaid for past work. You may notice the problem, or the California Division of Labor Standards Enforcement (DLSE) may recalculate the amount and notify you that you are owed back pay.
Back pay and back wages in California are generally related to wage and hour law violations that under-calculate the amount of money owed to you.
This may involve the following types of violations:
- Minimum wage violations,
- Overtime pay violations (such as unpaid overtime),
- Unpaid meal and rest breaks,
- Unpaid final wages,
- Unpaid sick leave,
- Exempt misclassification,
- “Off the clock” work,
- Illegal payroll deductions, or
- Unpaid reimbursements.
Note that you can sue for back pay whether or not you are still employed or were furloughed, laid off or fired. As long as you are owed wages for work done, the employer owes you.
2. How do I know if my employer owes me back wages?
You may be notified of back pay and wages after a California DLSE investigation. The agency may send out a notice telling you that you are owed back pay and wages for some employer state or federal FLSA wage violation.
However, the DLSE does not catch all wage and hourly rate violations. It may be up to you to calculate how much you are owed in a pay period and compare that to the amount you are paid.
California law provides a number of minimum wage and hour protections for non-exempt employees in California. This includes:
- Minimum wage,1
- Overtime (whether permitted or not),23
- Lunch breaks,4 and
- Off-the-clock restrictions.5
The California Department of Industrial Relations makes the following recommendations to make sure you are paid your full wages and to support your case when filing a claim:
- Track the number of hours worked: write down the time you begin and end work every day, total hours worked, and when you take meal or rest breaks.
- Keep all pay stubs: itemized wage statements must contain certain information, including wages earned, deductions, and dates of the pay period.
In addition to the back pay and wages, the DLSE may also add interest to the unpaid wages. Interest on back pay is limited to 10% per year.
You may sue your employer for back pay.
3. How long do I have to file a lawsuit?
The amount of time to file an unpaid back wages lawsuit in California depends on the type of claim. The time limit, also called the “statute of limitations,” for most California wage and hour violations must be filed within three (3) years from the date of the most recent violation.6
Back pay violations that are based on breach of contract claims must be filed within 2 or 4 years.
- If the unpaid wage claim is based on an oral agreement (no written contract), the claim must be filed within two (2) years.
- If the unpaid wage claim is based on a written agreement, the claim must be filed within four (4) years.
It is important to file the claim in time or your claim may be denied. Talk to a California wage and hour lawsuit attorney as soon as possible to make sure your claim is filed in time so you can get the full compensation you are owed.
4. What about penalties and interest?
The amount of money owed for back pay and back wages may depend on the type of violation and the actions of the employer. If the back pay was the result of a mistake with no intentional wrongdoing, back pay may include:
- The unpaid wages from the miscalculation, and
- Interest on the unpaid wages (up to 10% per year).
If the back pay or unpaid wages were the results of labor code violations, the employer may also owe damages and penalties for the violations. Back payment for labor violations may include:
- The unpaid wages from the miscalculation,
- Interest on the unpaid wages (up to 10% per year),
- If the employer did not give mandatory meal breaks or rest breaks, you may be eligible for one hour’s wages for each missed break,7 and
- Reasonable attorney’s fees and court costs.8
If the violations were the result of intentional underpayment or were not due to a good-faith error, you may be eligible for double damages.9
5. What is the interest on unpaid wages?
If your wages are not paid on time in California, you may be entitled to collect interest at a rate of 10% per annum on the unpaid amount. This interest is generally calculated from the date the wages were originally due until the date of actual payment.10
The accrual of interest on unpaid wages is not automatic. As an employee seeking interest on unpaid wages, you must take legal action to enforce your rights by filing a wage claim with the DLSE or pursuing a lawsuit against your employer.
When pursuing interest on unpaid wages, it is crucial to gather and preserve evidence to support your claim. This may include pay stubs, time records, employment contracts, or any other documentation that can establish the amount of unpaid wages and the date they were due.
6. How can I file a claim?
If you are owed back pay or unpaid wages in California, you can file a lawsuit to recover
- the amount owed, including
- interest and any penalties.
Talk to your attorney about your case and how to make your employer pay for the work you were never compensated for.
If you are worried that you cannot afford to hire an attorney, many California employment lawyers represent employees based on contingency agreements. This means the lawyer will not get paid until you do.
Remember, California wage and hour laws require employers to pay your attorney’s fees in successful unpaid wage lawsuits, which means this fee will not reduce your total recovery.
If your employer is violating wage and hour laws against you, they may be doing it to multiple employees. This may mean your case can become part of a class action lawsuit on behalf of a large number of employees.
Additional reading
For more in-depth information, refer to the following scholarly articles:
- Is Back Pay Wages? – American Labor Legislative Review.
- Making Good on Vaca’s Promise: Apportioning Back Pay to Achieve Remedial Goals – UCLA Law Review.
- Back Pay Revisited – Boston College Industry and Commerce Law Review.
- Arbitration Back-Pay Awards – Labor Law Journal.
- The Back Pay Remedy in Title VII Class Actions: Problems of Procedure – Georgia Law Review.
Legal References:
- Labor Code 1197 LC — Payment of lower wage than minimum wage. (“The minimum wage for employees fixed by the commission or by any applicable state or local law, is the minimum wage to be paid to employees, and the payment of a lower wage than the minimum so fixed is unlawful. This section does not change the applicability of local minimum wage laws to any entity.”)
- Labor Code 510 LC — Day’s work; overtime; commuting time. (“(a) Eight hours of labor constitutes a day’s work. Any work in excess of eight hours in one workday and any work in excess of 40 hours in any one workweek and the first eight hours worked on the seventh day of work in any one workweek shall be compensated at the rate of no less than one and a-half times the regular rate of pay for an employee. Any work in excess of 12 hours in one day shall be compensated at the rate of no less than twice the regular rate of pay for an employee. In addition, any work in excess of eight hours on any seventh day of a workweek shall be compensated at the rate of no less than twice the regular rate of pay of an employee. Nothing in this section requires an employer to combine more than one rate of overtime compensation in order to calculate the amount to be paid to an employee for any hour of overtime work. The requirements of this section do not apply to the payment of overtime compensation to an employee working pursuant to any of the following: (1) An alternative workweek schedule adopted pursuant to Section 511. (2) An alternative workweek schedule adopted pursuant to a collective bargaining agreement pursuant to Section 514. (3) An alternative workweek schedule to which this chapter is inapplicable pursuant to Section 554.”)
- Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575, 584–85. (“Along with other amici curiae, the California Labor Commissioner notes that “the time the employee is suffered or permitted to work, whether or not required to do so” can be interpreted as time an employee is working but is not subject to an employer’s control. This time can include work such as unauthorized overtime, which the employer has not requested or required. “Work not requested but suffered or permitted is work time. For example, an employee may voluntarily continue to work at the end of the shift. The employer knows or has reason to believe that he is continuing to work and the time is working time. (29 C.F.R. § 785.11 (1998).) “In all such cases it is the duty of the management to exercise its control and see that the work is not performed if it does not want it to be performed.” (29 C.F.R. § 785.13 (1998).) “). See also: Barber v. State Personnel Bd. (Court of Appeal of California, Fourth Appellate District, Division Two, 2019) 35 Cal. App. 5th 500; Davis v. Los Angeles Unified School Dist. Personnel Com (Court of Appeal of California, Second Appellate District, Division One, 2007) 152 Cal. App. 4th 1122.
- Labor Code 512 — Meal periods; requirements; order permitting meal period after six hours of work; exemption; remedies under collective bargaining agreement. (“(a) An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee. An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.”)
- Adoma v. University of Phoenix, Inc. (E.D. Cal. 2010) 270 F.R.D. 543, 548. (“California law requires that an employer pay for all hours that it “engages, suffers, or permits” an employee to work.”)
- Code of Civil Procedure 338 CCP — Statutes of limitations for wage/hour lawsuits. (“Within three years: (a) An action upon a liability created by statute, other than a penalty or forfeiture.”)
- 8 C.C.R 11040. (“11 . . . (B) If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided. . . . 12 . . . (B) If an employer fails to provide an employee a rest period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the rest period is not provided.”)
- Labor Code 1194 LC — Action to recover minimum wage, overtime compensation, interest, attorney’s fees, and costs by employee. (“(a) Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney’s fees, and costs of suit. (b) The amendments made to this section by Chapter 825 of the Statutes of 1991 shall apply only to civil actions commenced on or after January 1, 1992.”)
- Labor Code 1194.2 — Liquidated damages in wage/hour suits. (“(a) In any action under Section 98, 1193.6, 1194, or 1197.1 to recover wages because of the payment of a wage less than the minimum wage fixed by an order of the commission or by statute, an employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon. Nothing in this subdivision shall be construed to authorize the recovery of liquidated damages for failure to pay overtime compensation. A suit may be filed for liquidated damages at any time before the expiration of the statute of limitations on an action for wages from which the liquidated damages arise. (b) Notwithstanding subdivision (a), if the employer demonstrates to the satisfaction of the court or the Labor Commissioner that the act or omission giving rise to the action was in good faith and that the employer had reasonable grounds for believing that the act or omission was not a violation of any provision of the Labor Code relating to minimum wage, or an order of the commission, the court or the Labor Commissioner may, as a matter of discretion, refuse to award liquidated damages or award any amount of liquidated damages not exceeding the amount specified in subdivision (a). (c) This section applies only to civil actions commenced on or after January 1, 1992.”)
- California Civil Code 3289.