EC - Employment Considerations Overview

Employment Considerations

Introduction

It’s Friday and you just got paid! But, wait, why is your paycheck way less than you thought it would be? What are all of these deductions for Social Security, Medicare and income tax? It’s very important to be able to understand the concepts that factor into your compensation. After this module, you will be able to understand the different aspects of a pay stub and check your deductions and earnings. This way you can ensure that you were paid correctly for the amount of work you provided. No one wants to work for free!

Lesson Preview

In this module, we will study the following topics:

Getting Paid: Learn the differences between gross income and net pay, between hourly wages and earning a salary, and how things such as overtime affect your paycheck.

Salary Graphs: Learn how linear and piecewise functions can represent compensation scenarios and help you compare different payment methods. 

Earn that Commission: Take a look at how professionals such as salespeople and real estate agents earn commission depending on how many items they are able to sell.

Income Tax: Explore the different types of taxes that you have to pay, how to determine how much money is withheld from your paycheck and how things like allowances have an effect.

Deductions: Discover the charges that are deducted from your paycheck, why they are deducted, and how to determine the amount or percentage of the deductions.

Key Terms

The following key terms will help you understand the content in this module.

  • Commission - the amount of money you are paid for selling a product or service
  • Federal tax - a tax levied by the United States Internal Revenue Service (IRS) on annual earnings
  • Gross Pay/ Income - an individual's total personal income before taking taxes or deductions into account
  • Health Insurance - insurance coverage that pays for medical and surgical expenses that are incurred by the insured
  • Life Insurance - protection against the loss of income that would result if the insured passed away
  • Medicare - a United States federal health program that subsidizes people who meet one of the following criteria. Generally, Medicare is for people 65 or older. Individuals may be able to qualify for Medicare earlier if they have a disability or specific disease.
  • Net Pay - an individual's income after deductions, credits, and taxes are subtracted
  • Overtime Pay - the pay you receive when you have worked more than your regular work hours; pay is usually time and a half, or 1.5 times your regular wage
  • Pay Period - a pay period is a recurring length of time over which employee time is recorded and paid. Examples of pay periods are: weekly, bi-weekly, semi-monthly, and monthly
    • A weekly pay period will result in 52 paychecks a year
    • A bi-weekly (every other week) pay period will result in 26 paychecks a year
    • A semi-monthly (twice a month) pay period will result in 24 paychecks a year
    • A monthly pay period will result in 12 paychecks a year
  • Piecework - when you are paid a specific amount of money for each item of work you complete
  • Retirement - when a person chooses to leave the workforce
  • Salary - a fixed amount you earn on a regular basis
  • Social Security - a United States federal program of social insurance and benefits developed in 1935; the program includes retirement income, disability income, Medicare and Medicaid, and death and survivorship benefits
  • State tax - tax levied on income at the state level

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