Administrative Fee – A fee deducted from payroll either bimonthly or monthly when entered into a PEO, HRO, or ASO service agreement. The fee can be vastly different depending on the vendor of choice. Some will charge as a percentage of payroll, others a flat administrative fee.
Administrative Services Outsourcing (ASO) – This is often a great solution for larger companies with over 100 employees – it allows them to provide Human Resources functions such as payroll, benefits, and worker’s compensation while outsourcing the administrative tasks.
EE – Abbreviation for Employee
Employee Assistance Program (EAP) – This option improves your employees’ lifestyle by helping employees with private issues.
Employer Protection Liability Insurance (EPLI) – Insurance which covers employment-related claims made by employees, such as harassment and discrimination. Provides a defense and claim payment on behalf of the business if necessary.
Employer Services Assurance Corporation (ESAC) – The industry standard accreditation program for PEOs – it insures compliance with government regulations and provides assurance for all parties involved.
ER – Abbreviation for Employer
Federal Insurance Contributions Act (FICA) – This legislation mandates that 12.4% of earned income gets paid into Social Security, and 2.9% gets paid into Medicare. If your employees are paid wages or salaries, you have to pay half of the taxes and withhold the rest – meaning you pay a 7.65% tax on your employees’ paychecks, and withhold an additional 7.65%.
Federal Unemployment Tax Act (FUTA) – You pay en Unemployment Tax equal to 6.2% of taxable wages separately from Social Security and Medicare – employees are not responsible for this tax.
Human Capital – Your most important asset – your employees.
Human Resource Management System (HRMS/HRIS) – An application which handles payroll, employee benefits, and tax administration. Allows both employers and employees to communicate with the service provider via a web-based application.
Human Resources Outsourcing (HRO) – An organization which provides all Human Resources functions to provide cost savings through consolidated services – excellent for small and medium businesses.
Long-Term Disability – An insurance policy that protects an employee from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a long period of time. Once the employee’s short term disability insurance benefits expire (usually after three to six months), the long term disability insurance pays an employee a percentage of their salary, typically 50-70%.
Minimum Contribution Rate – The minimum contribution from the employer on medical premiums of the least expensive benefit option offered by the PEO is 50%.
National Association of PEOs (NAPEO) – The largest trade association for PEOs in the USA, providing advocacy for PEO members in governmental issues as well as networking and referrals, education, and robust marketing support.
Participation Rate – There is a 75% minimum employee participation required by all PEOs administering a master medical plan. This includes valid medical waivers and excludes part time & seasonal employees.
Payroll Register – A report provided by the payroll, PEO, HRO, ASO companies of employee wages.
PEO – An organization which provides integrated human resources services by serving as an administrative employer for client employees.
Performance Review – An annual review of an employee’s overall contributions to the company. It is intended to evaluate an employee’s skills, achievements and growth, or lack thereof.
Short-Term Disability – Insurance that pays a percentage of your salary (typically 40 – 70%) if you become temporarily disabled and are not able to work for a short period of time due to sickness or injury not related to your job.
Shared Employment (Co-Employment) – A legal relationship between two companies (usually a human capital management firm and their client) in which both have actual or potential legal rights and duties as employers. In this situation, the PEO is the Administrative employer and client is the Worksite employer.
State Unemployment Tax Assessment & State Unemployment Insurance (SUTA & SUI) – A tax companies pay based on unemployment in their state and individual employee turnover
Tax Restarts – Some states mandate companies joining a PEO restart their FICA, FUTA, and SUTA taxes. Employees can re-claim these taxes at the end of the year, but employers cannot. Some PEOs will offset this cost.
Worker’s Compensation – Employers pay for this insurance, which provides benefits for workers who are injured on the job.
Workers Compensation Loss Runs – A compilation in timeline format of all the claims your company has been charged with by each individual insurance company where you’ve had a workers compensation policy. This includes a record of claim dollars paid for each case, a snap shot of your claims data as reported to and used for computing your experience rating factors, and retrospective rating adjustments.
Workers Compensation Declaration Page – This is the section within your Workers Compensation Policy that describes your estimated payrolls, classifications, discounts, rates and credits. This is also where the insurance company establishes your deposit premium for the policy period.
WSE – Abbreviation for Work Site Employees.