Payroll Liability Definition

Payroll liabilities include funds owed to an employee as compensation for work performed or hours worked, as determined by the individual’s employment contract, as well as payroll taxes and other deductions.

Payroll Liability Expanded Definition
Payroll liability is a debt that is owed directly to an employee, based on the legal employment relationship and terms established by the employment contract or agreement.

This liability includes the hourly wage and benefits that the employer has agreed to provide to the employee as a result of their work. The total payroll liability includes the gross wages, employer taxes, and pre-tax benefits of the employee.

Payroll liability can also include payroll tax liabilities that employers owe to federal, state, and government tax agencies. And, payroll liability includes withheld deductions and contributions for benefits.

Related Article
What Are Payroll Liabilities?

Last Updated By

Rachel Blakely-Gray | Apr 28, 2023