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 relang 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