Earning Types Definition

Employers pay employees for various earning types, including wages, salaries, and overtime pay that contribute to an employee’s gross income.

Earning Types Extended Definition
The Internal Revenue Service defines an employee as someone who performs work for an employer who mandates what will be done and how it will be done. Employees receive compensation for these services. Earning types include wages, salaries, and overtime pay.

Typically, wages are calculated by multiplying the hours worked by an hourly rate. Employers usually determine the rate by the employment category, such as:

  • Supplemental
  • Hourly
  • Premium
  • Overtime
  • Salary
  • Paid leave
  • Shift differential
  • Standby

Alternatively, employers pay salaries, fixed sums of money paid for a specific time period, such as weekly, monthly, or yearly.

Some employees also receive tips from customers or clients for the quality of service performed, including hair stylists, waiters, baggage handlers, and other workers who offer personal services.

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Last Updated By

Rachel Blakely-Gray | Apr 13, 2023

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