Compensation is the money received by an employee of a company or organization as payment for work and/or services. Compensation is provided by the employer to the employee in the form of salary and/or wages along with benefits. 

It is important to note that compensation comes in a variety of forms, some of which are cash, and some of which are not. Here is a (non-exhaustive) list of examples:

  • Salary
  • Hourly wages
  • Tips
  • Commision
  • Bonus cash
  • Incentive or merit pay
  • Equity (in the form of stock options, RSUs, or other)
  • Travel benefits
  • Meal per diems
  • Health benefits 
  • Tuition assistance
  • Childcare assistance

Base pay vs. compensation

While base pay is the salary or wage amount received by an employee, base pay is just one factor within total compensation. As mentioned above, compensation includes a variety of factors (including base pay).  

Compensation compliance 

Some laws and regulations entitle workers to fair compensation; there are federal, state, and local laws, and employers must be sure to remain compliant with the regulations that govern their regions. Here are examples of federal comensation regulations: 

Minimum Wage and Fair Labor Standards Act (FLSA)

Employees of certain types of organizations are entitled to a minimum wage that is set by the federal government and each state. Certain municipalities also set a minimum wage. 

Get more information about minimum wage laws here

Title VII

This law bans employers from discriminating against employees based on certain protected characteristics when it comes to compensation (and other workplace concerns).

Learn more about Title VII here

Equal Pay Act (EPA) 

The EPA prohibits employers from discriminating against employees based on gender when it comes to compensation. 

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