PEO, payroll, and HR glossary

A service model where a provider handles HR administration without entering co-employment — the client remains the sole legal employer.

A contract provision that automatically extends the agreement unless terminated within a specific window.

The required written notice period before terminating a PEO agreement.

A PEO certified by the IRS, which transfers federal employment tax liability from the client to the PEO.

The contract that defines the PEO-client relationship — co-employment scope, fees, liabilities, termination.

A legal arrangement where a PEO and a client business share specific employer responsibilities for the same workforce.

The ability to export employee data, payroll history, and HR records when leaving a PEO.

A third-party accreditation body for PEOs that verifies financial stability, ethical conduct, and operational standards.

A service that legally employs workers on behalf of a client business — typically used for international hiring or contractor-to-employee conversions.

The software platform used to manage employee data, payroll, benefits enrollment, time tracking, and HR processes.

An umbrella term for outsourcing some or all HR functions to a third party, ranging from payroll-only to comprehensive PEO arrangements.

The PEO industry trade association — defines industry standards and publishes economic research on PEO outcomes.

The process of moving an existing business onto a PEO's payroll, benefits, and HR systems.

The standard pricing unit for PEO services — total monthly cost divided by total employees.

A company that enters into a co-employment relationship with a client business to handle payroll, benefits, workers comp, and HR compliance.

A 2014 federal law that created the IRS Certified PEO program and shifted federal employment tax liability to the CPEO.

Software and processes for scheduling, time tracking, attendance, and labor cost management.

The federal law that funds Social Security and Medicare through payroll taxes split between employer and employee.

The federal employer-only payroll tax that funds the federal unemployment insurance program.

Annual tax document issued to independent contractors and other non-employees who received payments during the tax year.

The annual tax document employers issue to each employee documenting wages paid and taxes withheld.

The IRS form employees complete to tell their employer how much federal income tax to withhold from each paycheck.

Any tax assessed on wages — including FICA, FUTA, SUTA, federal/state income tax withholding, and local payroll taxes.

A deduction from wages taken before income tax (and sometimes FICA) is calculated, reducing taxable income.

State-level payroll tax that funds each state's unemployment insurance trust fund.

A state-administered program providing partial wage replacement to eligible workers who lose their jobs through no fault of their own.

A legal order requiring an employer to withhold a portion of an employee's wages and remit to a creditor or government agency.

A multiplier applied to base workers comp premium that reflects an employer's historical claim experience relative to industry peers.

A state where workers compensation must be purchased from the state fund — private carriers cannot write WC coverage.

The standards-setting organization for workers compensation classification codes used in most US states.

A coordinated process for bringing injured employees back to productive work — often via modified duty.

Documented workplace safety processes — training, recordkeeping, hazard identification, return-to-work.

A four-digit code that classifies a job role for workers compensation premium calculation purposes.

A post-policy-year review by the workers comp carrier to verify actual wages, class codes, and contractor relationships.

Insurance that pays medical expenses and lost wages for employees injured on the job, in exchange for limiting the employer's tort liability.

A tax-advantaged employer-sponsored retirement savings plan that allows employees to defer wages on a pre-tax or Roth basis.

The ACA section that imposes penalties on Applicable Large Employers (50+ FTE) for failing to offer compliant coverage.

The 2010 federal health reform law that established the employer mandate, exchanges, and various coverage requirements.

The period after hire before a new employee becomes eligible for benefits — capped at 90 days under ACA.

A licensed professional who helps employers select and manage benefits plans.

A federal law giving employees the option to continue group health coverage at their own cost after employment ends.

The process of providing required notices, processing elections, and managing premium billing for COBRA continuation coverage.

An IRS-approved arrangement that allows employees to pay for certain benefits with pre-tax dollars.

A confidential employee benefit providing short-term counseling and referrals for personal or work-related issues.

A 1974 federal law that sets minimum standards for most voluntary pension and health plans in private industry.

The ACA requirement that applicable large employers offer affordable health coverage to full-time employees or pay penalties.

A pre-tax account for qualified medical expenses, with annual contribution limits and use-it-or-lose-it rules.

Non-wage compensation provided to employees in addition to base salary.

Health insurance purchased by an employer to cover its employees, typically at lower per-employee cost than individual policies.

An employer-funded plan that reimburses employees for qualified medical expenses.

A tax-advantaged account paired with a high-deductible health plan, used for qualified medical expenses.

A health plan with higher deductibles than traditional plans, paired with HSA eligibility.

Insurance that replaces a portion of income for extended disability periods, often through retirement age.

A retirement plan that covers employees of more than one unrelated employer — common in PEO 401(k) arrangements.

The annual period when employees can elect, change, or drop benefits coverage for the upcoming plan year.

Employer-provided paid leave that bundles vacation, sick, and personal time into a single bank.

A retirement plan covering unrelated employers, enabled by the SECURE Act of 2019.

A life change that allows employees to make benefits changes outside of open enrollment.

A health plan where the employer pays claims directly (often with stop-loss insurance) rather than paying premiums to an insurer.

Insurance that replaces a portion of income when an employee is unable to work due to non-work-related illness or injury.

Insurance that caps an employer's claim exposure on a self-insured health plan — specific (per claim) and aggregate (annual total).

The full value of compensation including wages, benefits, paid time off, equity, and non-cash perks.

Benefits offered by an employer that employees pay for themselves through payroll deduction.

A federal law prohibiting discrimination against qualified individuals with disabilities and requiring reasonable accommodations.

Pre-employment screening of criminal history, employment verification, education, and references.

A 1931 federal law requiring prevailing wages on federally-funded construction projects.

An annual federal report on workforce demographics required from employers with 100+ employees.

A written document outlining workplace policies, procedures, and expectations for employees.

The end of the employment relationship — termination, resignation, retirement, or layoff.

The federal law establishing minimum wage, overtime, recordkeeping, and child labor standards for most US employers.

A federal law giving eligible employees up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons.

A federal form every employer must complete for every new hire to verify identity and employment authorization.

The federal law setting privacy and security standards for protected health information.

A systematic review of HR policies, practices, and records to identify legal or regulatory exposure.

Required training in many states on identifying and preventing workplace harassment.

The lowest hourly wage an employer can pay employees by law — federal, state, or local, whichever is highest.

An employer with employees working in more than one US state — triggers state-by-state compliance obligations.

The federal agency that sets and enforces workplace safety standards for most US private-sector employers.

The process of integrating a new employee into the organization — paperwork, orientation, training, role transition.

Pay at 1.5× the regular rate for hours worked over 40 in a workweek, required for non-exempt employees under FLSA.

State-administered programs that provide partial wage replacement during family or medical leave — separate from federal FMLA.

State or local laws requiring employers to provide paid time off for employees' or family members' health needs.

Federal and state laws requiring equal pay for similar work regardless of sex, race, or other protected characteristics.

Local laws requiring employers to provide advance notice of work schedules and predictable hours for hourly workers.

An employee working from a location other than the employer's primary location — typically a home office.

State or local laws prohibiting employers from asking job applicants about their prior salary.

Payments made to employees upon termination, typically beyond what is legally required.

A wage-and-hour mechanism allowing employers to pay tipped employees a lower cash wage, with tips making up the difference to minimum wage.

A federal law requiring 60 days advance notice of large-scale layoffs and plant closures.

Federal and state laws governing minimum wage, overtime, recordkeeping, child labor, and meal/rest breaks.

A termination that violates state or federal law — typically due to discrimination, retaliation, or public-policy violations.

A 2020 California ballot measure that classified app-based ride-share and delivery drivers as independent contractors with limited benefits.

A person or entity with discretionary control over an ERISA-covered plan — bound by strict duty-of-loyalty and prudence standards.

Insurance that covers claims arising from employment law violations — discrimination, harassment, wrongful termination.

A federal law governing how employers can use consumer reports in hiring and employment decisions.

A worker performing short-term jobs or piecework, typically via an app or platform — usually classified as 1099.

A worker who provides services to a business under a contract but is not an employee — typically receiving 1099 income.

A legal status where two entities share employer responsibilities for the same workforce — distinct from PEO co-employment.

State laws that prohibit requiring union membership or union dues payment as a condition of employment.

The legal determination of whether a worker is an employee or independent contractor for tax, benefits, and wage-and-hour purposes.