Glossary Of Payroll Terms And Definitions
Payroll Terms And Definitions
Below is a general U.S. payroll glossary covering common payroll terms, definitions, and major payroll laws. Note that this is covers federal terms, and that state and local rules may add additional requirements.
Accountable Plan
An IRS-compliant reimbursement arrangement. Under an accountable plan, qualifying reimbursements are generally not treated as taxable wages.Accrual
The process of earning and accumulating wages, paid time off (PTO), vacation time, sick leave, or other benefits over time.Accrued Sick Pay
Sick leave that an employee earns over time based on hours worked, length of service, or employer policy.Accrued Vacation Pay
Vacation time that an employee earns over time based on hours worked, length of service, or employer policy.Adjusted Gross Income (AGI)
An employee's gross income after certain allowable adjustments, used for federal income tax purposes.Advance Payment
Money provided to an employee before an expense occurs, often requiring later documentation and reconciliation.After-Tax Deduction
A deduction taken from an employee's paycheck after taxes have been calculated, such as some insurance premiums, charitable contributions, or loan repayments.Annual Wage Base
The maximum amount of wages subject to certain payroll taxes during a calendar year. For example, Social Security tax applies only up to an annual wage limit.Audit Trail
A record showing payroll changes, approvals, and transactions for review purposes.Back Pay
Wages owed to an employee for work performed but not properly paid, often due to payroll errors, wage disputes, or legal claims.Backup
A copy of payroll data, systems, or records stored separately so information can be restored if the primary system is unavailable.Base Pay
An employee's regular compensation before overtime, bonuses, commissions, or other additional earnings.Benefits
Employer-provided programs or perks, such as health insurance, retirement plans, paid leave, or wellness programs.Benefit Cost
The employer's expense for providing benefits to employees.Bonus
Additional compensation paid to an employee beyond regular wages, often tied to performance, incentives, or company results.Business Purpose
The work-related reason an expense was incurred, such as traveling to a client meeting or purchasing job-related supplies.Business Supplies
Repayment for work-related purchases such as office supplies, software, or equipment.Business Travel Expenses
Costs related to business travel, such as airfare, lodging, rental vehicles, mileage, and meals during business tripsCafeteria Plan (Section 125 Plan)
A benefits plan that allows employees to choose among certain benefits, often using pre-tax salary deductions.
Certified Payroll Administrator
A Certified Payroll Administrator is a payroll professional who has demonstrated knowledge and skills in payroll processing, payroll laws, compliance, reporting, and payroll administration through professional training or certification. The term may refer to a payroll certification designation, depending on the organization offering it.Child Support Withholding
A legally required payroll deduction used to collect child support payments from an employee's wages.Commission
Compensation based on sales, performance, or completed transactions. Compensation
All forms of payment an employee receives for work, including wages, salaries, bonuses, commissions, and certain benefits.Compa-Ratio
A measure comparing an employee's pay rate to the midpoint of a salary range.Company Vehicle
Use of an employer-provided vehicle for business purposes and, in some cases, personal use.Compensable Time
Time that must be counted as paid working time under applicable wage laws.7Compliance
Following applicable payroll laws, tax rules, reporting requirements, and employment regulations.Contractor
A worker who provides services under a contract and is generally responsible for managing their own taxes and business expenses.Cost-of-Living Allowance (COLA)
Additional pay intended to offset differences in living costs between the employee's home and host countries.Data Recovery
The process of restoring lost, damaged, or unavailable payroll information.Deduction
An amount subtracted from an employee’s gross pay, such as taxes, insurance premiums, retirement contributions, or garnishments.De Minimis Fringe Benefit
A small-value benefit that is administratively impractical to track and may be excluded from taxable income under certain rules.Direct Deposit
An electronic transfer of an employee's wages directly into a bank account.Disability Insurance
Coverage that provides income replacement when an employee cannot work due to a qualifying disability.Disaster Recovery
Disaster recovery is the process of preparing for, responding to, and restoring payroll operations after an unexpected event that disrupts normal business activities. The goal is to ensure employees continue to be paid accurately and on time while protecting payroll data and systems.Discretionary Bonus
A bonus where the employer has sole discretion over whether to pay it and how much to pay.Disposable Earnings
The amount of an employee's wages remaining after legally required deductions, used to determine limits for wage garnishments.Earnings
Money an employee receives for work performed, including regular wages, overtime, bonuses, and commissions.Earnings Record
A record showing an employee's compensation history.Employee
A worker who performs services under an employer's direction and control and is generally entitled to wage and employment protections.Employee Classification
The determination of whether a worker is an employee or an independent contractor and whether they are exempt or non-exempt from overtime rules.Employee Discounts
Reduced prices on company products or services provided to employees.Employer Identification Number (EIN)
A federal tax identification number issued by the Internal Revenue Service used by employers for tax reporting.Employer Payroll Taxes
Taxes paid by employers based on employee wages, such as unemployment taxes and employer portions of Social Security and Medicare taxes.Escheat
The legal process of transferring abandoned property, including certain unpaid wages, to the state after a required dormancy period.Exempt Employee
An employee who is not entitled to overtime pay under the Fair Labor Standards Act (FLSA) because they meet specific salary and job-duty requirements.Expense Reimbursement
Expense reimbursement is the repayment an employer provides to an employee for approved business expenses the employee paid out of their own funds. Reimbursements are intended to cover costs incurred while performing job-related duties.Expense Report
A document submitted by an employee listing expenses for employer review and reimbursement.Expat (Expatriate)
An expatriate (expat) is an employee who is sent by their employer to work outside their home country, usually for a temporary international assignment.Federal Income Tax Withholding
The amount withheld from an employee's paycheck to cover federal income tax obligations.Federal Insurance Contributions Act (FICA)
The federal law requiring payroll taxes for Social Security and Medicare.Federal Income Tax Withholding (FITW)
The amount withheld from an employee’s paycheck for federal income taxes.Federal Unemployment Tax Act (FUTA)
A federal law requiring employers to pay unemployment taxes that help fund state unemployment programs.FICA Taxes
Payroll taxes required under the Federal Insurance Contributions Act, including Social Security and Medicare taxes.Final Paycheck
The term "final paycheck refers to the last paycheck issued to an employee after separation from employment, including any required wages or benefits owed.FLSA (Fair Labor Standards Act)
A federal law establishing rules for minimum wage, overtime pay, recordkeeping, and child labor.Form I-9
Form I-9 is a U.S. employment eligibility verification form used by employers to verify the identity and authorization of individuals hired for employment in the United States. It is administered by U.S. Citizenship and Immigration Services (USCIS).Form W-2
A tax form employers provide to employees showing annual wages, tips, and taxes withheld.Form W-4
An employee's federal form used to provide information needed to calculate federal income tax withholding.Fringe Benefits
Fringe benefits are additional forms of compensation provided by an employer beyond an employee's regular wages or salary. They may be offered as part of an employee benefits package and can include both taxable and non-taxable benefits.FUTA
FUTA stands for the Federal Unemployment Tax Act. It is a U.S. federal payroll tax that employers pay to help fund the federal and state unemployment insurance systems. FUTA taxes help support unemployment benefits for eligible workers who lose their jobs.Garnishment
A garnishment is a legal order requiring an employer to withhold part of an employee's wages to satisfy debts such as child support, taxes, or court judgments.
Gross Pay
An employee's total earnings before taxes and deductions.Gross Wages
Total earnings before taxes and deductions.Gross-Up
An employer payment that increases an employee's compensation to cover taxes owed on a benefit or payment.Health Insurance
Employer-provided medical, dental, and vision coverage. Certain employer contributions may receive favorable tax treatment.Hourly Employee
An employee paid based on hours worked, typically receiving overtime pay when required by law.Holiday Pay
Compensation provided for holidays when an employee does not work, depending on employer policy or applicable law.Home Office Expenses
Reimbursement for certain remote work expenses, such as equipment, internet, or office supplies, depending on employer policy and applicable laws.Housing Allowance
Employer-provided assistance with housing costs during an international assignment.Housing or Lodging Benefits
Employer-provided housing or housing allowances, which may be taxable depending on circumstances.Incentive Pay
Additional compensation designed to reward performance, productivity, or achievement of goals.Independent Contractor
A self-employed worker who provides services under a contract and is generally responsible for their own taxes.Inpat (Inpatriate)
An inpatriate (inpat) is an employee who is transferred from a foreign country to work in the company's home country or another country where the company operates. The employee is usually a foreign national working on an international assignment.IRS (Internal Revenue Service)
The federal agency responsible for collecting taxes and enforcing federal tax laws.Leave Accrual
The process of earning available leave hours over time.Life Insurance
Employer-provided coverage that pays a benefit to designated beneficiaries upon an employee's death.Living Wage
A wage level intended to cover basic living expenses; requirements vary by location and are often separate from legal minimum wage rules.Lost Wage Benefits
Payments intended to replace a portion of an employee's wages while they are unable to work due to a covered workplace injury.Meal and Entertainment Expenses
Reimbursement for business-related meals, client meetings, or work events, subject to company policies and tax rules.Meals and Refreshments
Employer-provided food or beverages, which may be taxable or excluded depending on the situation.Medicare Tax
A payroll tax that funds the Medicare healthcare program. Employers and employees generally share responsibility for this tax.Mileage Reimbursement
Payment to employees who use their personal vehicles for business purposes. It is often calculated using a standard mileage rate or an employer-established rate.Minimum Wage
The legally required lowest hourly wage an employer may pay covered employees.Multi-State Taxation
Multi-state taxation refers to the process of calculating, withholding, reporting, and paying payroll taxes when an employee works in, lives in, or receives wages connected to more than one state. It requires employers to follow the tax rules of each applicable jurisdiction.Net Pay
The amount an employee receives after all taxes and deductions are removed from gross pay.New Hire Report
A report employers submit to state agencies with information about newly hired or rehired employees.Nexus
A connection between an employer and a state that creates tax obligations, such as having employees working in that state.Non-Exempt Employee
An employee covered by overtime requirements under the FLSA.Off-Site Backup
A backup copy of payroll data stored in a separate physical or cloud location.Overtime
Additional compensation paid to eligible employees who work more than the legally defined number of hours, commonly at 1.5 times their regular pay rate under U.S. federal law.Overtime Rate
The rate used to calculate overtime compensation.Overtime Pay
Additional pay required for eligible employees who work more than the legally defined number of hours, commonly 1.5 times the regular rate for hours over 40 in a workweek under federal law.Paid Sick Leave
Paid time off that employees can use when they are sick, need medical care, or need to care for an eligible family member.Payroll Audit
A payroll audit is a systematic review of an organization's payroll records, processes, and controls to verify that employees are paid accurately, payroll taxes are calculated correctly, and payroll practices comply with company policies and applicable laws.Payroll Journal Entry
An accounting record used to record payroll expenses, liabilities, and payments.Payroll Reconciliation
Comparing payroll records with accounting records, bank records, and tax filings to identify and correct differences.Payroll Register
A report listing payroll details such as employee earnings, deductions, taxes, and net pay.Pay Period
The recurring schedule used to calculate and pay employee wages, such as weekly, biweekly, semimonthly, or monthly. Payroll
The process of calculating and distributing employee wages, taxes, and deductions.Pay Stub
A statement showing earnings, deductions, taxes, and net pay.Paycards
Paycards (also called payroll cards or payroll debit cards) are prepaid cards provided by employers to employees as an alternative way to receive wages instead of receiving a paper paycheck or using direct deposit. An employee's wages are loaded onto the card each pay period and can typically be used for purchases, bill payments, ATM withdrawals, or transfers.Payroll Register
A report showing employee pay details, including earnings, deductions, taxes, and net pay. 
Payroll Reporting
Payroll reporting is the process of preparing, submitting, and maintaining records that show employee wages, payroll taxes, deductions, benefits, and other compensation information. Payroll reports are used for compliance, tax filing, financial reporting, and internal recordkeeping.Payroll Summary Report
A condensed report showing total payroll costs, wages, taxes, and deductions for a selected period.Payroll Taxes
Taxes related to employee wages, including income tax withholding, Social Security, Medicare, and unemployment taxes.Per Diem
A daily allowance provided for certain business travel expenses, such as meals and lodging, instead of reimbursing actual costs.Pre-Tax Deduction
A deduction taken from wages before certain taxes are calculated, such as qualifying retirement contributions or health insurance premiums.Prevailing Wages
Required wage rates for certain workers on government-funded projects, often including required benefit amounts.Reciprocity Agreement
An agreement between certain states that allows residents of one state who work in another state to pay income taxes only to their resident state. Employees typically must provide a certificate or exemption form.Regular Rate of Pay
The hourly rate used to calculate overtime under the FLSA. It may include certain forms of compensation beyond an employee's base hourly rate.Relocation Allowance
Payment or reimbursement for moving expenses related to an international transfer.Repayment of Excess Amounts
The return of unused or unsupported advance payments to the employer.Resident State
The state where an employee maintains their primary home or legal residence. A resident state may tax an employee's income, depending on state law.Retirement Plan Contribution
Money contributed by an employee or employer to a retirement savings plan, such as a 401(k).Retroactive Pay (Retro Pay)
Additional wages paid to correct a previous underpayment or pay rate change.Salary
A fixed amount of compensation paid over a defined period, usually expressed as an annual amount.Salary Employee
An employee paid a fixed amount per pay period rather than based on hours worked.Sick Pay
Sick pay is compensation provided to an employee when they are unable to work because of illness, injury, medical appointments, or certain health-related reasons. It may be provided through an employer's paid sick leave policy, a collective bargaining agreement, or a legal requirement.Sick Pay Balance
The amount of unused sick leave hours or days available to an employee.Short-Term Disability Pay
Income replacement provided when an employee is unable to work for an extended period due to a qualifying medical condition. It may be employer-provided or through an insurance plan.Social Security Tax
A payroll tax under FICA that funds Social Security benefits. Split Payroll
A payroll arrangement where an employee's compensation is paid through payrolls in two or more countries.State Income Tax Withholding
Money withheld from employee wages for state income taxes where applicable.State Payroll Tax Reports
Reports required by state agencies for income tax withholding, unemployment insurance, and other payroll obligations.State Unemployment Tax (SUTA)
Employer-paid state unemployment insurance taxes that help fund unemployment benefits.Stock Options or Equity Awards
Compensation provided through ownership interests or rights to purchase company stock.SUI (State Unemployment Insurance)
Another term commonly used for state unemployment taxes.State Disability Insurance (SDI)
A state payroll tax that funds disability benefits in certain states.State Paid Leave Tax
A payroll tax or employer contribution used to fund state-required paid family or medical leave programs in some jurisdictions.Statutory Deduction
A deduction required by law, such as taxes or court-ordered wage withholding.Supplemental Wages
Payments made in addition to regular wages, such as bonuses, commissions, prizes, and certain allowances.Taxable Wages
The portion of employee compensation subject to specific taxes.Timecard
A record of an employee's hours worked, used to calculate wages.Tip Credit
A provision allowing employers in some circumstances to count employee tips toward meeting minimum wage requirements.Tip Income
Money received by employees from customers in addition to wages, such as restaurant tips.Total Compensation
The complete value of an employee's pay package, including wages, bonuses, and benefits.Total Rewards
The complete package of employee compensation and benefits, including pay, bonuses, benefits, and workplace programs.Totalization Agreement
An agreement between certain countries to help prevent employees from paying social security taxes in both countries for the same work period.Transportation Benefits
Benefits such as parking assistance, transit passes, or commuting programs.Travel Pay
Travel pay is compensation provided to employees for time spent traveling for work-related purposes or for expenses incurred while conducting business away from their normal work location. Whether travel time must be paid depends on the type of travel, employee classification, and applicable wage laws.Tuition Assistance
Employer payments or reimbursements for education expenses, subject to applicable tax rules.Unbanked Employee
An employee who does not have a traditional bank account and may benefit from alternative wage payment methods.Unclaimed Pay
Unclaimed pay is wages or other payroll-related payments that have been earned by an employee but have not been received or cashed by the employee. These unpaid amounts may become the employer's responsibility to report and turn over to the appropriate government authority under unclaimed property (escheat) laws.Unclaimed Wages
Unclaimed wages are earned wages that remain unpaid because an employee cannot be located, does not claim payment, or a payment cannot be delivered.Unlimited Vacation Policy
A policy that allows employees to take vacation time without a fixed annual limit, subject to employer guidelines and approval processes.Vacation Pay
Vacation pay is compensation provided to an employee for approved time away from work for rest, travel, or personal reasons while continuing to receive wages. It is typically provided as part of an employer's benefits program and may be earned through an accrual system or granted upfront.Vacation Accrual Rate
The rate at which an employee earns vacation time, such as a set number of hours per pay period or month.Vacation Balance
The amount of unused vacation time available to an employee.Vacation Payout
Payment made to an employee for unused vacation time, often when the employee leaves the company or as required by employer policy or applicable law.Vacation Carryover
The transfer of unused vacation time from one benefit year to the next, depending on company policy and applicable laws.W-2 Form
A tax document employers provide to employees showing annual wages and taxes withheld.W-4 Form
A form employees complete to provide information used to calculate federal income tax withholding.Wages
Wages are payments made by an employer to an employee in exchange for work performed. Wages may be calculated based on hours worked, a fixed salary amount, completed tasks, commissions, bonuses, or other compensation methods.Wage and Hour Laws
Employment laws governing minimum wage, overtime, working hours, recordkeeping, and other pay requirements.Wage Base Limit
The maximum amount of wages subject to a particular payroll tax during a tax year.Wage Garnishment
A court or government order requiring an employer to withhold part of an employee's earnings to satisfy a debt.Work State (Situs State)
The state where an employee physically performs work. This state may have the authority to impose income tax withholding and employer payroll obligations.Workers' Compensation (Workers' Comp)
Workers' compensation is an employer-provided insurance program that provides benefits to employees who experience work-related injuries or illnesses. It may cover medical expenses, wage replacement, rehabilitation services, and disability benefits, depending on applicable laws.Workers' Compensation Report
A report used to calculate insurance premiums based on employee wages and job classifications.Worksite
The location where an employee performs job duties; travel between worksites may be treated differently from normal commuting.
