HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.


What Is Payroll?

Payroll is the process of employers compensating employees. From compliance to payment schedules and direct deposits, payroll comprises various components that ensure workers receive their wages and that federal, state, and local governments receive legally owed tax dollars.

How Does Employee Compensation Work?

Employee compensation is an employee’s regular salary or hourly pay, including other wages such as overtime, bonuses, retirement benefits, health benefits, stock options, and other non-financial incentives.

In most cases, an employee’s compensation is reflected on their paycheck, which includes both gross pay and net pay. The former indicates the wages the worker earned during the corresponding pay period before taxes and deductions are removed; the latter is the sum of the employee’s wages after these deductions are removed.

Employees who join an organization fill out Form W-4, which indicates how much federal income tax employers should withhold from their wages. Other state and local taxes are also taken from the individual’s gross pay.

What Is a Typical Payroll Cycle?

Employers have options when it comes to how often to pay employees. The most common payroll schedule options include monthly, semi-monthly, bi-weekly, and weekly.

What’s the difference between semi-monthly and bi-weekly? Semi-monthly is twice per month, while a bi-weekly approach delivers paychecks every other week. Bi-weekly pay schedules have two additional pay periods than semi-monthly pay schedules.

State laws determine the minimum pay period—in other words, the minimum frequency you can pay. Click here to see a list of state regulations.

How Is Payroll Processed?

  • Step 1: Gather information from all employees required for payroll, such as W-4. 
  • Step 2: Determine the net pay for all employees. Net pay is calculated by subtracting withheld taxes from the gross pay. 
  • Step 3: Employers will pay employees through direct deposit or by distributing physical checks.  
  • Step 4: Employers must file federal and state tax withholdings and submit them to the IRS, benefits providers, and other related entities. 

Related Terms: Compensation

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