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How to Calculate Retroactive Pay

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When an employee is underpaid for work completed over a period of time, the problem is typically corrected with retroactive pay. This totals the amount of money which should have been paid, which is then usually paid to the employee in a one-time payment.

Enter the date for first pay period during which an underpayment was made, at the top of the first column. For example, “January 2009.”

Enter the amount which should have been paid out during that pay period in the next column. For example, “$3,000.”

Enter the amount which was actually paid in the next column. For example, “$2,500.”

Add a calculation field in the next column to show the difference between those two columns. In many spreadsheets, you would enter “=B1-C1” for the columns you entered earlier.

Repeat steps 1 to 3 for each of the missed pay periods.

Click on the calculation you created in step 4, and drag the lower-right corner of that entry down until it covers the entire column of figures. The column will fill with the calculation for all missed pay periods.

Add up the numbers in the calculation column to determine the total amount due. In many spreadsheets, select the column and the sum will automatically be displayed. Otherwise, add a sum calculation at the bottom of the column. For example, “=sum(d1:d20)”; replace “d1” and “d20” with the top and bottom of your column.

About the Author

Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. He has written a book about self-employment for recent college graduates and is a regular contributor to "Macworld" and the TidBITS technology newsletter. He is completing a book on self-employment options during a recession. Davidson holds a Bachelor of Arts in American civilization from the University of Pennsylvania.

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