Accounting 117 - Chapter 2 (Computing Wages and Salaries)

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Accounting 117 - Chapter 2 (Computing Wages and Salaries)
2015-09-09 18:36:14

Computing Wages and Salaries
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  1. Enterprise Coverage
    1. At least two employees engage in interstate commerce or produce goods for interstate commerce.  

    2.  The business has annual gross sales of at least $500,000
  2. Individual Employee Coverage
    Under individual employee coverage, the FLSA covers a worker if the employee either engages in interstate commerce or produces goods for such commerce.

    Coverage depends on the activities of the individual employee and not on the work of fellow employees,the nature of the employer's business, or the character of the industry as a whole.
  3. Employer
    Any person acting directly or indirectly in the interest of an employer
  4. Employee
    An individual is an employee if he or she performs services in a covered employment.
  5. Common-law relationship
    A common-law relationship of employer and employee exists when the employer has the right to control both what work will be done and how it will be done.
  6. Independent Contractor
    • 1.  Is free of direction and control in the performance of the work.
    • 2.  performs services outside the usual course of business of the company that has hired the contractor.
    • 3.  customarily engages in a independent occupation.
  7. Domestic Service
    Consists of services of a household nature performed in or about a private home of the person who employs the domestic.
  8. Direct Care Workers
    Provide essential home care assistance to the elderly and people with injuries, illnesses, or disabilities.
  9. Statutory Employees
    Workers who qualify as independent contractors under common law, but are taxed as employees for social security, are statutory employees.
  10. Statutory Nonemployees (direct sellers and licensed real estate agents)
    For federal tax purposes, they are considered to be self-employed as long as their earnings are based on the amount of sales and their services are performed under a written contract stating that they will not be treated as employees for federal tax purposes.
  11. Wages
    Refers to renumeration paid on a hourly or a piecework basis.
  12. Salary
    Refers to the renumeration paid on a weekly, biweekly, semimonthly, monthly, or yearly basis.
  13. Nondiscretionary bonus
    A bonus normally based on hours worked, units produced, production efficiency, or work quality
  14. Discretionary bonus
    A bonus not agreed upon, announced, or promised before payment, is not included in an employee's regular rate of pay.
  15. Tip
    Is a gift or gratuity given by a customer in recognition of some service performed for him or her.
  16. Tipped Employee
    Is one who engages in an occupation in which tips of more than $30.00 a month are customarily and regularly received.
  17. Tip Credit
    The tip credit reduces the employer's liability for Medicare and Social Security payments.
  18. Workweek
    Fixed and regularly recurring period of 168 hours-seven consecutive 24-hour periods.
  19. Principal Activities
    Include those tasks employees must perform and include any work of consequence performed for the employer.
  20. Compensable
    To which money is paid.
  21. Time Sheet
    Provides the information required by law and the data used to compute the payroll.
  22. Time Card
    Time worked is recorded manually by the employee or automatically by a time clock.
  23. Continental System
    Where each day consists of one 24-hour period, instead of two 12-our periods.
  24. Nonexempt
    Subject to taxation
  25. Commission
    Is a stated percentage of revenue paid to an employee who transacts a piece of business or performs a service.
  26. Non-exempt employee
    Most employees are entitled to overtime pay under the Fair Labor Standards Act. They are called non-exempt employees. Employers must pay them one-and-a-half times their regular rate of pay when they work more than 40 hours in a week. The biggest problem most employers have with nonexempt employees is miscalculating how much overtime workers are owed.
  27. Exempt Employee
    The primary advantages of classifying employees as exempt are that you don’t have to track their hours or pay them overtime, no matter how many hours they work.