What Types of Wages Can You Use to Pay Employees?

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As a business owner or manager, you must decide the right wage type for your employees based on their job roles, experience, your business, etc. Wage types can differ for various employees. So, what are the different wage types that are available? Generally, they fall into one of two categories: Regular and Supplementary.

Mark Rowley, Owner
RandR Payroll Services

Regular Wages

The fixed rate of pay your employee is given each pay period is their regular wage. There are two types:

  1. Hourly Wages – Employees paid hourly are compensated based on hours worked in a pay period multiplied by their hourly rate. Their paycheck may change depending on the number of hours worked.
  2. Salary Wages – Employees are given a fixed amount of pay each pay period, regardless of hours worked in the year. It is calculated by dividing the annual salary by the number of pay periods you use in your business.

Supplemental Wages

These are non-regular wage types. Note that some supplemental wages are required.

  1. Commission Wages – These are payments to an employee based on sales or goal achievement. They can be paid as a percentage of the sale price, or a fixed amount based on volume. You must pay at least the minimum wage.
  2. Overtime Wages – Nonexempt employees must be paid overtime wages when they work more than 40 hours in a workweek. Overtime pay is 1.5 times the regular wage rate. California state law requires overtime pay for time worked more than 8 hours per day.
  3. Retroactive Pay – If you owe an employee additional money from a prior pay period, you are required to pay it. This can happen if you miscalculate a wage payment.
  4. Accrued Time Off – You must pay an employee for accrued time off pay they have earned but not used.
  5. Tips – If your employee makes tips, they are required to report anything in excess of $20 per month.
  6. Severance Pay – When terminating an employment relationship, you can choose to provide this wage type.
  7. Bonus Pay – Often paid as a reward or gift on top of regular wages.

For details specific to your business, call our friendly payroll professionals at R&R Payroll & Bookkeeping Services: (951) 296-0412.