In a recent National Labor Relations Board case, Latino Express, Inc., the Board decided that "in connection with an award of backpay, should routinely require a respondent to: (1) submit the appropriate documentation to the Social Security Administration (SSA) so that when backpay is paid, it will be allocated to the appropriate calendar quarters, and/or (2) reimburse a discriminatee for any additional Federal and State income taxes the discriminatee may owe as a consequence of receiving a lump-sum backpay award covering more than 1 calendar year."

This decision means that employers who lose backpay awards cases will need to reimburse workers for excess federal and state income taxes that the employees would need to pay on a backpay award.  This is true if the backpay awards to the employees stretch over a year period.  

The case in Latino Express, Inc., resulted in a multi-year backpay award to the employees because of numerous delays.  As in this case, many cases involve thousands of dollars in backpay.  In the past, the employees had been responsible for paying state and local income taxes on the backpay awards.  With this case, the Board has required that the employer reimburse the employees for these extra tax payments.  The employer must also submit documents to the Social Security Administration, so that the employees' backpay is distributed to the appropriate calendar quarters for determining future Social Security benefits. This decision is being applied retroactively to pending cases.