Reference

Glossary of compensation and payroll terms.

The vocabulary that turns up in offer letters, payroll runs, and SHRM continuing-education materials. Each entry is short and links to longer treatment where one exists.

1099: US tax form for non-employee compensation. Contractors are issued 1099-NEC; employees receive a W-2. The form itself is the artefact; the underlying classification is what determines tax treatment.
2,080-hour year: The US standard for converting annual salary to hourly rate (40 hours/week × 52 weeks/year). Used in full-paid-leave conventions where vacation weeks are still “hours” for division purposes.
BATNA: Best Alternative To a Negotiated Agreement. The fall-back position if the negotiation fails. The strength of your BATNA materially shapes outcome.
Base salary: The fixed annual cash compensation, exclusive of bonus and equity. Often less than half of total compensation in tech and finance.
Biweekly: Paycheck issued every two weeks. 26 paychecks per year (occasionally 27 in leap-year-spanning periods).
Cost-of-living adjustment (COLA): An increase in compensation tied to inflation or to relocation across cost-of-living-different cities. See the cost of living page.
DPDP Act: Digital Personal Data Protection Act 2023. India's primary data protection legislation, comparable to but distinct from GDPR.
Exempt: An employee classification under the US FLSA exempt from overtime pay requirements. Requires meeting salary basis, salary level, and duties tests. See the exempt vs non-exempt page.
FICA: Federal Insurance Contributions Act. The US payroll tax for Social Security (6.2 %) and Medicare (1.45 %). Employee pays half (7.65 %); employer pays half. Self-employed pays both.
FLSA: Fair Labor Standards Act. The US federal law governing minimum wage, overtime, and exempt/non-exempt classification.
Gross pay: Pre-tax, pre-deduction compensation. The figure on offer letters and contracts.
GRP: Global Remuneration Professional. Designation administered by WorldatWork covering compensation strategy and cross-border practice.
Hours per year: The denominator in salary-to-hourly conversion. 2,080 in US standard convention; 1,950 in UK 37.5-hour convention; varies by country.
Net pay: Take-home pay after taxes, social charges, pension contributions, and benefit deductions. Typically 60–75 % of gross for professional incomes in developed economies.
Non-exempt: An FLSA classification entitled to 1.5× overtime for hours above 40/week. Most hourly workers and salaried workers below the FLSA threshold are non-exempt.
OTE: On-Target Earnings. Total compensation if the employee meets their performance targets. Common in sales-role offer letters; the “target” portion is contingent on commission attainment.
Overtime: Compensation for hours worked beyond the standard work week, paid at 1.5× the regular rate (US). Required for non-exempt employees.
RSU: Restricted Stock Unit. A grant of company stock that vests over time. A common tech-industry compensation component; the 4-year vesting cliff is the canonical pattern.
Self-employment tax: The full FICA equivalent (15.3 %) paid by self-employed individuals, covering both the employee and employer halves. The portion above the employee half (~7.65 %) is the self-employment-tax uplift the contractor must price in. See the contractor rates page.
Semimonthly: Paycheck issued twice per month (typically 1st and 15th). 24 paychecks per year. Distinct from biweekly.
SHRM: Society for Human Resource Management. The largest professional HR body globally; administers SHRM-CP and SHRM-SCP designations.
Total compensation: Base salary + bonus target + equity vest value + benefits value. The figure to compare across offers; base alone is misleading in tech and finance roles.
Vesting: The schedule by which equity grants become owned by the employee. Common: 4-year vest with 1-year cliff (nothing vests for the first year, then 25 % at year 1, monthly thereafter).
W-2: US tax form reporting employee wages. Issued in January for the prior calendar year. Distinct from 1099 (contractor) and 1099-K (third-party payment).