The employer assigns/allocates an additional amount in tips on the W-2 of employees whose reported tips are less than 8% of the total gross sales. Compensation that an employer provides to terminated employees, typically those who are discharged through no fault of their own (e.g., layoff). The amount of wages that must be paid what is days sales outstanding dso to an employee who voluntarily or involuntarily leaves the company.
Net pay, also known as take-home pay, is the wages an employee receives after deductions. 401(k) contribution limit is the cumulative cap of funds an employee may elect, often for retirement plans. This limit is determined by the combined total of all plans an employee paid toward and will change from year to year. Unless you’re in HR, payroll terminology and abbreviations can be intimidating.
Fringe Benefits
A statement given to employees showing details of their wages received for the pay period, such as hours worked, total wages or salary, overtime, and bonus. Many states have laws dictating the minimum information that must go on a pay stub. An employee’s minimum pay, such as their fixed salary or regular hourly rate. Base pay does not include additional compensation like overtime, benefits, or bonuses.
Payroll Terms You Should Know
For more than 30 years, Paycor has maintained a core expertise in payroll, tax filing and compliance. If you don’t want to go it alone, you can entrust your payroll to the experts at Paycor. When employees are terminated through no fault of their own, they may be eligible for a special payment known as severance pay. This is designed to tide recently terminated employees over until they are able to obtain employment again. First passed in 1993, the Family Medical Leave Act (FMLA) allows employees to take leave from work in order to free payroll deductions online calculator care for themselves or family members.
- Organized groups of employees with a common identity, interest, or background.
- Refers to when an employer pays its employees once every two weeks, such as every other Friday.
- Most businesses qualify for a 5.4% FUTA credit reduction after paying their state unemployment taxes, bringing the FUTA tax rate down to 0.6%.
- When employees receive the same pay despite having different levels of experience, skills, or qualifications.
- A timesheet documents the number of hours an employee worked within a pay period.
This tax is then used to fund such programs as Social Security and Medicare. The amount an employee pays in payroll taxes over the course of his or her career may be indirectly related to the level of benefits for which he or she is eligible. Gross pay is the total pay received by the employee before taxes and deductions are removed. This includes the base pay plus any additional earnings like bonuses, vacation pay, and commissions. Income tax is any federal or state-level tax deducted from an employee’s gross pay.
Federal Unemployment Tax Act (FUTA) tax
The I-9 is a form used to verify if an employee is legally eligible to work in the United States. The last quarter of the year and beginning of the next, when many tax and financial requirements accounting explained with brief history and modern job requirements are due. Temporary reassignment of an employee to a different role or organization. A life change that allows an employee to enroll in or modify benefits outside open enrollment. The structured process of integrating new hires into an organization’s systems, roles, and culture. Prerequisite qualifications job candidates must possess to be successful in a role.
Payroll Terms and Acronyms Glossary
When an employee’s wages are garnished, he or she is forced to forfeit a given portion of the paycheck to a debtor. Garnishments are most common for employees who have failed to pay their debts (such as student loans) and for child support payments. Form W-4 is completed by employees to inform their employer of how much federal income tax to withhold from their paychecks.
Businesses may use paper timesheets, time clock software, or an ESS portal to track how much an employee worked. Shift differentials are additional compensation for irregular shifts. Businesses often entice employees to work the graveyard shift by paying a few dollars more per hour or a percentage increase on their regular hourly pay.