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31 Am. Lab. Legis. Rev. 106 (1941)
Is Back Pay Wages

handle is hein.journals/alablegr31 and id is 108 raw text is: Is Back Pay Wages?' By MICHAEL FOONER Bureau of Old-Age and Survivors Insurance M ORE than a million dollars of back pay was awarded to almost 8,000 workers in the United States from July 1938-June 1940, under NLRB orders resulting from cases of discriminatory dis- charge.2 However, workers receiving back pay generally do not re- ceive equivalent wage credits for social security purposes. Since benefit rights under the unemployment compensation and old-age and sur- vivors insurance systems are based upon wage credits, the workers concerned and their dependents are likely to find that their benefits have been reduced, or that insured status has been lost and no benefits are payable. The purpose of a back pay order is to make whole an employee who has suffered by reason of his employer's violation of the law. But a worker who does not obtain social security wage credits equivalent to the amount of back pay is not made whole if he loses out on unem- ployment compensation and old-age and survivors insurance benefits. This situation has resulted from an interpretation of the term wages in the Social Security Act. The Bureau of Internal Revenue, which is responsible for the collection of social security taxes and for obtaining reports upon which the social insurance wage credits of individual workers are initially established, has ruled that back pay is not taxable as wages. The Social Security Board has followed this interpretation in crediting of wages for old-age and survivors insur- ance purposes. In unemployment compensation, some states credit back pay as wages and some do not. The B.I.R. ruling (413-S.S.T. 359) is an interpretation of the Social Security Act's general definition of wages. The Act defines wages as ..... all remuneration for employment . . . ; and defines employment as . . . any service of whatever nature performed... by an employee for the person employing him . . . B.I.R. has held that a reinstated worker was not an employee during the period of his discriminatory discharge; that he performed no services for the em- 1 The opinions as expressed in this article are those of the author and do not necessarily represent the official views of the Social Security Board. 2 National Labor Relations Board, Fourth Annual Report, 1940, and Fifth Annual Report, 1941.

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