As a crucial part of any business, you would think payroll would be easy to understand. Unfortunately, this is not always the case. To help, we have answered the most frequently asked questions by employees.
When is payday?
Payday frequency changes from business to business. Most businesses pay their employees weekly, biweekly, semi-monthly or in certain cases monthly. Your employee handbook should layout your company’s payroll process policy. The information should include when the pay period beings and ends, when employees get paid, procedures for overtime, bonuses and commission. Although the information in the handbook is important and helpful, we also recommend having a one-page informational sheet to be given to all employees as part of their onboarding process to help get them familiar with employee policies. It should include easy reminders for the payroll basics like:
- Payroll start and end dates (When your employees accumulate their pay)
- Pay dates (When their checks or DD is distributed)
- A sample paystub
- Answers to basic deduction questions (i.e. What is FICA?)
What common payroll terms should I be familiar with?
There are many terms that fly around regarding payroll. Here are a few basics you and your employees should become familiar with:
- Compensation: Everything your employees receive in exchange for their work. This includes:
- Benefits (Could include medical, retirement, fringe, and more)
- Deduction: The money withheld from employee’s wages for taxes, benefits, etc.
- Gross & Net Wages: The employees’ wages before and after deductions respectively.
What is a W-2, W-4, and I-9?
- A W-2 is a form from the IRS or Internal Revenue Service used to report wages to the United States government. The employer must complete one for each employee who they pay a salary, wage, or other compensation if they are not an independent contractor.
- A W-4, is used to determine how much federal tax should be withheld from and employee’s wages. Employees who have dependents or a spouse are eligible for more federal tax credits.
- An I-9 or Employment Eligibility Verification form is to prove an employee’s legal eligibility to work in the United States. The I-9 will ask employees to provide personal identification and proof of citizenship or a USCIS number
What’s the Difference Between Overtime and Holiday Pay?
- Overtime pay, with exceptions, requires non-exempt employees employed more than eight hours in any workday or more than 40 hours in a work week compensation at a rate of one-and-a-half times the regular rate of pay.
- Holiday pay is pay received due to a workday falling on a holiday. The employee may be asked to work it or may have it off as stated in their employee handbook.
Please contact us to learn more about overtime and holiday pay in your state
How can I Better Help my Employees Understand Payroll?
This one is simple but works wonders. Be around to answer any questions your employees might have on payday. Questions like “Why is the amount I’m being paid less this week?” or “Seriously, who the heck is FICA and why are they taking my money?” will be fired at you in rapid succession. Make sure you or an HR professional are there to answer their poetically sensitive questions.