FPC key terms

The total money an employee earns during a pay period before any taxes or deductions are subtracted. It includes wages, salaries, overtime, bonuses, commissions, and other taxable compensation.

The amount an employee actually receives after all mandatory and voluntary deductions are taken out of gross pay. It is also called take-home pay.

The recurring interval for which employees are paid, such as weekly, biweekly, semimonthly, or monthly. It determines how often payroll runs and how many hours are reported.

The scheduled day employees receive their wages. Employer policy and state law set the timing, and it must align with tax deposit and reporting schedules.

The full value of what an employee receives from a job, including base pay, bonuses, benefits, and employer contributions. It is broader than taxable wages.

The Fair Labor Standards Act is the federal law that sets minimum wage, overtime, child labor, and recordkeeping rules for most employers. It also defines exempt and nonexempt status.

An employee who is not entitled to overtime under the FLSA, usually because the role meets salary and duties tests for executive, administrative, professional, computer, or outside sales exemptions.

An employee covered by FLSA minimum wage and overtime rules. Most hourly workers are nonexempt and must receive overtime pay for hours over 40 in a workweek.

A worker who provides services under a contract and controls how the work is done, rather than an employee whose work is directed by the company. Misclassification can create tax liability.

The Federal Insurance Contributions Act authorizes Social Security and Medicare taxes withheld from employees, with matching employer contributions. Rates and wage bases are set annually.

The Federal Unemployment Tax Act imposes an employer-only payroll tax that funds federal unemployment benefits. Employers report it annually on Form 940.

State unemployment insurance tax paid by employers to fund state jobless benefits. Rates and taxable wage bases vary by state and by the employer's experience rating.

The IRS form an employee files to tell the employer how much federal income tax to withhold. It reports filing status, dependents, and other adjustments.

The annual statement employers send to employees and the Social Security Administration showing wages paid and taxes withheld for the year. It must be furnished by January 31.

The employer's quarterly federal tax return reporting wages, federal income tax withheld, and both employee and employer Social Security and Medicare taxes.

The annual federal unemployment tax return employers file to report FUTA wages and compute the tax due, including credits for state unemployment taxes paid.

A court order or legal process requiring an employer to withhold part of an employee's pay to satisfy a debt such as child support, a tax lien, or a judgment.

A federal law that limits how much of an employee's disposable earnings can be garnished for most debts and protects employees from discharge because of a single garnishment.

The part of an employee's pay left after legally required deductions such as taxes, but before voluntary deductions. It is the base used to calculate garnishment limits.

A fixed, recurring period of 168 hours, or seven consecutive days, chosen by the employer. Overtime under the FLSA is measured by hours worked within this period.

Paid time off given in place of overtime pay. Under the FLSA, private-sector employers generally cannot offer comp time to nonexempt employees instead of overtime.

A fixed, predetermined amount paid each pay period regardless of hours worked or quality of work, required for most FLSA white-collar exemptions.

The lowest hourly rate an employer may legally pay covered nonexempt workers. The federal floor can be exceeded by state or local minimum wage laws.

An employer-sponsored cafeteria plan that lets employees pay for certain benefits, such as health insurance, with pre-tax dollars, reducing both income tax and FICA wages.

The IRS timetable that tells an employer when federal payroll taxes must be deposited, usually monthly or semiweekly, based on the lookback period.

The four-quarter period used to determine whether an employer deposits federal taxes monthly or semiweekly for the coming year.

Pay at one and one-half times an employee's regular rate for hours worked beyond 40 in a workweek, unless another rule applies under federal or state law.

The hourly rate used to calculate overtime, including base pay plus nondiscretionary bonuses, shift differentials, and other compensation divided by hours worked. It may exceed the base rate.

An amount subtracted from gross pay before income and sometimes FICA taxes are calculated, which lowers taxable wages. Examples include Section 125 health premiums and traditional 401(k) deferrals.

An amount taken from pay after taxes are calculated, so it does not reduce taxable wages. Roth 401(k) contributions and most garnishments are common examples.

The value of non-cash benefits, such as employer-paid life insurance above $50,000, that is treated as taxable wages and included in the employee's gross pay.

The payroll process of starting with gross wages, adding taxable benefits, subtracting pre-tax deductions, computing taxes, and subtracting post-tax deductions to arrive at net pay.

An electronic transfer of net pay into an employee's bank account. It reduces paper checks and requires written authorization and secure account verification.

A prepaid debit card an employer loads with an employee's net pay. It must be voluntary and comply with state rules on fees and access.

A payment beyond regular wages, such as a discretionary or production bonus. Nondiscretionary bonuses generally must be included in the regular rate for overtime.

Compensation paid to an employee whose employment ends, often in exchange for a release. Tax treatment depends on whether it is considered wages for FICA and withholding.

A detailed record summarizing each employee's hours, earnings, deductions, taxes, and net pay for a pay period. It supports journal entries, reconciliation, and reporting.

The Electronic Federal Tax Payment System is a free IRS service employers use to deposit federal payroll taxes electronically, including withholding, FICA, and FUTA.

Employers must keep payroll records such as hours worked, wages paid, and deductions for a set period, generally three years under FLSA and four years for IRS purposes.

A chronological record of changes made to payroll data, showing who changed what and when. It supports internal controls, troubleshooting, and compliance reviews.