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Laws(Civil Rights Acts of 1964 and 1991; the Equal Pay Act of 1963; the Age
Discrimination Act of 1967 and the Americans With Disabilities Act of 1990)
• Equal Employment Opportunity laws prohibits discrimination in hiring, firing, promotion or compensation based on color, race, religion, national origin or gender.
• Age Discrimination law prohibits the use of age to discriminate in hiring, firing and promoting employees.
• Americans with Disabilities Act prohibits discrimination against employees and candidates for jobs based on their disability
• FIT –Federal Income Tax withheld. This is a required deduction which depends on an employee’s particular income tax situation (determined by completing a W4 form).
• FICA –Federal Insurance Contributions Act (Social Security) There are two components Social Security taxes and Medicare Taxes. The are designed to provide workers with supplemental retirement income, medical and employment disability benefits.
FUTA –Federal Unemployment Insurance. This is a tax paid by the employer to provide employees with jobless benefits should they be laid off. It is designed to reimburse states for administrative costs in providing unemployment benefits.
• SUTA –State Unemployment Insurance. Paid by
the employer only in most states to provide jobless benefits. Designed to provide temporary income to employees who are laid off through no fault of their own.
FUTA –Federal Unemployment Insurance. This is a tax paid by the employer to provide employees with jobless benefits should they be laid off. It is designed to reimburse states for administrative costs in providing unemployment benefits.
• SUTA –State Unemployment Insurance. Paid by
the employer only in most states to provide jobless benefits. Designed to provide temporary income to employees who are laid off through no fault of their own.
• Medical Insurance and other employee benefits (optional)–The employer portion of medical insurance or any other benefits which the employer may offer to provide for employees.
• Worker’s Compensation Insurance –This is required on a state by state basis and provides for medical expenses and compensation for lost wages for employees from job related injury and illness.
Retirement benefits –The employer may have commitments to retirement benefits for its’ employees. These are know as retirement or pension plans. Some plans are contributory, meaning employees contribute and bear some of the cost of the plan and some plans are non-contributory in which the employer bears all of the costs of the plan.
Retirement benefits plans usually fall under two general types:
• Defined contribution plans are plans in which the employer agrees to contribute a certain amount each period into a trust for the retirement benefit of the employee to provide retirement income and medical benefits.
• Defined benefit plans are plans in which the employer promises to provide specific amounts of retirement income and possibly other benefits such as medical insurance to employees based on formulas that take into account the employee’s years of service and compensation level.
Retirement benefits plans usually fall under two general types:
• Defined contribution plans are plans in which the employer agrees to contribute a certain amount each period into a trust for the retirement benefit of the employee to provide retirement income and medical benefits.
• Defined benefit plans are plans in which the employer promises to provide specific amounts of retirement income and possibly other benefits such as medical insurance to employees based on formulas that take into account the employee’s years of service and compensation level.
• The Fair Labor Standards Act identifies exempt and nonexempt employees. Exempt employees are exempt from overtime pay rules while nonexempt must be compensated for overtime according to the act.
• The Fair Labor Standards Act identifies exempt and nonexempt employees. Exempt employees are exempt from overtime pay rules while nonexempt must be compensated for overtime according to the act.
Hyunok earns a base salary of $1,200 per month as an exempt
employee. The pay period is biweekly. Commissions are paid at the rate of 25% of sales made after a quota of $2,500 in sales per pay period has been achieved. For the
pay period just ending she achieved $3,500 in sales. Compute her gross pay for the pay period.
Calculation of taxes and additional contributions made by the employer
Following are additional payroll taxes and other contributions made by the employer on behalf of the employee. The total of these taxes and contributions plus the gross earnings of the employee There can be many more, however, these are common to most payroll.
Following are additional payroll taxes and other contributions made by the employer on behalf of the employee. The total of these taxes and contributions plus the gross earnings of the employee There can be many more, however, these are common to most payroll.
Calculation of taxes and additional contributions made by the employer
• FICA –matches dollar for dollar of amounts withheld from employee’s gross earnings including Social Security and Medicare These taxes are often describe together as FICA taxes.
• FICA –matches dollar for dollar of amounts withheld from employee’s gross earnings including Social Security and Medicare These taxes are often describe together as FICA taxes.
Calculation of taxes and additional contributions made by the employer
• Voluntary deductions such as medical insurance premiums paid by the employer as on behalf of the employee. These deductions vary by firm and by employee.
• Voluntary deductions such as medical insurance premiums paid by the employer as on behalf of the employee. These deductions vary by firm and by employee.
Calculation of taxes and additional contributions made by the employer
Astrid
1. FICA: 1. Social Security 6.2% x $850 = $52.702. Medicare 1.45% x $850 = $12.33;3. Total employer FICA taxes = $52.70 + $12.33 =
$65.032. FUTA .8% x $850 = $6.803. SUTA 5.4% x $850 = $45.904. Voluntary deduction of medical insurance (given): $1985. Total additional payroll expenses: FICA = $171.03
Caps are maximum earning levels that a particular tax applies to.
For example
The Social Security tax paid by employees is 6.2% (also matched by employer) of earnings up to $90,000. After reaching that total, no additional tax is paid. For Medicare however, there is no cap and the 1.45% Medicare tax (also employer matched) would continue to apply to all earnings regardless of total.When dealing with a cap, you should ask. . .
Caps are maximum earning levels that a particular tax applies to.
For example
The Social Security tax paid by employees is 6.2% (also matched by employer) of earnings up to $90,000. After reaching that total, no additional tax is paid. For Medicare however, there is no cap and the 1.45% Medicare tax (also employer matched) would continue to apply to all earnings regardless of total.When dealing with a cap, you should ask. . .
Gross Earnings (Big Wheel)•FIT –Federal Income Tax withheld•FICA –Federal Insurance Contributions Act (Social Security) Two components Social Security and Medicare •Medical Insurance –Employee benefit of medical insurance provided by the employer. Premiums often shared between employer and employee•Wages Payable –Gross earnings minus deductions = net paycheck
Employer Payroll Tax Expense (Little Wheel)•FICA –Same as employees. The employer is required to match dollar for dollar •FUTA –Federal Unemployment Insurance paid by the employer to provide employees with jobless benefits •SUTA –State Unemployment Insurance paid by the employer to provide jobless benefits.
Gross Earnings (Big Wheel)•FIT –Federal Income Tax withheld•FICA –Federal Insurance Contributions Act (Social Security) Two components Social Security and Medicare •Medical Insurance –Employee benefit of medical insurance provided by the employer. Premiums often shared between employer and employee•Wages Payable –Gross earnings minus deductions = net paycheck
Employer Payroll Tax Expense (Little Wheel)•FICA –Same as employees. The employer is required to match dollar for dollar •FUTA –Federal Unemployment Insurance paid by the employer to provide employees with jobless benefits •SUTA –State Unemployment Insurance paid by the employer to provide jobless benefits.
O12.2
Review of definitions-Payroll
Total Cost of Payroll = Gross Earnings + Employer Payroll