Chapter 8 FACS 2

Commission

a fixed percentage or amount of profit given to an employee in exchange for making a sale; some employees earn a commission in addition to hourly wages or salary; other employees work purely on commission

Minimum Wage

a provision within the FLSA to ensure workers who earn an hourly wage are paid fairly; lowest hourly rate an employer may legally pay most workers; raised periodically to help workers keep up with inflation; sub-minimum wage is a special minimum wage which is set lower than the standard, which can be applied to full time students, employees younger than 20, and employees who are developmentally disabled, each for only 90 calendar days after they are first employed

Salary

a set amount of money earned by an employee per year on other fixed length of time; paid at regular intervals, such as weekly, bi-weekly, or monthly; typically the same amount each pay period; each pay reflects the total salary divided by the number of pay period, minus deductions and taxes

bonuses

a sum of money paid to an employee in addition to regular pay; employers will pay bonuses when employees meet certain goals or perform their jobs especially well

Overtime

according to the FLSA, work in excess of 40 hours per week is classified as overtime; pay typically must be 1.5 times the employee's regular rate of pay; usually not paid to salaried employees; an hourly employee offered a promotion to a salaried position should take the loss of overtime into consideration

Tax credit

an amount of money that can be offset against a tax liability.

deduction

anything subtracted from gross pay

Paycheck

check issued from your employer that you will cash or deposit into a bank account

Wages

employee earnings that are paid by the hour, day, or item; wage per hour times the number of hours worked during that pay period

Equal Pay Provisions

forbid employers from paying one person less than another person for the same work; same establishment, under the same or similar conditions, doing work requiring equal skill, effort, and responsibility

Insurance Benefits

group health care plans offered by the employer; allows employee and dependents to access health care at a reduced cost

Form 1099

if you have earned interest on savings during the year, your bank will send you a Form 1099-INT showing the amount of interest earned

Tips

money given to an employee by customers in exchange for a service; many workers who receive tips often are not paid a significant hourly wage, so tips can be a substantial addition to their income

IRS Instruction Booklets and Forms

must use one of three forms to file your tax return: Form 1040, Form 1040A, or Form 1040EZ; 1040A and 1040EZ are the simplified versions that are used if you meet certain criteria like income below a certain amount; forms are available at public libraries, or online on the IRS website

vested

occurs after a certain amount of time; employee is entitled to some or all of the money in their retirement plan when leaving the company

Other benefits

paid holidays, vacation, sick leave, and maternity leave; pay for additional education or job training; money toward adoption or child care

Direct Deposit

pay that is electronically transferred directly into the recipient's bank account; will receive a receipt or statement showing the amount deposited, name of the financial institution, and account number; also will receive a pay stub with all of the same information that you would have received with a paycheck

Form W-2 Wage and Tax Statement

sent to you from your employer, which will show your total amount earned for the year, as well as total withholdings; by law it must be sent to employees by January 31st; make sure it contains the correct information including your name, SS number, income and taxes that appeared as the YTD totals on your final pay stub of the year.

Fair Labor Standards Act (FLSA)

the Federal government has enacted certain standards governing employee payment and compensation; often used to prevent discrimination against women, minorities, and older workers

Net pay

the amount of pay an employee is left with after taxes and other deductions are subtracted from the gross pay (take-home pay)

Income Tax

the largest source of money by the federal government to provide services; some state and local governments also collect income tax

Gross pay

total amount of money earned for working during the pay period; salaried employees' gross pay will usually stay the same; most pay stubs will include a column that lists the total hours worked and gross pay for the year to date

Saving and Retirement Benefits

typically, the employer deducts money from the employee's pay to deposit in a savings or investment account; some or all may be deducted pre-tax, reducing the amount of income tax you will pay; some employers will match the employee's contribution up to a certain amount

Piecework

work for which wages are based on the number of items or pieces produced; usually involves the manufacture or assembly of items