Rock the 2025 FPC Exam – Master Payroll Fundamentals with Confidence!

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What is the definition of a wage?

Fixed annual sum paid to employees

Amount paid for every hour worked

The definition of a wage refers specifically to the amount paid for every hour worked. This term typically applies to hourly employees and reflects the direct payment for labor based on time worked. Wages can vary depending on the number of hours an employee works; therefore, they are not fixed but rather calculated based on hours multiplied by the hourly rate.

This understanding distinguishes wages from other forms of compensation. For instance, a fixed annual sum paid to employees typically refers to a salary, which is not based on hours worked. Similarly, compensation for salaried positions aligns more closely with a salary rather than a wage. The concept of monthly deductions from an employee’s income is unrelated to the definition of a wage, as it pertains to withholding or other deductions rather than direct payment for labor.

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Compensation for salaried positions

Monthly deductions from an employee’s income

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