Payroll Liability Definition

Definition 
Funds owed to an employee as compensation for work performed or hours worked, as determined by the individual’s employment contract, as well as payroll taxes and other deductions.

Expanded Definition
Payroll liability is a debt that is owed directly to an employee, based on the legal employment relationship and terms established by the employment contract or agreement. This liability includes the hourly wage and benefits that the employer has agreed to provide to the employee as a result of his or her work. The total payroll liability includes the gross wages, employer taxes, and pre-tax benefits of the employee.

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