What is front pay?
Front pay is compensation awarded to an employee for lost earnings and other benefits due to employment discrimination. The compensation is determined from the time of judgment to reinstatement or in lieu of reinstatement.
Compensation in front pay includes:
- Compensation lost while the employee looked for a new job
- Compensation for reputational damage or harm caused to the employee
- The time between the case and when judgment is made in favor of the employee
Front pay ensures that the employee is adequately compensated for any losses caused due to discrimination. Front pay is considered an equitable remedy that seeks to "make whole" victims.
Does front pay lead to reinstatement?
No. Reinstatement assumes that the employee will resume their previous position without compensation for the losses incurred. Front pay is paid when there will be no reinstatement, either because the role has already been filled or because the position is no longer available. When reinstatement is possible, front pay will still be awarded to compensate for any losses incurred.
Front pay vs. back pay
There's a difference between front pay and back pay. Back pay refers to the compensation owed to an employee due to wrongful termination. It's calculated using the day of termination until the court rules in favor of the employee.
On the other hand, front pay is compensation paid to an employee as if termination did not occur until they find a comparable job or income.
How do you calculate front pay?
Front pay is calculated using various inputs and factors:
- The age of the employee
- The scarcity of similar jobs in the market
- The likelihood of continued employment if the discrimination had not occurred
- The length of time required to find a reasonable and comparable employer
- The tenure of the employee
- The employability of the employee
- Life expectancy