Back Pay Defined
Back pay, as used in these instructions, is a retroactive wage increase. For
example, a negotiated contract expires December 31st but employees continue to
work while a new contract is negotiated. A new contract is approved in the
following August which includes a pay increase retroactive to January 1st. The
retroactive increase, or back pay, is paid in September, for work beginning
January 1st.
Crediting Back Pay
Like other compensation, back pay may be creditable for the month compensation
is paid or for the period earned. Also, like other compensation, if back pay is
reported for the month paid and the employee makes a timely request that it be
allocated instead to the month(s) earned, the employer must submit an adjustment
report accordingly. See Part II, Chapter 5 for more information about employee
protests of service and compensation records.
No Service Month With Back Pay
A service month should not be reported for the month that back pay was paid. In
the case of a retroactive wage increase, it is presumed that service has already
been credited based on the initial wage payment prior to the increase.
Distinguishing Between Back Pay and Pay for
Time Lost
Back Pay under the RRA and RUIA is defined differently than pay for time
lost. Employers have used the term back pay to refer to pay for time lost. For
example, an employer may indicate that a discharged employee won reinstatement
with back pay from the termination date. This would be payment for the period of
lost wages, not back pay as defined under the RRA and RUIA. The name the
employer gives to the payment does not govern the rules under which the payment
is creditable. See the next chapter for instructions
on reporting pay for time lost.
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