VOCABULARY
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Payroll
The term "payroll" is a general term, and it has several meanings. It can be the amount of money paid to
all employees in a payday, the nancial records of a company relang to the payment of wages and
salaries to employees, or the total record of earnings of all employees for a year
Gross Pay
Gross pay is the total paid to an employee each pay period. Gross pay is determined as an annual
amount for salaried employees. The annual gross pay is divided by the number of pay periods in
the year to get the salaried employee's gross pay for the pay calculations.
For hourly employees, gross pay is the worker's hourly rate times the number of hours worked in
that pay period; overtime is included in gross pay too
Net Pay
Net pay is the amount of pay an employee receives after all withholding and deductions from
gross pay. In other words, net pay is the amount of the employee's paycheck.
Withholding
Withholding refers to amounts taken from an employee's paycheck for federal and state income
taxes. Withholding is determined for federal income tax by a Form W-4 completed by the
employee at hire, and for state income tax by a state W-4 or other tax form.
Overtime
Overtime is the additional amounts paid to hourly employees who work over 40 hours in a week,
who work on weekends, or other additional amounts. The federal minimum overtime
requirement is that overtime must be paid at 1 1/2 times pay rate for employees who work more
than 40 hours in a work week. Of course, you can pay overtime at higher rates.
Work Week
A work week is considered as 168 consecutive hours of work in a seven-day period. This term is
used is calculating overtime.
Pay Period
A pay period is a recurring length of time over which employee pay is recorded and paid. Some
common pay periods are monthly, weekly, bi-weekly (every other week) and semi-monthly
(twice a month). A bi-weekly pay period results in 26 pay periods in a year, while semi-monthly
pay results in 24 pay periods in a year. The difference is important in computing total pay for
employees for a year
Overtime
Overtime is a calculated amount that is paid to employees who work more than a specific
number of hours in a work week. Overtime may be determined by the employer, but it can never
be less than 1 1/2 times the employee's hourly rate, for work over 40 hours in a work week.
Overtime may also be required for some exempt employees too. An explanation of overtime pay
for exempt employees is included in this article.
Salaried vs. Hourly Employees
The terms "salaried employee" and "hourly employee" relate specifically to how these
employees are paid.
Salaried employees are paid an annual salary. Hourly employees are paid an hourly rate times
hours worked.
Other distinctions between salaried and hourly employees might need to be noted
Exempt vs. Non-exempt Employees
Exempt means "exempt from overtime." Exempt and non-exempt employees are categorized
typically by the work they do.
Exempt employees (sometimes called a "white collar exemption") work in professional,
managerial, and executive positions. Other workers are non-exempt
Worker Compnsation
Employers need this insurance
Earnings and Leave Types
Salary- Fix compensation
Hourly- Compensation pay to a person by hour
Overtime- Compensation pay to a person before or after schedule hours
Per Item- Compensation per individual items (meeting, ...)
Leave and compensation- compensation for sick vacation, personal, holidays
Other taxable income
Non Taxable Income
Non...
Pension
Define Contribution plan
Define benefits plan