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Wages and Salary

One of the things  new grads really need to get a handle on as they transition from college to career, is their wages and salary.

Back Pay

Payment that is for work that was done prior to a specific time for which the employee was not paid. Back pay also applies to compensate someone for work they may not have been allowed to do. For example, if an employee was wrongfully terminated from employment and ultimately reinstated, the company could be liable to pay back pay for lost income.

Commissions

Payment you receive as part of your paycheck that is based usually on performance. Used a lot in retail so for example for every widget you sell, you receive a percentage of the sale.

Compensation

How you will be paid for the work you do. Compensation does not just include salary.

Compensation Package

The grouping of all the ways that you will be paid. Eg. you compensation package can include wages, plus reimbursement for cell phone usage for business, plus the cost of health care insurance coverage.

Compensation Plan

Usually companies have structured plans that guide how they pay employees based on the knowledge, skills, abilities or other factors that impact how someone is compensated. Plans usually involve salary ranges.

Hold your Paycheck

You will hear this expression in the workplace sometimes if someone is leaving a job. Let us say you work in the IT office and one of the tools you were given to use at work is a laptop. Let us further say, you choose to leave that job and forgot to return the laptop. An employer might say that he/she will “hold your paycheck” until you return property like tools or even office keys. The employer cannot legally hold your paycheck. Having said that, you can still be prosecuted if you do not return company property. If you get an actual paycheck and do not have direct deposit, the employer does have the right to establish the time of day that a paycheck is released. For example, if the employee sets 4pm as the pay time, he/she can hold your paycheck until the designated pay time established.

Hourly Employee

Employee whose wages are based on an established rate of pay per hour. For example if you are hired at a hourly rate of $10.00, you will earn $100 for working 10 hours. There is usually a time reporting process.

Mandatory Overtime

When employers require employees to work hours in excess of the standard 40-hour work week. Employees working these hours will be paid at a premium rate (time and a half or double time as necessary). Usually, employees might be advised about this possibility if this will be a routine part of the work week. In other cases, this might be required due to unusual circumstances at work.

Median Wage

That salary within the range where 50% of the salaries fall above it and the other 50% fall below it.

Merit Pay

This is extra compensation (raise) that you could get as a result of good performance at work. It is usually referred to as a merit increase and it is often tied to a prescheduled, eg. annual review of work. Companies can establish different milestones for merit pay adjustments and how much this merit adjustment will be.

Minimum Wage

The lowest hourly wage that can be paid to an employee can be paid. This minimum wage can be established by state law or by congress. There can also be minimum wage for a job based on a specific agreement such as union contract.

Pay Scale

A graduated list of wages that a company establishes. Essentially it can be broken down into tiers, quartiles and each step would have a pay range. This is a key part of a company’s overall compensation strategy.

Performance Bonus

This is typically cash payments in excess of regular wages that an employee receives if they reach certain specific established targets. Often this is a way to compensate an employee for not just completing their work, but achieving or surpassing set goals. Employers use performance bonuses to increase employee productivity to reach company goals. Performance bonuses can be paid for individual achievements or for group achievements.

Salaried Employee

Usually how we refer to an employee who gets paid an annual salary which does not change from week to week and who will not receive overtime pay. See Exempt

Salary

This is a fixed amount paid to an employee for work to be completed. You will hear employers refer to “salary plus benefits” or “salary and benefits”. It is both of these components that will make up a compensation package. It is paid usually weekly, bi-weekly or monthly. Salaried employees are typically exempt, which means they get paid to do the whole job, no matter how many hours it takes to complete the job there is no overtime.

Salary Deductions

These are set amounts of money taken or deducted from your paycheck. Deductions could be for example the cost of benefits, insurance payments or charitable donations.

Salary History

If you wrote a list of all the jobs you have ever held, you could probably also list the salary you earned for each job. This is your salary history. Usually entry-level jobs or career positions won’t ask you about salary history. However some will ask and you might have to include a salary history in a resume, cover letter or application packet. The job application might have a place for you to share the rate you were paid on the jobs you had before. Essentially, when you do that you are sharing your salary history.

Salary Negotiations

Often the most nerve wracking part of the job search process when the job seeker negotiates with the employer about compensation. Although it is called “salary” negotiations, the discussions can cover the entire compensation package.

Salary Range

This is the range of dollar amounts that a company would be willing to pay someone to do a job. It is inside this range of salaries that the employer would expect the employee’s requested salary would fit. You will see it in some job announcements eg. $35,000 to $42,000. The range is usually determined through labor market research.

Salary Surveys

Salary and wage information is gathered by a lot of sources from government agencies to private companies. These surveys may be published. Salary surveys will list average or median salaries for employees with specific duties and assignments in specific geographic locations or across specific industries. These surveys should be the source of information on what to expect to be paid for a certain job. It’s a good idea to research this data during the job search data from salary surveys should be the basis for salary negotiations, during the job search.

Sick Pay

This is kind of a misnomer because you are not being paid because you are sick. Instead you are being paid as if you are at work, even though you are away from work on sick leave. The terms of how an employee accumulates sick time (hours) that you can use is decided at the beginning of your employment and may depend on your position or years of service.

Wages

Rate an employee will be paid for doing a job. Wage, salary, income are all used interchangeably in conversations. Usually wages are expressed as an hourly rate.

Week-in-the-Hole-Pay

Typically, payroll services will need a week or two to get new employees into the payroll system. This is what is usually referred to as the “week-in-the-hole” since you actually work for a while before you get an actual paycheck.

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