Young, inexperienced job seekers often focus primarily on salary — the amount of money they will be paid to do a job. There is much more to employee compensation than a salary!
What could possibly be as, or maybe even more important than the salary?
The benefits that come with the job, of course! Benefits often comprise up to 30% of total compensation, so you need to understand the benefit of benefits.
Unit Theme
Earning an Income
Lesson Topics
- Compensation
- Salary and employee benefits
- Social Security
- FMLA
- Workers compensation
- Disability insurance
- Retirement plans
- Perks
- Freelancing/Independent Contracting
- The job interview
Chapter Text
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What Does That Mean? e-flashcards
Lesson Four has 23 personal finance and money management vocabulary terms.
Affordable Care Act
U.S. law increasing the affordability of health insurance and requiring everyone to have health insurance coverage; also called ObamaCare.
Base salary
A fixed amount of money paid to an employee for work performed, not including benefits or bonuses.
Compensation package
Everything a company provides to an employee in exchange for working, including base salary bonuses, and employee benefits.
Cost of Living Adjustment
“COLA”; a built-in adjustment to base salary that offsets the effects of inflation.
Defined benefit plan
A retirement plan that is funded by the employer and promises a specified monthly amount of money at retirement; pension.
Defined contribution plan
A retirement plan where the employee, employer, or both, contribute money each pay period to the employee’s retirement account.
Employee benefits
Non cash or other compensation paid to an employee; there are a multitude of types of employee benefits.
Employee stock ownership plans
“ESOP”; an employee benefit program which provides employees with ownership of the company’s stock, making employees part-owners of the company.
Entitlement program
A federal government-sponsored program guaranteeing certain benefits for people who meet eligibility criteria.
Family and Medical Leave Act of 1993
“FMLA”; a federal law entitling employees to take unpaid leave for medical reasons, the birth of a child, or to care for a sick family member.
Federal Insurance Contributions Act
“FICA”; federal law requiring employers to collect Social Security and Medicare taxes from an employee’s paycheck.
Flexible Spending Account
“FSA”; a special account into which an employee puts pretax money that can be used to pay for certain healthcare costs.
Flextime
A schedule that is an alternative to the traditional 9 to 5, 40-hour work week, allowing employees to vary their arrival and/or departure times.
Form 1099
A form filed with the Internal Revenue Service by the employer of an independent contractor reporting what they paid the independent contractor that year.
Gross salary
Base salary plus any money received for commissions, overtime, and benefits before any deductions are taken.
Incentive pay
A higher wage, bonus, overtime, or commission paid to promote the productivity of an employee.
Independent contractor
Person who is not a direct employee but completes work for a company pursuant to a contract; also called freelancer.
Individual Retirement Account
“IRA”; a savings retirement account that can be opened and managed by an individual; popular with self-employed individuals and small business owners.
Net salary
The amount received in a paycheck after deductions are taken for benefits and taxes; take home pay.
Pension plan
A type of retirement plan where an employer makes contributions toward a pool of funds set aside for an employee’s future benefit.
State Disability Insurance
“SDI”; a state established compensation plan supporting employees unable to work due to an illness or injury. Lesson 4 | Pay. It’s More Than a Salary 60.
Social Security
A federal entitlement program of social insurance maintained by the U.S. government through employer and employee payments providing benefits for old age and disability.
401K
A retirement plan funded by contributions from the employee, employer, or both.