Payroll
What is net pay?
The amount an employee takes home after deductions.
Who qualifies for overtime pay?
Non-exempt employees.
What form is used to determine federal tax withholding?
W-4 form.
What is a 401(k)?
A retirement savings plan funded by the employee.
What is gross pay?
Total earnings before any deductions.
What is the standard workweek for overtime calculation?
40 hours
What is FICA?
A payroll tax that includes OASDI and Medicare.
What is a defined benefit plan?
A pension that guarantees a payout at retirement.
What is included in gross pay?
Salary, wages, commission, and bonus.
Do holiday or sick hours count toward overtime?
No
What does OASDI stand for?
Old Age, Survivors, and Disability Insurance.
What happens to SUTA/FUTA rates when employee turnover increases?
The rates increase.
What is the difference between gross pay and net pay?
Gross pay is total earnings; net pay is after deductions.
What happens if an employee earns less than $684 per week?
They are automatically non-exempt.
What are garnishments?
Court-ordered deductions like child support or fines.
What is SUTA and FUTA?
Employer unemployment taxes.
State Unemployment Tax Act
Federal Unemployment Tax Act
Why is gross pay considered an expense to the employer?
Because it represents the total amount the employer must pay the employee.
What are the three tests used to determine if an employee is exempt from overtime under the FLSA?
Salary Level Test, Salary Basis Test, and Duties Test
What is the rate for OASDI and HI?
Social Security 6.2% only on first $168,600
Medicare 1.45% on all wages
Employees pay an extra 0.9% on wages above:
What is FUTA and SUTA rate?
FUTA = Federal = Fixed (0.6% after credit, 5.4% standard credit for paying state unemployment tax on time): First $7,000 of each employee’s wages
SUTA = State = Shifts (0.23% – 6.23% (varies by employer experience): $9,000 per employee per year