Students explore paycheck concepts, facts, and statistics by using reasoning, prior knowledge, and preconceptions to decide whether each statement is fact or fiction.
A direct deposit occurs when an employer electronically transfers money into the worker’s designated bank account on payday; the worker does not receive a paper paycheck. Fact or fiction?
Fact
15
From each paycheck, 6.2% of a worker’s gross pay is withheld for Social Security (retirement and disability benefits) and 1.45% is withheld for Medicare (health care for those over 65). Fact or fiction?
Fact
15
If an employee earns $20 per hour and works 40 hours, the net pay is $800. Fact or fiction?
Fiction: The gross pay, not net pay, is $800. Net pay equals gross pay minus deductions and taxes.
15
A worker submits a W-4 form to adjust the amount of federal tax withheld from the paycheck. This is one way to help ensure the correct amount of federal tax is paid. Fact or fiction?
Fact
15
Base pay is a worker’s normal hourly or annual wage plus overtime pay and bonuses. Fact or fiction?
Fiction: Base pay does not include extra compensation such as bonuses, commissions, or overtime pay.
15
A pay stub is a document that many employers provide to workers each pay period. It typically lists the worker’s current and year-to-date gross pay, taxes, deductions, net pay, and hours. Fact or fiction?
Fact
15
All U.S. employers must issue paychecks to workers each week. Fact or fiction?
Fiction: The frequency of paychecks varies from company to company but must comply with state laws.
15
If a worker quits a job before payday, the worker does not receive a final paycheck. Fact or fiction?
Fiction: Laws require that workers receive a paycheck for all work completed prior to quitting or beingfired.
15
The U.S. Department of Labor enforces minimum wage, overtime, and other job laws. Fact or fiction?
Fact
15
If state and federal minimum wages differ, the worker is paid the lower of the two. Fact or fiction?
Fiction: The worker is entitled to the higher of the state or federal minimum wage.
15
The median (middlemost) weekly earnings of full-time U.S. workers is about $1,120. Fact or fiction?
Fact
15
If an employer withholds taxes from paychecks, those workers never have to file an annual federal income tax return (report). Fact or fiction?
15
A worker’s net pay is smaller than gross pay. Fact or fiction?
Fact: Net pay is gross pay minus deductions and taxes; therefore, net pay is smaller than gross pay.
15
If a company pays “time and a half” for overtime and a worker’s base pay is $20 per hour, then the worker will earn $20.50 for each hour of overtime. Fact or fiction?
Fiction: The worker earns time ($20) + one half ($20/2 = $10), which equals $30 per hour in this case.
15
If a worker earns a $500 sales bonus, the net pay will increase by $500. Fact or fiction?
15
Approximately 141,000 U.S. workers earn exactly the federal minimum hourly wage. Fact or fiction?
Fact: According to the Bureau of Labor Statistics, 141,000 U.S. workers earned exactly the current federal minimum hourly wage (2022 data).
