GLOSSARY
Payroll + HR glossary
What each term means, which rule applies, and how to work out the numbers.
Pay & wages
- Regular rate of payRegular rate of pay is the rate federal overtime is built on, found by dividing a workweek’s total includable earnings by the hours actually worked.
- Overtime payOvertime pay is 1.5 times the regular rate, owed under the FLSA for each hour a non-exempt employee works over 40 in a workweek.
- GarnishmentGarnishment is a legal order requiring an employer to withhold part of an employee’s wages and send it to a creditor, court, or agency.
- Gross payGross pay is the total amount an employee earns in a pay period before taxes, benefits, and other deductions are subtracted.
- Accountable plan
- Bill rate vs pay rate
- Bonus pay
- Child support withholding
- Commission pay
- Compa-ratio
- Cost-of-living adjustment (COLA)
- Deduction priority
- Direct deposit
- Earned wage access
- Equity compensation
- Final paycheck
- Flag rate pay
- Gross-up
- Holiday pay
- Imputed income
- Merit increase
- Net pay
- Pay period
- Pay statement (pay stub)
- Payroll overpayment recovery
- Piece rate pay
- Pre-tax vs after-tax deduction
- Retroactive pay
- Severance pay
- Shift differential
- Taxable fringe benefits
- Tip credit
- Tip reporting
- Weighted average overtime rate
Taxes
- Form W-4Form W-4 is the IRS form an employee completes to tell their employer how much federal income tax to withhold from each paycheck.
- FICAFICA is the federal law, and the payroll tax under it, that funds Social Security and Medicare through matching employee and employer shares.
- Form 941Form 941 (Employer’s Quarterly Federal Tax Return) reports wages paid, federal income tax withheld, and both shares of Social Security and Medicare tax.
- Form W-2Form W-2 is the annual wage and tax statement you give employees and file with the Social Security Administration, reporting wages paid and taxes withheld.
- Additional Medicare tax
- Backup withholding
- EIN (Employer Identification Number)
- Form 1099-NEC
- Form 940
- FUTA
- Nonqualified deferred compensation
- Nonresident alien withholding
- Paid family and medical leave (PFML)
- Payroll tax
- Payroll tax penalties and interest
- Social Security Number Verification Service (SSNVS)
- Social Security wage base
- State disability insurance (SDI)
- State income tax
- State tax registration
- Supplemental wages
- SUTA
- Tax deposit schedule
- Tax notice
- Taxable wage base
- Third-party payer
- Third-party sick pay
- Transit payroll tax
- Work Opportunity Tax Credit (WOTC)
- Year-end payroll
Compliance
- Minimum wageMinimum wage is the lowest hourly rate you may legally pay a covered employee, set by federal, state, and sometimes local law.
- Form I-9Form I-9 is the federal form every U.S. employer completes for each new hire to verify identity and employment authorization, from documents the employee chooses.
- FLSAThe Fair Labor Standards Act (FLSA) is the federal law setting minimum-wage, overtime, recordkeeping, and youth employment standards for covered employment.
- ACA affordabilityACA affordability is the test of whether an employee’s share of the lowest-cost self-only coverage you offer stays within a set share of income.
- ACA reporting (Forms 1094-C and 1095-C)
- Certified payroll
- Direct deposit fraud
- EEOC
- Employer of record (EOR)
- Equal Pay Act
- FMLA
- H-2B visa worker
- Labor law posters
- Meal and rest break requirements
- Multi-state payroll
- New hire reporting
- OSHA recordkeeping (Form 300 log)
- Pay transparency law
- Payroll audit trail
- Payroll recordkeeping and retention
- Predictive scheduling (fair workweek)
- Prevailing wage
- SUTA dumping
- Union payroll
- Wage theft
- Workers’ compensation
Classification
- Exempt vs non-exempt employeeExempt vs non-exempt is whether an employee is owed overtime under the Fair Labor Standards Act or passes the tests for an exemption.
- 1099 contractorA 1099 contractor is a self-employed person who performs services for your business and is generally paid without withholding and reported on Form 1099-NEC.
- ABC testThe ABC test is a state law standard: a person you pay for services is your employee unless you prove all three conditions.
- Co-employmentCo-employment is a contractual arrangement in which a professional employer organization (PEO) and its client company each hold defined employer responsibilities for the same employees.
Time & leave
- PTO accrualPTO accrual is how an employee earns paid time off over the year, turning time worked or time employed into a balance of usable hours.
- Paid time off (PTO)Paid time off (PTO) is a single bank of paid hours an employee draws from for vacation, illness, or personal reasons.
- Workweek (FLSA)A workweek under the Fair Labor Standards Act is a fixed, regularly recurring period of 168 consecutive hours used to compute overtime.
- Time roundingTime rounding adjusts recorded clock-in and clock-out times to a set increment, such as the nearest quarter hour, before hours are totaled for pay.
Benefits
- COBRACOBRA is the federal law that lets eligible employees and their covered dependents continue group health coverage for a limited period after a qualifying event.
- 401(k)A 401(k) is an employer-sponsored retirement plan funded through payroll deferrals the employee elects, usually alongside an employer contribution.
- HSA (Health Savings Account)A health savings account (HSA) is an account the employee owns for medical expenses, funded by payroll deductions and often an employer contribution.
- Open enrollmentOpen enrollment is the annual window when employees elect, change, or waive benefit coverage for the coming plan year.
Payroll operations
- Off-cycle payrollAn off-cycle payroll is a payroll run outside the normal schedule that pays an omitted or additional amount.
- Cost of an employeeThe cost of an employee is what you spend to employ one person: gross wages plus employer payroll taxes, workers’ compensation, and benefits.
- Earning codeAn earning code is the configured category that tells payroll how one kind of pay behaves for tax, rate calculation, and reporting.
- Escheatment (unclaimed wages)Escheatment is the transfer of wages an employee never claims, such as an uncashed paycheck, to the state as unclaimed property after a dormancy period.
HR operations
- OnboardingEmployee onboarding is the process that turns an accepted job offer into a working employment record, ready for payroll, benefits, and system access.
- Applicant tracking system (ATS)An applicant tracking system (ATS) is software that manages recruiting before someone becomes an employee, from open positions and applications to interviews and offer approvals.
- ASO (administrative services organization)An administrative services organization (ASO) performs payroll, HR, and benefits administration for a business under the business’s own EIN, without co-employment.
- At-will employmentAt-will employment is the U.S. default, absent a contract or statute saying otherwise: either party may end employment at any time for any lawful reason.