HR & PEO Glossary

Employer-sponsored retirement savings plan allowing employees to contribute pre-tax or Roth (after-tax) dollars.

An HR outsourcing model where a vendor provides HR services without becoming a co-employer.

An employment relationship where either party can terminate at any time without cause (with some exceptions).

Americans with Disabilities Act — prohibits discrimination against qualified individuals with disabilities.

Software that manages the recruitment process, from job posting to candidate selection.

Affordable Care Act — federal law requiring employers with 50+ full-time employees to offer health coverage.

A legal relationship where both the PEO and the client company are considered employers of the same workers.

Consolidated Omnibus Budget Reconciliation Act — allows employees to continue health coverage after leaving a job.

A four-digit code assigned to job types that determines workers' compensation insurance rates.

Electronic transfer of employee pay directly to their bank account.

A staffing arrangement where a PEO employs workers and leases them back to the client company.

An entity that legally employs workers on behalf of another company, handling all employer obligations.

Employer Services Assurance Corporation accreditation — a financial assurance and ethical standards certification for PEOs.

Equal Employment Opportunity Commission — federal agency enforcing anti-discrimination employment laws.

A document outlining company policies, procedures, and expectations for employees.

Federal web-based system that verifies employment eligibility by comparing I-9 information against government records.

An employee not entitled to overtime pay under the FLSA, typically salaried workers meeting salary and duties tests.

Employee Retirement Income Security Act — federal law governing employer-sponsored benefit plans.

A multiplier applied to workers' comp premiums based on a company's claims history relative to its industry.

Family and Medical Leave Act — federal law requiring eligible employers to provide up to 12 weeks of unpaid leave.

Fair Labor Standards Act — federal law governing minimum wage, overtime, recordkeeping, and child labor.

Federal Insurance Contributions Act — mandates payroll taxes for Social Security and Medicare.

Federal Unemployment Tax Act — employer-paid tax funding unemployment benefits.

Flexible Spending Account — allows employees to set aside pre-tax dollars for eligible medical or dependent care expenses.

Total compensation before any deductions, including taxes and benefits.

Employer-sponsored health coverage offered to employees, often at lower premiums than individual plans.

Delegating HR functions to an external provider, which may or may not involve co-employment.

Human Resource Information System — software that manages employee data and HR processes.

Health Insurance Portability and Accountability Act — protects the privacy of employee health information.

Health Savings Account — tax-advantaged account for individuals with high-deductible health plans.

A PEO certified by the IRS under the Small Business Efficiency Act, providing tax liability protections to clients.

Employment Eligibility Verification form required for all new hires in the United States.

A self-employed worker who provides services under a contract, not classified as an employee.

States where workers' comp insurance must be purchased from a state-operated fund (e.g., Ohio, Wyoming).

National Association of Professional Employer Organizations — the industry trade group for PEOs.

Take-home pay after all deductions have been subtracted from gross pay.

An employee entitled to overtime pay (1.5x regular rate) for hours worked over 40 per week under the FLSA.

Federal and state requirement to report newly hired employees to a state directory within a set timeframe.

National Council on Compensation Insurance — organization that develops workers' comp classification codes and rates.

The process of integrating a new employee into the organization, including paperwork, training, and orientation.

The formal process of managing an employee's departure from the organization.

Occupational Safety and Health Administration — federal agency enforcing workplace safety standards.

A co-employment arrangement where a PEO shares employer responsibilities with a client business.

The business that enters into a co-employment relationship with a PEO.

The ongoing process of setting goals, monitoring progress, and evaluating employee performance.

Taxes withheld from employee wages and paid by employers, including FICA, FUTA, and state taxes.

The recurring time frame for which employees are paid (weekly, biweekly, semimonthly, or monthly).

A detailed record of all payroll transactions for a given pay period.

A program that helps injured employees return to productive work as quickly and safely as possible.

State Unemployment Tax Act — state-level unemployment insurance tax paid by employers.

A cafeteria plan allowing employees to pay for certain benefits with pre-tax dollars.

An employee who is co-employed by both the PEO and the client company.

Annual wage and tax statement provided to employees and the IRS by January 31.

Employee's withholding certificate that determines federal income tax withholding.

Worker Adjustment and Retraining Notification Act — requires 60 days notice before mass layoffs or plant closings.

Incorrectly classifying an employee as an independent contractor, resulting in significant legal penalties.

State-mandated insurance providing wage replacement and medical benefits to employees injured on the job.