Owed wages
How back pay works
Back pay represents the gap between what you were paid and what you should have been paid. The most common causes are misclassification (being labeled exempt when you should receive overtime), minimum wage violations, missed raises that were contractually promised, and straight wage theft. Under the FLSA, non-exempt employees must receive at least the federal minimum wage ($7.25/hour, or higher state minimum) and overtime at 1.5x for hours over 40 per week.
The FLSA recovery window
Federal law allows employees to recover up to 2 years of back pay for unintentional violations, or 3 years for willful violations (where the employer knew or should have known they were violating the law). Many state wage-and-hour laws extend this further. Courts can also award liquidated damages equal to the back pay amount, effectively doubling your recovery.
Common back pay scenarios
- Overtime misclassification: You worked 50 hours/week but were paid straight time for all hours. Back pay = 10 hrs/wk x 0.5x your rate x weeks affected.
- Minimum wage violation: You were paid below the applicable minimum. Back pay = (minimum - paid rate) x hours x weeks.
- Denied raise: Your contract specified a raise effective on a certain date, but it was not applied. Back pay = (new rate - old rate) x hours x weeks since the raise was due.
If you believe you are owed back pay, document your hours and pay stubs, then contact your state labor department or consult an employment attorney. The U.S. Department of Labor Wage and Hour Division also investigates FLSA complaints at no cost.
Questions
Back pay calculator FAQ
What is back pay?
Back pay is the difference between what an employee was paid and what they should have been paid over a specific period. Common causes include wage theft, misclassification (exempt vs. non-exempt), missed overtime, denied raises that were contractually due, or minimum wage violations.
How do you calculate back pay?
Back pay equals (correct rate minus actual rate paid) multiplied by the number of hours worked during the underpayment period. For salaried employees, convert salaries to hourly equivalents first. Include any missed overtime at the applicable overtime rate.
Is back pay taxed?
Yes. Back pay is taxed as regular wages in the year you receive it, subject to federal income tax, Social Security, and Medicare. If the lump sum pushes you into a higher bracket for that year, you may owe more tax than you would have if paid correctly over time.
How far back can you claim back pay?
Under the federal Fair Labor Standards Act (FLSA), employees can recover up to 2 years of back pay for unintentional violations, or 3 years for willful violations. State laws may allow longer recovery periods. The statute of limitations runs from the date of filing, not from the date the underpayment began.
Can I get liquidated damages on top of back pay?
Under the FLSA, courts can award liquidated damages equal to the back pay amount, effectively doubling your recovery. This applies to willful minimum wage and overtime violations. Some state laws provide additional penalties.
- Sources: U.S. Department of Labor — FLSA back pay and liquidated damages rules · IRS Publication 15 (supplemental wage withholding 22%) · IRS Rev. Proc. 2025-32 (2026 brackets).
- 🔄 Last updated July 2026 · Tax year 2026
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