REMEDIES FOR UNFAIR PRACTICES; REINSTATEMENT; BACKPAY BENEFITS – Back Pay; Interest

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Make-whole relief includes tax neutralization, which is make-whole relief to cover potential increased tax liability employees may incur from a lump sum backpay award that artificially moves earnings from multiple tax years into a single tax year, thereby making large parts of such income taxable at a higher rate. (County of Ventura (2021) PERB Decision No. 2758-M, p. 56, fn. 23.) In most cases, even though a charging party has not yet incurred the tax liability warranting neutralization, the charging party has the burden to estimate likely tax consequences in the compliance stage. Whether the charging party engages a professional or relies on tax software or an online tax calculator, the charging party must detail the basis for its estimate, thereby allowing the respondent a chance to contest the estimate and the compliance officer to assess what level of tax neutralization, if any, is appropriate based on a preponderance of the evidence.