Wage:  Set amount of money paid to a worker for each hour worked — an hourl
y wage.  According to federal law, hourly wage earners are entitled to overtime pay for hours worked over
 40 hours per week.  
(Some states have laws that require wage earners get overtime pay after
 working 8 hours in a day.)
Salary:  Amount of money paid to a worker for a period of time worked — such a
s monthly or yearly 
  salary.  Salary workers are not entitled to overtime pay.  Salary workers are paid the same each week 
even if it takes more or fewer hours in the work week to do the job.
Commission:  Percentage amount of money paid to a worker when he or she sells produ
cts or services to 
  customers.  For example, a sales clerk‘s 2% commission on shoes that 
cost $100 would be $2.  A real 
estate agent’s 6% commission on a house that costs $250,000 would be $15,000.  The goal of 
  commission is to encourage workers to make as many sales as possible.
Tips:  Money paid to a worker by customers to reward the worker for good serv
ice.
Piecework:   Amount of money paid to a worker for each piece of work completed.  For 
example, artists 
earning piecework may be paid $200 for each picture painted.  
Bonus:  Extra money paid to workers, in addition to the regular pay, for reaching a goal.  For example, sales  representatives may receive a bonus if they sign-up 10 new customers.  O
r, workers may receive a one-
time year-end bonus if the company made money during the year.  A bonus is used to encourage 
  workers to do the best work possible.
Profit sharing:  Extra money paid to workers, in addition to the regular pay, if the company makes a profit  (more income than expenses).  For example, if the company made $500,000 in profits from selling 
  products, each factory worker might receive 1/2% of the profits or $2,500 at the end of the year .  Profit 
sharing encourages workers to view the company as if it was their own bu
siness.
Fringe benefits:  Fringe benefits are used to encourage skilled workers to  remain with the company.  Fringe benefits include sick days, holidays, 
vacation days, child care, company gym, and retirement plans.  Fringe 
benefits are not required by federal law.  Unskilled workers may not be 
offered fringe benefits by employers. 
QUICK CHECK:
1.  Define:  a) wage, b) salary, c) commission, d) piecework, e) bonus.
2.  a) When are hourly wage earners entitled to overtime pay?  b) Do salary workers received overtime pay?
3.  a) In the example of commissions:  Why was the sales clerk's commission only $2, but the real 
  estate agent's commission was $15,000?  b) What would the sales clerk's commission be if the customer 
bought $500 worth of shoes?  (.02 times $500)
4.  a) What do fringe benefit encourage skilled workers to do?  b) List 4 types of fringe benefits.
5.  a) Are fringe benefits required by federal law?  b) What type of workers may not be offered fringe 
  benefits?  c) What does this encourage you to do? 
6.  a) Which type of job earnings would you prefer to be paid?  b) Give a reas
on for your choice.
7.  a) List 3 fringe benefits that you would like to receive as a worker .  b) Give a reason for your choices.	
Pay — Employers Use Different Types
U.S. Work World
CAREER mini-lesson
College & Career Publishing. Permission to use with usworkworld.com subscription.