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Understanding Payroll Terms: Definitions and Key Concepts in Employee Compensation

This guide provides clarity on essential payroll terms, including definitions and explanations of key concepts. The payroll is a report listing employees eligible for payment, detailing the amounts due to each. It can also summarize company totals and averages. We define "payroll," which refers to individuals working for remuneration, and distinguish between salaried and hourly employees. Understanding these terms is fundamental for effective payroll management and ensuring accurate employee compensation.

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Understanding Payroll Terms: Definitions and Key Concepts in Employee Compensation

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  1. BCA

    Payroll Terms

  2. A list or report of employees to be paid, with the amount due to each. A payroll might list company totals and averages. Payroll
  3. A person working for another person or for a business for pay. Employees are salaried or hourly. Employee
  4. Have a set rate of pay per period Their pay is referred to as their salary SalarY Employees
  5. Get paid for every hour worked, including overtime. “Full-time” work week is 40 hours. Overtime is anything over 40 hours. Hourly employees’ pay is called “wages”. Hourly Employees
  6. A person or business that hires employees or workers. The employer offers wages or a salary to the workers in exchange for the worker’s work or labor. Employer
  7. The amount that an hourly employee gets paid per hour. Also known as hourly rate. Overtime is sometimes paid at 1 ½ times or 2 times the hourly rate. Pay Rate
  8. An amount that reduces a person’s pay. Sample deductions are taxes, insurance, and retirement. Deductions
  9. Regular pay = regular hours worked X regular pay rate RegularPay
  10. Overtime Pay = Overtime hours worked X Overtime pay rate Overtime Pay
  11. Gross pay = Regular pay + Overtime pay Gross pay
  12. The amount of an employee’s earnings AFTER deductions. Net Pay = Gross Pay – Deductions. Net Pay is your “take-home” pay….your check amount! Net Pay
  13. The following are known collectively as Payroll Taxes: Federal Income Tax Social Security Tax Medicare Tax Payroll Taxes
  14. A payroll deduction collected by employers by law Sent to the federal government Supports governmental programs Federal Income Tax
  15. A payroll deduction collected by employers by law Sent to the federal government Provides a small income and other services to the elderly, disabled Americans, and orphaned minors Social Security Tax
  16. A payroll deduction collected by employers by law Sent to the federal government Provides medical insurance to the elderly and to some disabled Americans Medicare Tax
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