Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

Gross wages typically encompass all earnings before any deductions are made. This includes an employee's base salary as well as any additional compensation that may be earned, such as bonuses and overtime pay. These forms of compensation contribute to the total gross wages because they represent the amount earned by the employee for their work during a specific pay period.

In contrast, base salary solely represents fixed compensation without accounting for any variable elements such as bonuses or extra hours worked. Deductions for benefits, like health insurance or retirement contributions, are subtracted from gross wages to arrive at net pay and are not included in the gross wage calculation. Similarly, net pay reflects the amount an employee takes home after taxes and deductions have been applied, which makes it distinctly different from gross wages. Thus, considering these factors, including bonuses and overtime pay as part of gross wages accurately reflects the total earnings attributable to the employee for their work.