Employment vocabulary

0:01- Hey, everyone, Sal here. The goal of this video is to give you a primer of sorts on just some words you should know about your employment. So first and foremost, people are going to be categorized as either salaried or hourly employees. As you can imagine, hourly employees are folks where someone is keeping track.

0:23There might be a timecard or some other system of knowing how many hours you worked, and you're going to get paid based on the number of hours. For salaried employees, you just make a salary that's usually given every other week, maybe every two weeks, which would be every other week, (laughing) monthly, or an annual salary, but no one is keeping track of exactly how many hours you are working that week.

0:46Now, if you are an hourly employee, a very important word to know is overtime. And over time is essentially a way of getting paid extra if you are working extra. In most states, for example, in both Texas and California, and in many, many other states, if you work over 40 hours a week, you are going to get overtime in, for example, both Texas and California.

1:16And I'm just using those as examples of big states. If you work over 40 hours a week, every extra hour you work, you're going to get paid 1 1/2 times your wage. So let's say that you typically make $20 an hour, that's what you would get paid for that first 40 hours.

1:33But then let's say you worked another 10 hours above and beyond that in a given week, so you worked 50 hours, for that extra 10 hours, you're going to get paid $30 an hour, so you're getting paid 1.5 times your wages. Now, California has some other things, and you should look at your particular states to know the details.

1:52In California, it also kicks in if you work more than eight hours in any given day. So on that ninth hour, 10th hour, you're also making 1.5 times your wage. And in California, if you work over 12 hours in a day, you're going to get two times your wage. So that's really like, "Hey, that's a lot of hard work," you are due that overtime.

2:15Now, as a reminder, who is eligible for overtime? Well, if you're an hourly employee, it's likely that you're eligible for overtime. Now, similar terms that you might hear are exempt versus non-exempt employees, and this is related to being hourly or salaried.

2:34When we talk about exempt employees, we're really talking about people who are exempt from overtime, and that's going to be salaried employees because people do not know or they're not keeping as close tabs on how many hours you are working in a given week. Non-exempt employees, those are folks who are not exempt from overtime.

2:52They can get the actual overtime. Now, related to all of this is minimum wage. And minimum wage is easiest to think about from an hourly point of view. There is a federal, a national minimum wage in the United States; it's $7.25 cents an hour. Now, depending on what state you are in, they might either match that federal minimum wage or it could be a good bit higher.

3:16For example, in California right now, the minimum wage is over $16 an hour, and there's even certain cities that are even higher than that. So look at your specific, not just state, but also the city, and see what those minimum wage laws actually are. Now, the last thing I'll talk about is being a contract employee or a contractor versus an actual employee.

3:42A contractor is usually for a fixed term with a set amount of work. And usually for a contractor, they aren't going to be able to dictate when and where you have to be in most of the time, but you are going to be paid usually by the hour as a contractor, but there are some contracts that it might be paid in some other way.

4:03While when you're an employee, you are officially part of the team of the company, you are working for them. Now, there's some important differences in just even forms you might see. If you're an employee, you're going to have a double, you're going to get a W2 form that tells you what you've done at the end of the year that you're going to use to fill out your taxes.

4:23If you are a contractor, you're going to get a 1099 form, which tells you the income that you are paid by the people who have contracted you, so you're not officially an employee in those situations. Now, there are some other tax considerations to keep in mind.

4:40The FICA tax, which is the Federal Insurance Contributions Act. I have to look off screen to cheat on that one. That's the type of thing that pays for things like social security. And when you are an employee, half of that comes from you and half of that comes from the employer, so the total is 15.3%.

5:01When you are an employee, 7.65% comes out of your paycheck, and then the other 7.65%, you don't see it, but your employer is paying that. When you're a contractor, all 15.3% comes out of what you are getting paid. Now, the other thing to keep in mind is when you're an employee, you're oftentimes going to get some taxes withheld and paid straight to the federal government.

5:26While if you're a contractor, it's expected that you have to calculate what your taxes are and maybe make regular monthly or quarterly payments to the federal government. So when you're a contractor, you have to think a lot more about those things. You're also gonna be responsible for your own insurance.

5:42So in some cases you're like, "Oh, I could make a lot as a contractor," and that might be great, but remember, you're gonna have to pay more on the FICA, you're gonna have to keep track of your own insurance, and you're gonna have to keep track of making sure that you're paying your taxes on time.

5:55If you wait until the end to pay your taxes and the government says you weren't paying enough on time, you might have to pay some type of a penalty. So I will leave you there. These are important terms to know and think about when you think about different jobs or even what job that you're in.