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Workforce HR & Workforce Payroll™ v8.0 Glossary of Terms Revision A Version 8.0

1099 1099

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Workforce HR & Workforce Payroll 8.0 WFHR & WFPR GLOSSARY Document Revision History

Document Revision Product Version Release Date

A Workforce HR & Workforce Payroll 8.0 March 2016

1099 Accountable Plan

WFHR & WFPR GLOSSARY

# A B C D E F G H I J K L M N O P Q R S T U V W Y Z Term or Acronym Definition #

1099 Refers to a set of forms that are used to show different types of income other than wages paid by companies to employees and contractors.

These include: 1099-A, -B, -DIV, -G, -INT, -MISC, -OID, -PATR, -R, and -S

218 Agreement An agreement between a state or local government employer and the state social security agency under which the employees are subject to social security and Medicare coverage.

360-Degree Feedback A performance evaluation method through which employees receive feedback from multiple sources at different levels within an organization. These levels typically include supervisors, peers, and subordinates.

401(k) Plan A cash or deferred arrangement that allows employees to authorize their employer to place pretax dollars in a retirement plan that invests the money. The contributions (including those matched by the employer) and any earnings are not subject to federal income tax (most state income taxes also) until they are withdrawn.

403(b) Annuity An annuity or mutual fund that provides retirement income for employees of public schools and certain tax exempt organizations.

457 Plan An annuity or mutual fund that provides retirement income for employees of public sector employers (e.g., state and local governments).

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Absenteeism An employee’s failure to attend to his or her assigned workplace or duties as scheduled.

Accelerated Deposit Rule Also known as the one-day rule, it requires employers that accumulate a tax liability of $100,000 or more during a deposit period to deposit the withheld taxes within one banking day of the day on which the liability was incurred.

Access Channel or Candidate Access Channel

Any means by which a candidate can gain access to online recruiting functions or online staffing assessment tools. These may include job boards, corporate employment portals, kiosks, wireless handheld computers, hyperlinks that are embedded in emails, or URLs that are advertised using conventional channels such as billboards or newspaper ads.

Accidental Death & Dismemberment Insurance

Insurance that provides an employee with benefits in the event he or she loses life, limb, or eyesight as the result of an accident.

Account Representation of assets, expenses, liabilities, and revenues in the general ledger, to which debit and credit entries are posted to record changes in the value of the account.

Accountable Plan An employer’s business expense reimbursement plan that satisfies all IRS requirements regarding substantiation, business connection, and return of excess amounts in a reasonable period of time.

Accrual Affordable Care Act (ACA)

Term or Acronym Definition Accrual Recognition of assets, expenses, liabilities, or revenues after the cash

value is determined but before it’s transferred.

Actual Deferral Percentage (ADP) Percentage of wages deferred by employees participating in a salary reduction plan (e.g., 401(k) plan.) The IRS uses the ADP to determine whether the plan meets the agency’s nondiscrimination requirements.

ADA (Americans with Disabilities Act of 1990)

The federal law that prohibits employment discrimination on the basis of mental or physical disability or a disability perceived by the employer. Qualified individuals are those whose disability substantially limits a major life activity and who can perform the essential functions of the job with or without reasonable accommodation.

AD&D Accidental Death and Dismemberment insurance.

ADEA (Age Discrimination in Employment Act)

Age Discrimination in Employment Act of 1967. Federal law that prohibits employment discrimination on the basis of an individual’s age (40 or older.)

Adjusting Entry Entry made at the end of an accounting period to update or adjust an account before financial statements are prepared.

Adoption Assistance Financial benefit provided by an employer to an employee to help with the child adoption process. Within certain limitations, it is excluded from federal income tax withholding, though not social security and Medicare taxes.

Advance Earned Income Credit (AEIC) Payments of earned income credit during the year to employees who expect to be eligible for the credit. Employers make the payments out of federal income, social security, and Medicare taxes withheld from the employees’ wages.

Adverse Employment Action An employment decision that negatively impacts an employee, such as a demotion, termination, reduction in pay or status, failure to promote, or less-desirable work assignment or transfer.

Advice The word “advices” refers to the record (either hard copy or available on line) of gross pay, taxes, other deductions, and direct deposit information that is used by employees who select direct deposit for their earnings rather than a “live” check.

Affirmative Action A set of public policies and initiatives designed to ensure equal employment by eliminating past and present discrimination based on race, color, religion, sex, or national origin.

Affirmative Action Plan An employer plan or program implemented to demonstrate support and compliance with civil rights legislation, which is generally required of government contractors. An AAP typically states the organization’s current minority population as well as plans to increase minority and female hiring and promotion.

Affirmative Defense Means of avoiding liability for a harassment or discrimination complaint so long as the following conditions are met: (a) the employer exercised reasonable care to prevent and promptly correct any harassing behavior, and (b) the employee unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise

Affordable Care Act (ACA) Comprehensive healthcare reform signed into law as the Patient Protection and Affordable Care Act (PPACA.) The law and subsequent amendments focus on provisions to expand coverage, control health care costs, and improve health care delivery.

After-Tax Deduction Applicant Tracking System (ATS)

Term or Acronym Definition After-Tax Deduction Deduction from an employee’s pay that does not reduce the employee’s

taxable wages. It is taken out only after all applicable taxes and other deductions are withheld (for example, union dues and garnishments.)

Age Discrimination in Employment Act A federal law that prohibits employment discrimination against individuals 40 years of age and older.

Agency Shop A workplace where all employees are required to pay to the union an amount equal to the customary initiation fees and monthly dues, even though the employee is not required to become a member of the union or follow union rules.

Aggregate Method Method of withholding federal income tax from supplemental wages in which the supplemental wage payment is combined with the regular wages paid during the most recent payroll period; after calculating withholding on the total amount using the wage-bracket or percentage method, the amount already withheld from the last wage payment is subtracted to reach the amount that must be withheld from the supplemental wage payment.

Alien Citizen of a country other than the U.S. or one of its territories or possessions.

Alternate Work Arrangement Alternate Work Arrangement: A work schedule that deviates from the traditional office workweek. Examples include job sharing, telecommuting, and flextime.

Alternative Dispute Resolution A forum, such as arbitration or mediation, for resolving disputes outside of the traditional court system.

Annual Report Form 5500 A written summary of a retirement plan’s assets, liabilities, income, and expenses that must be filed each year by certain pension, welfare, and fringe benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. The report shows the aggregate administrative fees and other expenses paid by the plan.

Annual Wage Reporting (AWR) Social Security Administration’s system of recording wages reported annually by employers on Form W-2.

Annuity Periodic payments made to a pensioner during a fixed period of time or until death. Purchasing an annuity involves paying a lump sum or periodic payments to an insurance company that guarantees certain periodic payments will be made to the participant.

Applicant Tracking System (ATS) An applicant tracking system (ATS) is a software application designed to help an enterprise manage its staffing process more efficiently. Applicant tracking systems are sometimes referred to as candidate management systems, although in reality the two are slightly different, since a true ATS functions at an enterprise level while a candidate management system is suitable for smaller-scale applications. An ATS can be used to post job openings on a websites or job boards, screen resumes, and generate interview requests to potential candidates by email. Other features may include applicant and requisition tracking, automated resume ranking, customized input forms, pre-screening questions and response tracking, and multilingual capabilities. Most applicant tracking systems represent enterprise-level technology and require a reasonable amount of time and effort to be configured to map onto an individual organization's staffing process.

Application Service Provider (ASP) Back Pay

Term or Acronym Definition Application Service Provider (ASP) Outsourcing arrangement where the outsourcing company hosts each

application at its location and the client gains access through the Internet.

Apprenticeship A combination of on-the-job training and classroom instruction in which workers learn the practical and theoretical aspects of a highly skilled job.

Aptitude Test A standardized test designed to measure the person’s ability to develop skills or acquire knowledge.

Arbitration A means of submitting a dispute for final resolution to a neutral third party.

Area Rate Differentials Differences in wage rates for the same job in different geographical areas that reflect cost-of-living differentials between those areas.

Arrears What happens when there is not enough net pay to cover all of an employee’s deductions, e.g., pay is docked; gross pay is lower than normal and cannot cover all deductions. Not all deductions are placed into arrears.

Assessment Administration Systems An electronic (online) system that allows staffing professionals to configure and administer online staffing assessments. These systems allow users to accomplish tasks such as scheduling candidates for assessments, attaching links to online assessments to job postings, and tracking a candidate's progress in the selection process.

Assessment Delivery Systems The system used to deliver assessment content to a candidate. Assessment delivery systems are usually web based; however, assessments can also be delivered via paper, phone (IVR), in person, kiosks, or wireless devices.

At-Will Employment An employment relationship that either party, employer or employee, can end for any reason, or no reason at all, at any time with or without notice.

Attrition The loss of personnel through resignation, retirement, and death.

Attrition Rate Staffing metric in which the number of quits and terminations for the year are divided by the average employee population for the year.

Authorization Agreement Written agreement authorizing an employer to withhold and distribute a portion of an employee’s wages to a party designated by the employee (e.g., direct deposit, union dues, and savings bonds).

Authorization Card A document indicating that an employee desires to belong to a bargaining unit of employees represented by a labor union.

Automated Clearing House (ACH) A Federal Reserve Bank or private financial institution acting on behalf of an association operating a facility that serves as a clearinghouse for direct deposit transactions. Entries are received and transmitted by the ACH under the rules of the association.

Autonomy Ability to make independent decisions to complete tasks.

Average Hourly Earnings Hours worked per period divided into total wages paid for that period.

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Back Pay Amount of money due an employee for periods prior to the current pay period and usually as an award for lost wages given through a court ruling or as a result of arbitration proceedings.

Back-Pay Award BLS

Term or Acronym Definition Back-Pay Award A cash award made to an employee that generally results from legal action

to remedy a violation of federal or state wage-hour or employment discrimination laws.

Background Check Investigation into accuracy of information provided by job applicants. May include verifying employment history, education, criminal, credit, and driving records.

Backup Withholding Income tax withholding required from non-employee compensation when the payee fails to furnish the payer with a taxpayer identification number or the payer is notified by the IRS that the payee’s TIN is incorrect.

Balance The value of an account, as determined by calculating the difference between the debits and credits in the account.

Bargaining Unit A group that represents employees in collective bargaining and representation elections between an employer and a union. A bargaining unit is determined by the National Labor Relations Board based on the commonality of interests among employees as well as other factors.

Base Period When dealing with unemployment compensation, it generally consists of the first four of the last five quarters immediately preceding the claimant’s benefit year.

Base Period Wages Wages earned during the base period. The amount is generally one of several criteria used in determining a claimant’s eligibility for unemployment compensation.

Base Salary An employee’s wages before deductions, not including incentives or bonuses.

Batch Sample or limited amount of all the data being processed.

Batch Control Control that is designed to ensure that a batch of data is entered successfully.

Batch Processing Processing data as a group, either to increase controls or processing efficiency.

Benchmark A fixed point of reference from which measurements can be made.

Benchmark Job A job that is common across various industries, e.g., accountant or customer service manager.

Beneficiary Individual who is either using or eligible to use insurance benefits under a contract.

Benefit Wages In the context of unemployment compensation, an amount charged to an employer’s account when a former employee receives unemployment benefits. The amount is determined by the base period wages paid by that employer to the claimant.

Benefit Year In the context of unemployment compensation, the 52-week period beginning on the first day a claim for benefits is filed.

Benefits Accrual The accumulation of pension credits in a defined benefit pension plan according to years of credited service.

Bereavement Leave Paid or unpaid leave for employees following the death of a relative.

BLS Bureau of Labor and Statistics.

Bona Fide Catch-Up Contributions

Term or Acronym Definition Bona Fide Refers to actions taken in good faith, without pretense or fraud.

Bona Fide Occupational Qualification A job requirement that may relate to sex, religion, national origin, or age but does not violate the law because it is necessary for the individual to perform the job.

Bonus An award granted to employees at the discretion of management, usually based on personal and/or company performance.

Broadband Salary structures that consolidate a large number of pay grades into a few broad bands. Often used to encourage movement between ranges of different jobs.

Bureau of Labor Statistics The federal agency that provides labor survey, statistical, and other data that is frequently used in human resources functions.

Business Standard Mileage Rate A cents-per-mile figure issued annually by the IRS. Reimbursements for employee transportation expenses incurred while using their vehicles for business are not included in income up to the business standard mileage rate.

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Cafeteria Plan A plan that offers flexible benefits under IRC Section 125. Employees choose their benefits from a “menu” of cash and benefits, some of which can be paid for with pretax deductions from wages.

Cafeteria Style Benefits A plan in which employees receive a menu of benefits. Typically carries a higher administrative cost.

Candidate management system (see also "Applicant Tracking System")

An application that allows staffing professionals to manage information obtained from job applicants and to use this information for administrative purposes. While these systems perform many of the same functions as applicant tracking systems, they are usually associated with functionality that is included with many online assessment platforms. This is in contrast to an ATS, which is usually a standalone system that functions at an enterprise level. A common difference between candidate management systems and applicant tracking systems is whether or not they are set up to transfer data to an organization's HRIS. Applicant tracking systems almost always provide this functionality, while many candidate management systems do not.

Candidate profiles Information that summarizes an individual's suitability for a job relative to specific job requirements. Candidate profiles represent the output of many online staffing assessment systems. Typically, candidate profiles contain a graphical representation of a candidate's traits compared to the ideal range of these traits in terms of effective job performance. Many candidate profiles also contain detailed narrative information about a candidate's strengths and weaknesses relative to job performance requirements.

Cash Balance Plan Defines the promised benefit in terms of a stated account balance.

Cash or Deferred Arrangement (CODA) An arrangement under a retirement plan that allows employers to either receive cash or have the employer contribute an equivalent amount to the plan.

Catch-Up Contributions Elective deferrals by an employee to a defined contribution retirement plan or IRS above any statutory or plan-mandated limit.

Child Support Withholding Compa-Ratio (Comparative Midpoint Ratio)

Term or Acronym Definition Child Support Withholding Process of withholding amounts from an employee’s compensation to

satisfy a child support order from a court or a state child welfare administrative agency. The employer is responsible for withholding the amounts and paying them over to the party named in the withholding order.

Circular E IRS Publication 15, Employer’s Tax Guide. Contains the basic rules, guidelines, and instructions for withholding, depositing, reporting, and paying federal employment taxes.

Civil Rights Act A federal law that prohibits discrimination based upon race, color, religion, sex, and national origin in all terms and conditions of employment. The Act includes provisions for monetary damages in cases of intentional discrimination and clarifies provisions regarding disparate impact actions.

Claims Experience Type and frequency of claims filed by insured employees used primarily to determine insurance premium rates.

Class Action A lawsuit brought on behalf of one or more persons as representatives of a larger group of plaintiffs and designed to expedite court proceedings involving numerous individuals alleging the same violations.

Cliff Vesting When employer contributions into a retirement or pension plan are fully owned by the employee after a period of five years.

Closed Shop A workplace where a security clause in a collective bargaining agreement requires the employer to hire only union members and discharge any individual who drops union membership.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

The federal law that requires employers with 20 or more employees to provide certain employees and dependents the opportunity to purchase the same health care group coverage if specific qualifying conditions are met. Some states have enacted their own laws providing additional coverage for workers.

Collective Bargaining Negotiations between representatives of organized workers and their employers to determine working conditions, such as wages, hours, and rules.

Collective Bargaining Agreement The end product of successful union-management negotiations, some clauses of which affect the employer, the union, and the rights and duties of employees.

Commission A fee or percentage of a sale of a product or service that salespeople receive in addition to or in lieu of salary.

Common Law Test A test that measures the amount of authority an employer exercises to control and direct employees. Where the employer has the right to direct the worker as to how, where, and when the work will be completed, in addition to controlling the result of the work, the worker is a common law employee.

Common Paymaster One of two or more related corporations that pay employees who work concurrently for the related corporations. Under this arrangement, the related corporations are treated as a single employer for social security, Medicare and FUTA tax purposes.

Compa-Ratio (Comparative Midpoint Ratio)

This is an index of an individual’s position in the pay range compared to the midpoint of the salary range. A compa-ratio can also be used for a group of employees within the same job range.

Calculating the Compa-Ratio: Constructive Receipt

Term or Acronym Definition Calculating the Compa-Ratio: The compa-ratio is calculated as follows:

Employee’s Salary / Midpoint of Salary Range

For example, an individual with a salary of $30,000 per year occupies an Administrative Assistant position (grade 7.) The salary range for grade 7 is $25,880 (minimum), $32,350 (midpoint), and $38,820 (maximum.) The individual's compa-ratio is determined by dividing his or her salary by the midpoint of the range and multiplying by 100:

[$30,000 (salary)/$32,350 (midpoint)] X 100 = 92.7% (compa ratio)

A Group Compa-Ratio is calculated as follows:

Average of Employees' Salaries / Midpoint of Salary Range

Compensation All cash and noncash remuneration given to an employee for services performed for the employer.

Compensatory Time Paid time off granted to an employee for working extra hours. The Federal Wage-Hour law places severe restrictions on the use of compensatory time to avoid paying overtime, although special exemptions are allowed for public sector employees.

Competency or Competency Model The term "competency" is often used in a variety of different ways. However, the most common definition defines a competency as a set of behaviors that influence organizational performance. For example, interpersonal savvy or relationship-building are common competencies. Competency models contain sets of competencies that identify key behaviors employees need to display to succeed in their roles.

Competency-Based Assessments Assessments designed around the behaviors found in a competency model instead of around more "psychological" attributes, such as personality traits or abilities. Competency-based assessments often integrate multiple types of assessment methodologies to predict the various behaviors defined by a competency.

Competency-Based Pay Payment for traits and characteristics rather than for specific skills or positions held.

Competency-Based Reports Much like a "candidate profile," these are reports that describe a candidate's suitability for a specific job based on the likelihood that he or she will display the competencies that influence performance for that job.

Compressed Workweek A schedule in which employees work the normal number of hours for a workweek but complete the hours in fewer than five days.

Concurrent Employment Working for more than one related corporation under a common paymaster arrangement.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)

Federal law that requires employers with group health care coverage to offer continued coverage to separated employees and other qualifying beneficiaries.

Constructive Discharge When an employee resigns due to intolerable working conditions, to which he or she is subjected because of race, color, religion, sex, or national origin, that a reasonable person would have no choice but to do the same.

Constructive Receipt An IRS rule that considers wages to have been paid to an employee when the employee has access to the wages without substantial limitations or restrictions.

Consumer Credit Protection Act (CCPA) Dashboard Reporting

Term or Acronym Definition Consumer Credit Protection Act (CCPA) Federal Law that restricts the amount of an employee’s earnings that can

be garnished to pay creditor debts, including child support.

Consumer Price Index A measure of change in prices of certain basic goods and services published by the Bureau of Labor Statistics.

Contingent Worker An individual who works on a temporary basis, as opposed to a regular, permanent employee.

Contribution An amount an employer pays into a plan for participants, or an amount an employee pays into a plan for his or her benefit.

Control Group Group of key or highly compensated employees in a company whose proportion of benefits is limited under the qualification requirements of certain benefit plans (e.g., Section 125 or 401(k) plans).

Corporate Careers Portal The careers section of a corporation's website. It is estimated that over 90% of organizations that have a website have some form of a corporate careers portal. However, there are a wide range of functions and services associated with these portals. Many larger corporations rely on their corporate careers portal to establish their employment brand. Such extensive portals often include detailed information about a company's values as well as profiles of employees, games, and the opportunity to search and apply for jobs.

Corrective Action Measures taken to correct or prevent a behavioral or performance problem.

Cost-of-Living-Adjustment (COLA) An adjustment of wages or benefit payments to account for changes in the cost of living, generally based on changes in the CPI.

Cost per Hire (CpH) Staffing metric which is calculated by dividing the recruiting costs by the number of positions filled. CpH = Recruiting Costs/Number of Positions. Recruiting costs can include recruiter expenses (such as recruiter salary, benefits, and overhead), applicant expenses (such as travel and testing), direct fees (ads, job fairs, and electronic job board postings), relocation expenses, and signing bonuses.

Cost-of-Living Adjustment (COLA) An adjustment in wages that represents a variation in the cost of living, typically tied to the consumer price index.

Covered Employees For each law affecting payroll and human resources, this term defines those workers who are subject to the law.

Credit Reduction Reduction in the credit an employer receives against FUTA tax owed for state unemployment taxes paid, where the state has not repaid a federal loan under the joint federal and state unemployment compensation program.

CSEA Child Support Enforcement Agency

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Dashboard Reporting A set of screens within an online staffing assessment system that provides comprehensive information about multiple applicants relative to the requirements of the job for which they are applying. Most dashboard systems utilize layered reporting in which high-level information is presented in initial screens, but more detailed information is accessed via clicking through various pieces of information about each candidate.

De Minimis Discipline

Term or Acronym Definition De Minimis Anything that is too insignificant to merit legal scrutiny, such as a fringe

benefit that is provided occasionally and is too small to justify accounting for or recording it. This does not apply to cash or cash equivalents except in very specific instances, such as supper money.

Death Benefits Amount payable to a pension plan or insurance policy beneficiary after the death of the insured individual.

Decertification The loss of a union’s right—frequently by election—to act as the exclusive bargaining representative of bargaining-unit employees.

Deductible Amount a covered employee must pay for medical expenses before a medical plan will reimburse for covered expenses.

Deduction An amount subtracted from an employee’s gross pay to reach net pay, or an amount allowed to taxpayers as an offset against income (pre-tax deduction).

Deemed Substantiation Safe-harbor rules under which IRS requirements regarding the substantiation of amounts spent on employee business expenses are considered to be met, e.g., per diem allowances.

Deferred Compensation The postponement of a wage payment to a later date. Usually describes a portion of wages set-aside by an employer for an employee and put into a retirement plan on a pretax basis.

Defined Benefit Pension Plan Retirement plan that uses a formula (generally based on an employee’s salary and length of service) to calculate an employee’s retirement benefits and is not funded by employee contribution to the plan.

Defined Contribution Plan Retirement plan with benefits determined by the amount in an employee’s account at the time of retirement; depends on the amount of the contributions as well as the gains or losses on the account. The account may be funded by contributions from both the employer and the employee.

Demotion To place an employee in a lower ranking position typically due to poor performance or a violation of a company policy or procedure.

Department of Labor Division of the government to which the Wage and Hour Board reports. The Wage and Hour Board oversees employment and labor laws.

Dependent Care Assistance Program An employer plan providing dependent care services or reimbursement for such services.

Dependent Group –Term Life Insurance Term life insurance that gives an employee death benefits should the employee’s spouse or other dependents die.

Direct Deposit The electronic transfer of an employee’s net pay directly into financial institution accounts designated by the employee, thus avoiding the need for a paycheck.

Disability The standard used to determine benefits under workers’ compensation or other disability insurance programs or to determine coverage under the Americans with Disabilities Act (ADA.) As used in the ADA, disability is defined as a mental or physical impairment that substantially limits one or more major life activities, a record of such an impairment, or being regarded as having such an impairment. State definitions may differ.

Discipline To take an adverse action against an employee in response to his or her poor performance or a violation of a policy or procedure.

Discretionary Bonus EEO-1 Report

Term or Acronym Definition Discretionary Bonus Bonus paid for services performed. To be considered discretionary, the

bonus cannot be paid due to a promise, a contract, or another agreement.

Discrimination An adverse action taken against an employee based on membership in a protected class.

Discrimination (Benefits) In the context of employee benefits, favorable treatment of highly compensated employees under an employer’s plan.

Dislocated Worker A worker who is permanently laid off or receives a notice of termination or layoff from employment due to no fault of their own.

Dismissal Pay Amounts paid to employees who are terminated from employment, also known as payments in lieu of notice, termination pay, or severance pay.

Disparate Impact A discriminatory effect on a protected class caused by an employment practice or policy that appears to be neutral on its face.

Disparate Treatment When an employee receives less-favorable treatment than others because of race, religion, national origin, gender, or disability.

Disposable Earnings That part of an employee’s earnings remaining after deductions required by law (e.g., taxes.) It is used to determine the amount of an employee’s pay that is subject to a garnishment or child support withholding order.

Duty to Bargain The requirement that while a collective bargaining agreement is in existence, an employer avoids unilateral changes to the work terms and conditions governed by the agreement, except those which the agreement has left to the discretion of management.

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E-Recruitment. Using the Internet to conduct recruiting practices

Early Retirement Age The earliest age at which social security retirement benefits can be received. Currently age 62. Individual company retirement plans may provide for benefits at an earlier age.

Early Retirement Incentive Program A strategic policy to encourage employees to retire where eligible employees can voluntarily retire with a one-time monetary incentive in addition to a full pension.

Earned Income Credit A tax credit available to low-income employees. It may be taken when the employee files his or her individual tax return, or partially paid in advance by the employer during the year (AEIC)

Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA)

Significant tax cut legislation enacted in 2001 that reduced income tax rates and increased pension plan elective deferrals.

EDI Electronic data interchange.

Educational Assistance Program An employer plan providing for payment or reimbursement of an employee’s educational expenses.

EEO-1 Report The Equal Employment Opportunity Information Report is an annual report filed with the Joint Reporting Committee, comprising the EEOC and the OFCCP, by employers subject to Executive Order 11246 or to Title VII of the 1964 Civil Rights Act. The report details the race, sex, and ethnic composition of an employer’s workforce by job category.

EEOC (Equal Employment Opportunity Commission) Employment At-Will

Term or Acronym Definition EEOC (Equal Employment Opportunity Commission)

The federal agency responsible for administering and enforcing: Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act; the Equal Pay Act of 1963; the Americans with Disabilities Act; and the Civil Rights Act of 1991.

EFT Electronic Funds Transfer.

EFTPS Electronic Federal Tax Payment System.

Elective Deferral The amount of pretax dollars that an employee chooses to have the employer contributes to a qualified deferred compensation (e.g., 401(k) plan) in the employee’s behalf, also known as pretax contributions or employer contributions.

Electronic recruiting agents Web-based applications that allow users to automatically search the web to find resumes of candidates who are qualified for a specific position. These are used by recruiters to identify and retrieve information that they can use to make contact with viable job applicants.

Electronic Tax Application Term for same-day settlement procedures for electronic tax deposits made through the Electronic Federal Tax Payment System.

Employee An individual who performs services for another individual or an organization in return for compensation.

Employee Assistance Program An employer-sponsored program designed to assist organizations in addressing productivity issues and employees in identifying and resolving personal concerns that may affect job performance.

Employee Referral Program A policy that uses monetary incentives to encourage current employees to solicit job applicants by word of mouth among acquaintances.

Employee Retirement Income Security Act of 1974 (ERISA)

Federal law regulating the operation of private sector pension and benefit plans.

Employee Self-Service An application that gives an employee access to personal and company data and allows the employee to review, print out, and/or update certain portions of that data. It can be accomplished by phone, at a centralized computer workstation, or on individual personal computers.

Employee Stock Option Plan A compensation plan, generally for upper-level employees, that allows the employee the opportunity to purchase company stock at a fixed price. The employee typically vests in the options over a five-year period; they also expire after a fixed period of time.

Employee Stock Purchase Plan (ESPP) An employer plan under which all employees are given the opportunity to buy the employer’s stock at a discount, subject to strict limitation.

Employee Verification Service (EVS) Service offered by the Social Security Administration allowing employers to verify the accuracy of their employee’ social security numbers by sending in a paper listing, magnetic tape, or diskette of their data for review by the SSA.

Employer Identification Number (EIN) Employer’s account number with the Internal Revenue Service.

Employment At-Will An employment relationship that either party, employer or employee, can end for any reason, or no reason at all, at any time with or without notice.

Employment Brand Fair Labor Standards Act (FLSA)

Term or Acronym Definition Employment Brand The message an organization sends to candidates regarding what the

company is like as an employer. The employment brand permeates recruitment messages sent by the organization. Staffing assessment tools also affect a company's employer brand. If candidates perceive assessments as unpleasant or non-job relevant, they are likely to be less favorably disposed toward the company as a potential employer.

Employment Cost Index Published quarterly by the Bureau of Labor Statistics, this index reflects changes in the cost of labor.

Employment Verification Process of determining whether a newly hired employee is authorized to work in the United States under the Immigration Reform and Control Act.

Enterprise Coverage Test for determining whether an employer’s entire operation is covered by the Fair Labor Standards Act. It is based on the employees’ involvement in interstate commerce and the employer’s annual volume of revenue.

Equal Pay Act The federal law prohibiting discrimination on the basis of gender in compensation for substantially similar work performed under similar conditions.

ERISA (Employee Retirement Income Security Act)

The federal law that sets minimum standards for pension plans in private industry.

Escheat In the context of payroll, the turning over of unclaimed wages to the state after a period of time determined by state law.

Excess Deferral Amount of an employee’s deferred compensation that exceeds the IRS’s annual contribution limit.

Exempt Employee While this term can refer to anyone not covered as an employee under a certain law, it generally means those employees who are exempt from the minimum wage, overtime pay, and certain recordkeeping requirements of the Federal Wage-Hour Law (FLSA.)

Exercise Price Price an employee pays for a stock when a stock option granted by an employer to an employee is exercised by the employee.

Excise Tax Tax imposed on a specific transaction.

Expatriate For U.S. payroll purposes, a U.S. citizen or resident alien who lives and works outside the U.S.

Experience Modification Factor A workers’ compensation figure used to estimate the risk of work-related injury and illness and to determine an employer’s contribution amount.

Experience Rating In the context of unemployment compensation, it is the employer’s past record of unemployment claims activity. This past record can then be used to determine the employer’s unemployment tax rate (i.e., the higher the turnover rate, the higher the tax rate.)

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F

Fair Labor Standards Act (FLSA) The federal law that establishes general wage and hour standards for companies that have at least two employees directly engaged in interstate commerce and have annual sales of at least $500,000. The basic requirements include the payment of minimum wage; overtime for time worked over 40 hours in a workweek; restrictions on the employment of children; equal pay and recordkeeping.

Family and Medical Leave Act (FMLA) FMV

Term or Acronym Definition Family and Medical Leave Act (FMLA) Law guaranteeing 12 weeks’ unpaid leave to most employees to care for

newborn or newly adopted children, or to deal with a serious illness or injury suffered by the employee or an ailing child, spouse, or parent of the employee.

FAVR Fixed and variable rate mileage allowance.

Federal Income Contribution Act (FICA) Combined taxes levied for social security and Medicare.

Federal Unemployment Tax Act (FUTA) Requires employers to pay a certain percentage of their employees’ wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees.

FICA Federal Insurance Contributions Act. Also describes the combined taxes levied for social security and Medicare.

Fiduciary Someone who exercises discretionary control over the assets of another party and has a responsibility to that party.

Field Service Advice Written advice to the IRS field agents and examiners from the IRS Chief Counsel’s office to guide them in handling particular factual situations.

Filing Information Returns Electronically (FIRE)

The IRS’s system for filing information returns (e.g., Forms 1099 MISC) electronically.

Filing Status Marital status of an employee for withholding purposes only.

Financial Accounting Standards Board (FASB)

The group that sets the standards for sound financial management.

Financial Control The right of a business to direct and control the economic aspects off a worker’s job.

FIT Federal Income Tax

FITW Federal income tax withholding; FIT withheld from an employee’s wages when they are paid.

Flexible Benefits The option to choose from a menu of benefits offered by an employer.

Flexible Spending Account (FSA) An arrangement that allows an employee to have pretax dollars deducted from wages and put into an account to pay for health insurance deductibles and co-payments and dependent care assistance (there are separate accounts for medical and dependent care assistance FSAs).

Flextime An arrangement in which employees set their own starting and finishing times within company parameters.

Float The dollar amount represented by checks that are deposited but not cleared. For example, many tax filing outsourcers remove the tax money from an account several days before the taxes are actually due and puts it into their own account (paying the taxes when they are due.) This allows the outsourcer to gain interest on that money.

Fluctuating Workweek An arrangement between an employer and a nonexempt employee to pay the employee a fixed weekly salary even though the employee’s hours may vary from week to week.

FMV Fair Market Value. Used to determine the value of non-cash, employer-provided benefits for payroll tax purposes, or the value of facilities provided to employees in lieu of wages.

Foreign Earned Income Exclusion FTE

Term or Acronym Definition Foreign Earned Income Exclusion An election by a U.S. citizen or resident alien working abroad to exclude up

to a certain amount of foreign earned income from the taxpayer’s gross income.

Foreign Housing Cost Exclusion An exclusion from income for reasonable foreign housing expenses exceeding a base housing amount that is available to U.S. employees working abroad whose tax home is not in the U.S.

Form 5500 A written summary of a retirement plan’s assets, liabilities, income, and expenses that must be filed each year by certain pension, welfare, and fringe benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. The report shows the aggregate administrative fees and other expenses paid by the plan.

Form 941 Employer’s Quarterly Federal Tax Return; provides the IRS with a report of each employer’s total taxable wage paid and payroll tax liability.

Form 941c (Statement to Correct Information)

A form used to make adjustments to Form 941 when taxes are under or over withheld. The form explains the nature of the adjustment and shows the erroneous and correct amounts of tax withheld.

Form W-2 (Wage and Tax Statement) Employers must file a Form W-2 (to both the employee and the Social Security Administration) to report the total amount of wages paid and taxes withheld for each employee in a calendar year.

Form W-2c (Statement of Correct Income and Tax Amounts)

A form that must be completed by an employer if an incorrect copy of a W-2 was sent to the SSA.

Form W-3 (Transmittal of Income and Tax Statements)

A form which an employer must also file when filing paper Forms W-2 (Copy A) with the SSA; contains totals of the amounts reported on the employer’s W-2 forms, acting as a “reconciliation” of these forms.

Form W-3c (Transmittal of Corrected Income and Tax Statements)

A form that accompanies Form W-2c in most situations when it is sent to the SSA that totals the information from all the W-2c forms being submitted.

Form W-4 (Employee’s Withholding Allowance Certificate)

A federal (or an equivalent state or local) form on which the employee states the number of withholding allowances he or she claims. The form is used by the employer to determine the amount of federal, state, and local income taxes to withhold from the employee’s compensation.

Form W-4P (Withholding Certificate for Pension or Annuity Payments)

A form that allows retired employees to have input into the amount of federal income tax withheld from a pension or annuity.

Form W-4S (Request for Federal Income Tax Withholding From Sick Pay)

A form that is filed when an employee receives sick pay from a third-party insurer due to a disabling non-job related injury; the employee uses the form to tell the third party how much to withhold from his or her pay.

Form W-5 (Earned Income Credit Advance Payment Certificate)

This form must be filed by employees who want to take advantage of advance EIC payments. The form attests to their eligibility for the advance payments.

Fringe Benefits Compensation other than wages provided to an employee such as health and life insurance, vacations, employer-provided vehicles, public transportation subsidies, etc., that may be taxable or nontaxable.

FTE Full time equivalent; a term used to describe the time or effort expected relative to a full time appointment (which is 1.00 FTE).

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Term or Acronym Definition Full-Service Assessment System System that supports a wide range of assessment tools and candidate

management features.

FUTA Federal Unemployment Tax Act. Requires employers to pay a certain percentage of their employees’ wages (up to a maximum wage limit) as a payroll tax to help fund unemployment compensation benefits for separated employees.

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G

Gain Sharing A formal incentive-pay system in which employees are rewarded as a group for improving productivity and identifying and implementing cost-saving techniques and practices.

Garnishee An employer that receives an order requiring withholding from an employee’s wages to satisfy a debt. A garnishee can also be a debtor against whom a creditor has brought a process of garnishment.

Garnishment A legal proceeding authorizing an involuntary transfer of an employee’s wages to a creditor to satisfy a debt.

Geographic Differentials Variances in compensation for the same job based on cost-of-living changes from one geographic area to another.

Golden Parachute Payments made to business executives in excess of their usual compensation (e.g., stock options, bonuses) in the event that the business is sold and the executives are terminated from employment.

Graded Vesting When employer contributions into a retirement/pension plan are fully owned by the employee after a period of 7 years; the employee vests 20% each year beginning with the third year.

Green Card (INS Form I-551) Permanent Resident Card which entitles the bearer to permanent resident status in the U.S. and provides proof of work authorization and identity under the Immigration Reform and Control Act (IRCA.)

Grievance A formal expression of a complaint. It may be a single or multi-step process used to challenge an employer’s or union’s alleged violation of a collective bargaining agreement or the National Labor Relations Act (NLRA.)

Grievance Procedure A method by which a grievance is expressed to management and resolved through internal policy and action.

Gross Income The compensation for services, including fees, commissions, fringe benefits, and similar items.

Gross Pay The total amount received from the employer before any deductions are made.

Gross-Up An IRS approved formula that employers can use to determine the taxable gross payment when the employer pays its share of tax.

Group Legal Services Plan An employer plan providing for the advance provision or prepayments of personal legal services for employees and their dependents.

Group Term Life Insurance (GTL) Term life insurance that is provided to employees, with the cost being borne by the employer, the employee or both.

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H Incentive Stock Option (ISO)

Term or Acronym Definition H

H-1B Visa A nonimmigrant visa that professionals with at least a bachelor’s degree or its equivalent in work experience may be eligible for if the position requires such a degree. Employers must demonstrate that these professionals are paid at least the prevailing wage for the job.

Health Care Financing Administration The division of the federal Department of Health & Human Services responsible for overseeing Medicare and Medicaid.

Health Insurance Portability and Accountability Act (HIPAA)

Law passed in 1996 restricting the right of group health plans to limit participation by newly hired employees and their dependents because of preexisting medical conditions.

HI Hospital Insurance (the Medicare component of FICA.)

Highly Compensated Employee (HCE) In the context of certain fringe benefit plans, an employee who is an owner or officer of a business or whose salary exceeds a certain amount (indexed each year for inflation). Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of highly compensated employees. An employer may also be restricted in their use of safe-harbor valuations of benefits provided to such employees.

Hiring Recommendations A specific recommendation to help staffing personnel choose candidates based on assessment results. These systems express hiring recommendations in very simple terms such as percentage values or red, yellow, and green lights.

HMO (Health Maintenance Organization)

An organization that provides an agreed-upon set of health maintenance and treatment services for a prepaid fixed sum.

Human Resources Forecasting Planning for future staffing needs as a part of a strategic plan.

Human Resources Information System Enterprise-level software systems designed to support management of human resource data (e.g. payroll, job title, candidate contact information.)

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I

I-9 Form A form issued by the Immigration and Naturalization Service to verify employment eligibility.

Illegal Immigration Reform and Immigrant Responsibility Act of 1996

Law enacted in 1996 that amends IRCA by reducing the number of documents that employers must accept to prove a new hire’s identity and work authorization.

Immigration Reform and Control Act of 1986 (IRCA)

Law enacted in 1986 that prohibits employers from hiring persons who are not authorized to work in the U.S. and from discriminating against those who are authorized, based on their national origin or citizenship.

Impute The addition of the value of cash and non-cash compensation to an employee’s taxable wages to properly withhold income and employment taxes from the wages.

Incentive Rewards given to employees in addition to their base wage that are intended to induce action or provide motivation.

Incentive Stock Option (ISO) A stock option plan that gives an employee the opportunity to buy the employer corporation’s stock at a fixed price for a certain period of time, and that offers favorable tax treatment if certain conditions are met.

Income Tax Treaties Interstate Commerce

Term or Acronym Definition Income Tax Treaties Treaties between the U.S. and foreign countries that may have provisions

governing the tax treatment of U.S. employees working in those countries, as well as aliens from those countries working in the U.S.

Independent Contractor A nonemployee contracted by a business to perform services. Although the business specifies the result of the work to be performed, it has no right to control the details of when, how, or who will ultimately perform the work.

Individual Retirement Arrangement A trust created or organized for the exclusive benefit of an individual or his or her beneficiaries.

IRA (Individual Retirement Account) A special retirement-savings arrangement that permits individuals to save up to $2,000 of pre-tax income every year and defer taxation on that money until it is withdrawn.

Individual Taxpayer Identification Number (ITIN)

A tax reporting identification number issued to aliens in the U.S. who cannot get a social security number but are required to file a tax or information return with the IRS.

Information Return A return sent to the IRS (e.g., 1099 series) or the SSA (e.g., Form W-2, Copy A along with Form W-3 or 6559) that indicates information relevant to tax liability.

Information Statement A statement sent to a payee (e.g., 1099 series) or an employee (Form W-2) that indicates payments made and taxes withheld by the party issuing the statement.

INS Immigration and Naturalization Service.

IVR (interactive voice recognition) assessment

Assessment system that collects information from candidates using an automated telephone system. Candidates typically access these systems using a 1-800 number. Candidates answer questions either by using the telephone keypad or by speaking to a computer designed to recognize specific voice responses.

Internal Audit An audit of a business’s policies, procedures, operations, and records carried out by employees of the business as opposed to outside parties.

Internal Control Measures used by a company to safeguard company assets by preventing errors, waste, embezzlement, and fraud.

Internal Legal Memorandum (ILM) An interpretation of a point of tax law designated for internal use by the IRS.

Internal Revenue Bulletin (IRB) Issued regularly (weekly except during the summer) by the IRS, the IRB contains recently issued regulations, revenue procedures, and other agency announcements.

Internal Revenue Code (IRC) Federal tax laws. Generally referred to as the Internal Revenue Code of 1986, which was the year of the latest major overhaul of the Code. The IRC also comprises Title 26 or the United States Code.

Internal Revenue Service (the Service) Federal agency charged with interpreting, implementing, and enforcing the tax laws of the U.S.

Internal Revenue Service Restructuring and Reform Act of 1998

Law enacted in 1998 to reform the governance structure of the IRS to make it more responsive to taxpayers and to promote electronic filing of information.

Interstate Commerce The exchange of goods and/or services across state lines. It provides a basis for congressional and federal government agency regulation of

Top of the Document Liabilities

Term or Acronym Definition wages and hours of work and other employment related matters.

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J

Job Analysis A process used to establish and document whether employment procedures such as training, selection, compensation, and performance appraisal are related to a specific job position. It includes the review of job descriptions and specifications, such as the skill and background necessary to perform the responsibilities of the job. This process is also called job or position evaluation.

Job Board A website or part of a website that allows job seekers to view available jobs posted by a variety of organizations. When applicants have identified a job that they are interested in applying for, the job board provides them with a way to send critical job-related information (such as a resume) to the employer. Many job boards have a variety of additional services to help job seekers manage their careers and their ongoing job search processes.

Job Sharing When two part-time employees share the same full-time job.

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K

Key Employee In the context of fringe benefit plans, an officer or owner (of all or a significant part) of a business whose annual pay exceeds a certain amount. Many benefits offered by employers do not qualify for favorable tax treatment if they discriminate in favor of key employees. In the context of FMLA, a high salaried employee who may not be entitled to reinstatement after FMLA if doing so would cause the employer serious economic injury.

Kiosk A centrally located, specialized workstation located for easy employee access, where employees can inquire about and modify their payroll and personal data, as well as view company-provided information.

Knockout Questions Specific questions on an assessment instrument that are used as independent criteria for qualifying or removing candidates for consideration for a position during the pre-screening or qualifications screening phase of the hiring process. For example, a question asking candidates if they can provide eligibility of their right to work in the United States might be used as a knockout question. A company might decide that if a candidate does not answer "yes" to this question, he or she will no longer be considered for the position regardless of how the candidate performed on the rest of the assessment. Knockout questions should be used very conservatively and only to assess very clearly defined, highly objective qualifications.

L

Labor Management Relations Act Also known as the Taft-Hartley Act, it gives employees the right to refrain from participating in union activities and prohibits unfair labor practices by unions.

Leased Employee Employees of a leasing agency who are hired and trained for the client firm through the agency. Withholding, depositing, and reporting responsibilities remain with the leasing agency.

Levy An attachment to satisfy a tax debt or a court judgment.

Liabilities Debts of a business that have yet to be paid.

Local National Multiple Worksite report (MWR)

Term or Acronym Definition Local National An employee who works in the country where his home base is located,

even though the employee may actually be a citizen of another country.

Long-Term Assignment A job assignment that is realistically expected to last more than 12 months.

Longer-Term Care Assistance An insurance contract providing for coverage of qualified long-term care services, including diagnostic, preventive, treating, mitigating, and rehabilitative services, which is treated as an accident and health insurance contract for payroll purposes.

Lookback Period The 12-month period running from July 1 or the second preceding calendar year through June 30 of the preceding calendar year. The employer’s payroll tax liability during this period determines its depositor status for the current year. The period may be different for some employers.

Loss Ratio The ratio of paid and incurred claims and expenses to insurance premiums.

Loss Reserve Amount reserved to cover future unpaid claims incurred but not reported.

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Magnetic Media Reporting Use of a computerized method of filing information with government agencies, such as magnetic tape, diskette, cartridge, or electronic filing from one computer to another.

Magnetic Media Reporting and Electronic filing (MMREF) Specifications

Set of specifications for filing Forms W-2 and W-2c with the Social Security Administration on magnetic media or electronically.

Matching Principle Matching revenue earned during an accounting period with the expenses incurred in generating the revenue.

Medical Savings Accounts (MSA) An arrangement through which an employer or an employee (but not both) can put tax-preferred contributions into an account for the payment of health care deductibles under a high deductible health insurance plan.

Medical Support Withholding The process of withholding amounts from an employee’s compensation to satisfy a medical support order from a court or a state child welfare administrative agency. The employer is responsible for withholding the amounts and paying them over to the party named in the medical support withholding order.

Medicare A federal hospital insurance program for individual age 65 or older and some disabled persons. It is funded through the hospital insurance (HI) component of FICA tax.

Merit Pay A method of compensation based on established company standards of performance.

Merit Raise A raise based upon an employee’s performance rather than the length of service or cost of living.

Minimum Wage The lowest dollar amount that an employer can pay its employees per hour under federal or state law.

Medicare Qualified Government Employee (MQGE)

An employee who has only the Medicare component of FICA, and not the social security, withheld from wages.

Multiple Worksite report (MWR) A report developed by the Bureau of Labor Statistics to help it collect

Top of the Document Nonexempt Employee

Term or Acronym Definition statistical information on U.S. businesses with multiple worksites.

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National Labor Relations Act The primary law governing relations between unions and private sector employers. The law guarantees the right of employees to organize and to bargain collectively with their employers or to refrain from all such activity.

National Labor Relations Board The independent federal agency that has two principal functions: (1) to determine whether employees wish to be represented by a union in dealing with their employers and if so, by which union; and (2) to prevent and remedy unfair labor practices by either employers or unions.

Negative Account Employer An employer whose state unemployment tax payments are less than the benefits charged to its unemployment reserve account.

Negative Election A salary deferral to fund pre-tax employee benefits that is begun without the employee making an affirmative election to begin the deferral.

Net Pay That part of an employee’s wages that remains after all deductions are subtracted (e.g., taxes, health insurance premiums, union dues, etc.)

New Hire Reporting The reporting of newly hired and rehired employees to state agencies to facilitate the collection of child support and/or to uncover abuse in the state’s unemployment compensation, workers’ compensation, or public assistance programs.

Niche Job Board A job board that serves a specific industry or occupation. For instance, http://www.salesjobs.com is a niche job board catering to sales people.

No-Additional Cost Services A tax-free fringe benefit for employees consisting of free services offered by an employer at not substantial additional cost to the employer.

Nonaccountable Plan An employer’s business expense reimbursement plan that does not meet the requirements regarding business connection, substantiation, and returning excess amounts. Payments made under the plan are included in employees’ income.

Noncash fringe benefits Benefits provided to employees in some form other than cash (e.g., company car, health and life insurance, parking, etc.) which may be taxable or nontaxable.

Non-Compete Agreement An employment contract in which the employee agrees not to work for a competitor for a period of time once his or her employment terminates.

Nondisclosure Agreement (NDA) An employment agreement that bars employees from disclosing or releasing an employer’s trade secrets and other proprietary information.

Nondiscretionary Bonus Contractual or agreed-upon bonus or incentive related to production, efficiency, attendance, quality, or some other measure of performance.

Nondiscrimination Testing Tests that determine whether benefit plans provided by an employer discriminate in favor of highly compensated employees. If such discrimination is found, the employer will lose its favorable tax treatment for the benefit. Benefits provided under the plan may be taxable to employees.

Nonexempt Employee Employees who are covered by the minimum wage and overtime provisions of the FLSA. They may be paid on an hourly or salary basis.

Nonqualified Plan Originating Depository Financial Institution (ODFI)

Term or Acronym Definition Nonqualified Plan An employer plan that does not meet IRS qualification requirements.

Nonqualified Stock Option or Nonstatutory Stock Option (NSO)

A stock option plan that gives an employee the opportunity to buy the employer corporation’s stock at a fixed price for a certain period of time, without the conditions that apply to an incentive stock option plan.

Nonresident Alien An individual from a foreign country working in the U.S. who does not pass either the “green card” or “substantial presence” residency test, but is subject to federal income tax on U.S. source income.

Normal Credit Amount of an employer’s required contributions paid timely into a state unemployment insurance fund, to a maximum of 90% of the employer’s basic federal unemployment tax rate, taken as a credit against the employer’s federal unemployment tax.

Normal Retirement Age Currently 65, the age at which retirees may receive unreduced social security benefits.

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O

Off-the-Shelf Assessments Assessment tools that can be purchased and implemented with little or no customization. These are typically less expensive than tailored assessments and can be quickly deployed. Off-the-shelf assessments may not be as valid or efficient as tailored assessments because they are designed to predict general aspects of performance rather than focusing on the specific behaviors that drive success in a particular job.

OASDI Old Age Survivors and Disability Insurance, also known as social security.

OCSE Office of Child Support Enforcement

On-Boarding The process by which a new leader is integrated into the organization.

One-Day Deposit Rule If an employer’s accumulated employment tax liability reaches $100,000 on any day during a monthly or semiweekly deposit period, the taxes must be deposited by the close of the next banking day.

OMB Office of Management and Budget.

On-Call Time Nonwork time during which employees are required to be available to handle job-related emergencies.

Online Processing Processing performed under direct control of the computer (can be batch or real-time).

Online Wage Reporting Service (OWRS)

Method for reporting Form W-2 information electronically to the Social Security Administration.

Open Enrollment The time span during which employees eligible for one or more health benefits programs may elect to participate in an offered plan.

Opportunity Wage A reduced minimum wage that can be paid to teenagers during their first 90 days at work.

Organizational Chart A diagram charting the organizational structure and relationships between various positions.

Originating Depository Financial Institution (ODFI)

A financial institution that is qualified to initiate deposit entries submitted by an employer as part of the direct deposit process.

OSHA (Occupational Safety and Health Administration) Performance Standard

Term or Acronym Definition OSHA (Occupational Safety and Health Administration)

The federal agency that enforces the Occupational Safety and Health Act and develops programs and policies to maintain safety and health standards and eliminate occupational injuries and illnesses.

Other Compensation Compensation not subject to federal income tax withholding that an employer must report on an employee’s W-2.

Out-of-Area Benefits HMO benefits provided to plan participants when seeking health care from a provider outside the covered geographical limits.

Outplacement Services Services provided by employers to help employees find a new job after a layoff or reduction in force.

Overtime Hours worked in excess of maximums set by federal or state law that must be compensation at a premium rate of pay (e.g., under the FLSA, all hours worked over 40 in a workweek must be paid at no less than 1½ times the employee’s regular rate of pay).

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P

Paid Time Off (PTO) A consolidated time-off package that contains all sick, vacation, and personal time.

Pay Grade A grouping of various jobs with similar importance or difficulty.

Payroll Period The period of service for which an employer pays wages to its employees.

Payroll Register A report listing and summarizing the compensation paid and deductions taken from each employee’s wages for the payroll period.

Payroll Tax Any tax levied by a government agency on employees’ wages, tips, and other compensation.

Percentage Method of Withholding One allowable method for calculating federal income tax withholding from an employee’s wages, most often used when the calculation is automated.

Per Diem Rates A flat daily rate that an employer may give to its employees for overnight travel, meals, and incidentals expenses, rather than requiring employees to substantiate actual expenses. Employees must still provide the business connection and may not receive more than the IRS published rate nor may they receive a per diem for more days than they are traveling without incurring taxable income.

Pension Plan A retirement plan in which a fixed amount of money is paid to eligible employees after retirement.

Performance Appraisal A periodic evaluation of an employee’s job performance that includes review of past performance, discussion of areas of strength and weakness, and future goals or actions. Appraisals should be presented both in writing and in a confidential discussion, and allow for employee self-appraisal and acknowledgement of review.

Performance Share Plan A stock grant plan in which an employee is offered stock options depending on certain goals being achieved. Stock recipients must pay personal service income tax on the fair market value of the stock at the time of issuance.

Performance Standard An established minimum set for the successful fulfillment of a job against which comparisons and judgments of an employee’s actual performance

Personnel Selection Q

Term or Acronym Definition record may be made.

Personnel Selection The process used to determine whether to make a job offer to a candidate.

Plan Administrator The individual charged with administering an organization’s financial or retirement plans in accordance with state and federal law.

Point of Service Plan A health plan that covers providers who are out of your network, usually with higher co-payments and/or deductibles.

Positive Account Employer An employer whose state unemployment tax contributions are more than the benefits charged to its unemployment reserve account.

PPO (Preferred Provider Organization) A medical-insurance plan in which members receive less expensive coverage by choosing health care providers approved by or affiliated with their plan.

Preliminary and Post Activities Time spent by employees to get ready for work or to get ready to leave work, which is generally not compensable time unless the activities are essential to the employee’s principal work activity.

Premium Pay The extra pay beyond an employee’s regular rate that is paid for working overtime hours. Or, it can also be a special pay rate for work done on weekends, holidays, or undesirable shifts.

Pretax Deduction A deduction taken from gross pay that reduces taxable wages.

Prevailing Wage Rate Wage rate paid to employees in specific job categories for similar work in the same geographic location. Used by companies under contract to the federal government.

Private Delivery Service (PDS) A private sector company that delivers packages. If their services are “designated” by the IRS, materials delivered to them by a taxpayer for delivery to the IRS are considered postmarked on the date the delivery to the PDS is recorded on their database or marked on the package.

Private Letter Ruling (PLR) A ruling provided by the IRS when requested by a taxpayer who wants to know how the tax laws apply to a particular factual situation. The ruling applies only to the taxpayer requesting it, and cannot be relied upon by other taxpayers.

Professional Employer Organization (PEO)

An employee leasing firm that arranges with clients to lease employees back to the client and handle all payroll and human resources functions for the client.

Progressive Discipline A process of increasingly severe disciplinary actions designed to ensure an understanding of job expectations, provide an opportunity to correct behavior, improve performance, and assure due process. Poor performance is normally addressed through a pattern of pre-discipline and formal discipline that eventually leads to termination.

Protected Activity An activity protected by federal or state law. Protected activities include complaining of discrimination, reporting safety violations, testifying on a coworker's behalf, etc.

Public Sector Employer An employer that is a state or local governmental unit (e.g., county, town, village) or a political subdivision of such a unit (e.g., school district).

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Q

Qualified Plan Reimbursement Financing

Term or Acronym Definition Qualified Plan A benefit plan that meets IRS qualification requirements for tax-favored

treatment (e.g., nondiscrimination).

Qualified Retirement Planning Services Certain retirement planning advice or information provided by an employer, the value of which is excluded from employees’ income if it is provided in a nondiscriminatory manner.

Qualified Transportation Fringe Certain employer-provided transportation benefits that can be excluded from employees’ income up to certain annually adjusted limits (i.e., transit passes, vanpools, parking.)

Qualifying Event A job-related event that triggers application of a federal or state law or workplace policy. Relating to COBRA benefits, a qualifying event, such as job separation, leads to the employee’s right to claim continued health coverage under the employer’s group health plan.

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Realistic Job Preview (RJP) A selection measure or step in a selection system that provides an applicant with realistic and accurate information about some of the more difficult aspects of the job. It is hoped that this realistic information will cause applicants who are not comfortable with the more difficult parts of a job to remove themselves from the selection process. Studies have shown that RJPs are an excellent way to help reduce turnover.

Reasonable Basis Test A standard used to determine whether a worker can be treated as an independent contractor whether or not the common law test is met, based on prior court and administrative rulings, IRS audits, or longstanding practice in the industry.

Receiving Depository Financial Institution (RDFI)

Financial institution that qualifies to receive direct deposit entries from an Automated Clearing House.

Reciprocity In payroll, a relationship between states under which privileges granted by one are returned by the other (e.g., reciprocal enforcement of child support orders, reciprocal agreements not to tax non-residents working in a state).

Reconciliation The process of ensuring that amounts withheld, deposited, paid, and reported by employers agree with each other and that if they do not, of determining the reasons and making the necessary corrections.

Recruiting The process of attracting applicants for open positions

Red-Flag Response A specific response to a single item on an assessment instrument that is felt to be highly indicative of a potential candidate weakness. For example, suppose a candidate marked "yes" in response to a pre-screening question asking if they were ever fired from a job; this might be marked as a red-flag response.

Regular Rate of Pay An hourly pay rate determined by dividing the total regular pay actually earned for the workweek by the total number of hours worked.

Regulations The means by which government agencies administer and enforce laws (e.g., rules issued by the IRS to enforce the tax laws).

Rehabilitation Act of 1973 A federal law prohibiting discrimination against qualified disabled individuals by federal government contractors and grantees.

Reimbursement Financing An unemployment insurance financing system that allows employers to pay

Related Corporations Selection

Term or Acronym Definition back to the state unemployment trust fund any benefits paid to their former employees, rather than paying a tax based on their experience rating. This form of financing is most often used by nonprofit groups and public sector employers.

Related Corporations A group of corporations meeting certain common ownership and concurrent employment requirements that may be treated as one employer for social security, Medicare, and FUTA purposes.

Relocation Expenses Costs incurred by an employee as the result of a move to a job in a new location. Reimbursement of these expenses may be made at an employer’s discretion. Certain employee-incurred relocation (qualified under IRC Section 132) expenses are tax deductible under the Internal Revenue Code and if paid by the employer are excluded from income.

Reporting Tools Tools that allow clients to interpret and use the data collected via an assessment system. Information typically provided by reporting tools includes summaries of applicant scores on different assessments tools, number of applicants completing different assessments, passing rates broken down by different applicant characteristics, or EEOC statistics.

Resident Alien In the context of payroll, an individual who passes either the “green card” or “substantial presence” test for determining resident status in the U.S. Resident aliens are generally subject to federal income tax withholding and social security and Medicare taxes on the same basis as U.S. citizens.

Resume Capture A functionality that allows a candidate's resume to be uploaded into a resume database maintained by a job board or corporate careers site.

Resume Evaluation Software Software that uses artificial intelligence to parse (dissect) a resume and infer meaning from its contents. These systems are seen by some as an efficient way to reduce the amount of resources required to evaluate resumes in situations with large numbers of applicants.

Revenue Procedures (Rev. Proc.) Official statements from the IRS on how to carry out tax compliance.

Revenue Rulings (Rev. Rul.) Published decisions issued by the IRS that apply the tax laws to a particular set of facts. They can be used by taxpayers to determine their tax liability in similar factual situations.

RRTA Railroad Retirement Tax Act

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Safe-Harbor An IRS-approved alternative method (usually a short-cut) for complying with IRS rules, regulations, and procedures (e.g., per diem allowances and high-low substantiation).

Salary Structure The configuration of job grades and pay ranges created by an organization.

Screening. The processes of separating qualified from unqualified candidates.

Segregation of Duties A basic principle of internal control that prevents individuals from having responsibility for all phases of a job process, thus guarding against misuse or misappropriation of company assets.

Selection The act of choosing the candidates that best fit an organization's needs for

Seniority System Special Wage Payments

Term or Acronym Definition a particular position.

Seniority System A ranking based on length of service to an organization that leads to increased privileges.

Severance Package A payment offered by some employers to terminated employees (usually those who are terminated through no fault of their own) that is designed to tide them over until new employment is secured.

Severance Pay A payment offered by some employers to terminated employees (usually those who are terminated through no fault of their own) that is designed to tide them over until new employment is secured.

Shared Services The consolidation of related functions and integration of the processes involved with them throughout an entire organization.

Shift Differential Extra pay received by employees for working a less-than-desirable shift (e.g., evenings or late nights).

Short Term Assignment A job assignment that is realistically expected to last, and in fact does last, less than 12 months.

Sick Pay Replacement wages paid to an employee who cannot work because of an illness or injury that is not work-related.

SIT State income tax.

Skill-Based Pay A compensation system in which pay scales are set by skill level rather than job title.

Skills Inventories A compilation of human capital in an organization, including a list of skills, attributes, and credentials.

Social Security The Old Age, Survivors, and Disability Insurance (OASDI) component of FICA,

Social Security Administration The federal government agency that administers social security.

Social Security Disability Insurance Federal disability payments made to qualified claimants who establish that they are totally unable to participate in gainful employment.

Social Security Number An individual’s taxpayer identification number, it consists of nine digits.

Social Security Statement The earnings and benefits verification statement sent by the Social Security Administration annually to employees over age 24 in the U.S. who are not currently receiving social security benefits.

Sourcing The act of finding candidates to apply for a job opening. Sourcing can be active or passive. In active sourcing, recruiters search databases and job boards to try and locate qualified candidates. Passive sourcing involves using resources such as print advertisements, careers pages, or job boards to help applicants find out about available job openings and compel them to apply.

Special Accounting Rule A safe-harbor rule that allows employers to treat certain Noncash fringe benefits provided to employees in November or December as received in the following year. If an employer uses the special accounting rule, the employee must also report the benefit for the same period.

Special Wage Payments Payments made to employees or former employees for services performed in an earlier year. These payments require special reporting by employers so that retirees’ social security benefits are not reduced under the annual

Split-Dollar Life Insurance Supper Money

Term or Acronym Definition earnings test because of amounts earned in prior years.

Split-Dollar Life Insurance An arrangement where an employer pays that part of an annual life insurance premium representing the increase in the cash surrender value of the policy during the year, while the employee pays the remainder of the premium.

Split Shifts A workday that is divided into two parts, separated by a spread of hours longer than the conventional meal or rest period.

Staffing The process of acquiring, deploying, and retaining a workforce of sufficient quantity and quality to create positive impacts on the organization's effectiveness. The process used to hire new employees into an organization.

Staffing Assessment Any tool or system that collects information from job candidates for the purpose of aiding hiring decisions.

Standalone Assessment Platform An assessment system that is designed to function on its own, without being integrated with other technology platforms.

State Disbursement Unit (SDU) A centralized location for the collection and disbursement of withheld child support payments throughout a state.

Statute of Limitations A period of time established by law during which parties can take legal action to enforce their legal rights.

Static Reporting Reporting in which the results of staffing assessments are delivered via a PDF file or in an email. Static reports do not allow users access to varying levels of information about a candidate.

Statutory Employees Special groups of employees identified by law (e.g., full-time insurance salespeople, certain homeworkers) whose wages are not subject to FITW, but are subject to FICA and FUTA.

Statutory Nonemployees Special groups of workers who may qualify as common law employees but are treated under the law as independent contractors (e.g., qualified real estate agents and direct sellers) whose compensation is not subject to federal income tax withholding or employment taxes.

Statutory Stock Option An Incentive Stock Option or an option exercised under an Employee Stock Purchase Plan.

Straight Time The standard number of work hours during a workweek for which an employee’s regular rate of pay will be paid.

Subrogation Right of an insurance carrier or employer to seek reimbursement of paid claims through third-party judgment or settlement of tort action related to an employee's claim.

Substantiation The requirement that employees keep records of the time, place, and business purpose of reimbursable expenses they incur, including receipts.

Substitute Forms Tax forms that are printed by private printers rather than the Internal Revenue Service. They must meet certain specifications to be acceptable for filing.

SUI State Unemployment Insurance

Supper Money The irregular and occasional payment of amounts to employees who work late to cover the cost of meals eaten during that extra working time.

Supplemental Unemployment Benefits Time to Fill or Time to Hire (TtF or TtH)

Term or Acronym Definition Supplemental Unemployment Benefits Employer plans that provide supplements to state unemployment

compensation benefits.

Supplemental Wages Compensation received by employees other than their regular pay, such as bonuses, commissions, and severance pay. Income tax may be withheld from such payments at a flat rate under certain circumstances.

System Edit Warning or alert built into computer software; a system edit checks for errors and either corrects them or notifies the operator that something may be wrong; system edits generally check for values outside accepted ranges.

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Table I Refers to IRS Uniform Premium Table I, which is used to calculate the value of group-term life insurance over $50,000.

Take-Home Pay In the context of a federal tax levy, the amount of an employee’s wages that remains after all normal deductions in effect at the time of the levy were subtracted.

Tax Equalization Plan A plan offered by an employer to an employee working abroad that would provide the employee with the same take-home pay he or she would have in the U.S.

Tax Protection Plan A plan offered by an employer to an employee working abroad that would guarantee the employee a foreign tax obligation no larger than he or she would have in the U.S.

Tax Reform Act of 1986 (TRA ’86) Sweeping tax reform legislation that lowered tax rates and sought to eliminate many of the loopholes in the tax laws.

Taxable Wage Base The maximum amount of employee compensation subject to social security, FUTA, and state unemployment insurance taxes.

Taxpayer Identification Number (TIN) Social security number or employer identification number, which serves as the taxpayer’s account number with the IRS.

Temporary Help Agency Employees Workers hired through temporary help agencies that are screened and trained by the agency to provide services for client firms. They are employees of the agency, rather than the client firm.

Third-Party Administrator An independent organization that provides administrative services including claims processing and underwriting to employers and insurance companies.

Third-Party Sick Pay Payments made by a third party, such as a state or private insurer, to employees because of non-job-related illness or injury.

Third-Party Designees An individual authorized by an employer to correspond with the IRS regarding the completion and processing of an employment tax return (e.g., Forms 940, 941, and 945).

Time-and-a-Half Payment of 1½ times an employee’s regular rate of pay for hours worked over 40 in a workweek, as required by the Federal Wage-Hour Law (for non-exempt employees only).

Time to Fill or Time to Hire (TtF or TtH) Staffing metric which calculates the average number of calendar days between the date when the position was open (job order date) and to the

Tip Credit W

Term or Acronym Definition date the position was filled (offer accepted).

Tip Credit A reduction in the minimum wage allowed for tipped employees.

Title VII The employment discrimination portion of the Civil Rights Act of 1964, which prohibits job bias based on race, sex, color, religion, or national origin.

Totalization Agreements Agreements between the U.S. and foreign countries that prevent double social security and Medicare taxation of U.S. employees working abroad and aliens working in the U.S.

Treasury Financial Agent (TFA) One of two banks chosen to implement the Electronic Federal Tax Payment System for depositing federal taxes electronically.

Trust Fund Taxes The amounts withheld by employers from employees’ pay for federal income, social security, and Medicare taxes. They are referred to as trust fund taxes because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state or local government.

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Unemployment Insurance Amounts paid by an employer, on both the federal and state level, to provide income to terminated employees while they are trying to secure another job. Three states have laws on their books that provide for employee contributions to the state unemployment fund.

Uniform Interstate Family Support Act (UIFSA)

Model state child support enforcement law under which employers must put into effect a child support withholding order from another state’s child support enforcement agency if the order appears “regular on its face.”

Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)

Federal law guaranteeing, among other things, the right of U.S. veterans to make additional elective deferrals under their employer’s §401(k) plan for the time they spent in military service.

Universal Availability Requirement that employers provide an equal opportunity for employees to make elective deferral catch-up contributions.

USC United States Code, where federal laws are compiled.

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Validity Edit Shows whether or not data entered meet the requirements set forth by a company.

Variable Pay Parts of an employee’s pay that may vary depending on either the employee’s or the employer’s performance, e.g., bonus, commissions, merit increase.

Voluntary Contributions Advance payments of unemployment tax that can reduce an employer’s state unemployment tax rate.

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W-2 Form Wrongful Termination

Term or Acronym Definition W-2 Form Wage and Tax Statement; employers must file a Form W-2 (to both the

employee and the Social Security Administration) to report the total amount of wages paid and taxes withheld for each employee in a calendar year.

W-4 Form Employee’s Withholding Allowance Certificate; federal (or an equivalent state or local) form on which the employee states the number of withholding allowances he or she claims. The form is used by the employer to determine the amount of federal, state, and local income taxes to withhold from the employee’s compensation.

Wage Assignment A voluntary agreement by an employee to transfer portions of future wage payments (e.g., insurance premium deductions, credit union deductions).

Wage Attachment An involuntary transfer of an employee’s wage payment to satisfy a debt.

Wage-Bracket Withholding Method A procedure for calculating the amount of federal income tax to be withheld from an employee’s wages based on wage-bracket tables classified by the employee’s marital status and payroll period.

Wage Continuation Sheet A periodic report (e.g., quarterly) from employers to state unemployment agencies containing employees’ names, total wages, and unemployment taxable wages.

Web-Enabled Applications An application that use the Internet as another means of accessing an organization’s data and the HRMS logic itself.

White Collar Employees In the context of the Federal Wage-Hour Law, these are executive, administrative, professional (including computer related professionals), or outside sales employees who are exempt from the law’s minimum wage, overtime pay, and certain recordkeeping requirements.

Withholding Subtracting amounts from an employee’s wages for taxes, garnishments or levies, and other deductions (e.g., medical insurance premiums, union dues). These amounts are then paid over to the government agency or other party to who they are owed.

Withholding Allowance Reduces the amount of wages subject to federal income tax withholding based on exemptions and deductions claimed on federal income tax Form 1040.

Work-Sharing Plan An agreement to reduce some employees’ hours to avoid laying off other employees. Those employees whose hours were reduced receive partial unemployment benefits.

Worker Classification The process of determining whether an individual performing services for a business is either an employee or an independent contractor.

Workers’ Compensation Payments required by state law when a worker suffers an industrial injury arising out of or in the course of employment, regardless of who was at fault.

Workers’ Compensation Insurance Insurance that covers any injury or illness requiring medical attention that is incurred by an employee during the course of employment. Provision of workers’ compensation insurance benefits to an employee typically relieves an employer of further liability arising from the employee’s injury or illness.

Workweek The basis for determining an employee’s regular rate of pay and overtime pay due under the FLSA. It can be any consecutive seven-day (168 hour) period chosen by the employer.

Wrongful Termination Illegally ending an employment relationship with an employee through

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Term or Acronym Definition violation of public policy, breach of contract, or breach of the covenant of good faith and fair dealing.

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Years of Service In reference to participation in a plan governed by the Employee Retirement Income Security Act (ERISA), 1,000 compensable hours completed by a plan participant during a consecutive 12-month period.

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Zero-Base Forecasting Method of determining future staffing requirements by using an organization’s current staffing level as a beginning reference point.

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