HR glossary: 100 HR, payroll, and benefits terms explained

360-degree feedback

360-degree feedback is a review process in which an employee receives structured feedback from people all around them, such as their manager, peers, direct reports, and sometimes customers, along with a self-assessment.

4

401(k) match

A 401(k) match is the money an employer contributes to an employee's 401(k) account based on how much the employee defers from their own pay.

A

ADA

The ADA, or Americans with Disabilities Act, is a 1990 federal law that bans discrimination against qualified people with disabilities and requires employers with 15 or more employees to provide reasonable accommodations unless doing so would cause undue hardship.

Adverse action notice

An adverse action notice is the letter the Fair Credit Reporting Act requires an employer to send when it decides not to hire, promote, or retain someone based in whole or in part on a background check report from a consumer reporting agency.

Applicable large employer

An applicable large employer, or ALE, is an employer that had an average of 50 or more full-time employees, including full-time equivalents, during the prior calendar year.

At-will employment

At-will employment means either the employer or the employee can end the employment relationship at any time, for any lawful reason or no reason, with or without notice.

ATS

An ATS, or applicant tracking system, is software that manages the hiring process, from posting jobs and collecting applications to screening candidates, scheduling interviews, and sending offers.

Attrition

Attrition in HR is the gradual shrinking of a workforce as employees leave, through resignation, retirement, or other departures, and their positions aren't immediately refilled.

B

Background check

An employment background check is a review of a candidate's records, such as criminal history, employment and education verification, driving record, or credit, used to make hiring decisions.

Biweekly pay

Biweekly pay means employees are paid every two weeks on the same weekday, which produces 26 paychecks in most years.

Boomerang employee

A boomerang employee is someone who leaves an organization and later returns to work there again.

C

CHRO

A CHRO, or chief human resources officer, is the senior executive responsible for an organization's people strategy, including talent, culture, compensation, leadership development, and HR operations.

COBRA

COBRA, the Consolidated Omnibus Budget Reconciliation Act, lets employees and their families keep their employer's group health coverage for a limited time after losing it because of job loss, reduced hours, or certain life events.

Code of conduct

A code of conduct is a written set of rules and principles that explains how employees are expected to behave at work, including ethics, conflicts of interest, harassment, data protection, and how to report concerns.

Comp time

Comp time, short for compensatory time off, is paid time off given instead of cash for overtime hours.

Constructive dismissal

Constructive dismissal, also called constructive discharge, happens when an employer makes working conditions so intolerable that a reasonable person would feel forced to resign.

Cost-of-living adjustment

A cost-of-living adjustment, or COLA, is an increase in pay or benefits designed to offset inflation so that purchasing power stays roughly the same.

D

Dependent care FSA

A dependent care FSA is a pre-tax account employees can use to pay for care of a child under 13 or a dependent who can't care for themselves, so the employee can work.

Disparate impact

Disparate impact, also called adverse impact, is discrimination that results from a neutral-looking policy or practice that disproportionately screens out a protected group and isn't job-related and consistent with business necessity.

E

EEO-1 report

The EEO-1 report is an annual workforce data report that private employers with 100 or more employees file with the EEOC, showing employee counts by job category, sex, and race or ethnicity.

EEOC

The EEOC, or US Equal Employment Opportunity Commission, is the federal agency that enforces laws against workplace discrimination and harassment based on race, color, religion, sex, national origin, age, disability, and genetic information.

Employee assistance program

An employee assistance program, or EAP, is an employer-paid benefit that gives employees and often their household members free, confidential short-term counseling and referrals for personal, family, work, financial, and legal concerns.

Employee experience

Employee experience is everything a person sees, feels, and does across their time with an organization, from the first job ad to their last day, including their manager, work, tools, environment, and culture.

Employee lifecycle

The employee lifecycle is the series of stages a person goes through with an employer, usually described as attraction, recruitment, onboarding, development, retention, and separation.

Employee self-service

Employee self-service, or ESS, is the part of an HR or payroll system that lets employees view and update their own information and complete common tasks without contacting HR.

Employer branding

Employer branding is how an organization is perceived as a place to work, and the deliberate work of shaping that reputation among candidates and employees.

Employer of record

An employer of record, or EOR, is a company that legally employs workers on behalf of another business, handling local contracts, payroll, taxes, benefits, and compliance.

Exit interview

An exit interview is a conversation or survey with a departing employee to learn why they're leaving and what the organization could improve.

F

FICA

FICA, the Federal Insurance Contributions Act, is the federal payroll tax that funds Social Security and Medicare.

FLSA

The FLSA, or Fair Labor Standards Act, is the 1938 federal law that sets the minimum wage, overtime pay, recordkeeping, and child labor standards for most private and public employees.

Form W-2

Form W-2, the Wage and Tax Statement, is the annual form employers send to each employee and the Social Security Administration showing the year's wages and the taxes withheld.

Form W-4

Form W-4, the Employee's Withholding Certificate, is the IRS form a new employee completes so the employer knows how much federal income tax to withhold from each paycheck.

FSA

An FSA, or flexible spending account, is an employer-sponsored account that lets employees set aside pre-tax pay for eligible health care expenses.

Furlough

A furlough is a temporary, mandatory unpaid leave or reduction in hours that an employer uses to cut costs while keeping employees on the payroll.

FUTA

FUTA, the Federal Unemployment Tax Act, is an employer-only payroll tax that funds federal oversight of state unemployment programs.

G

Gross pay

Gross pay is the total amount an employee earns in a pay period before any taxes or deductions come out.

Gross-up

A gross-up is when an employer increases a payment so that, after taxes are withheld, the employee receives a specific net amount.

H

HCM

HCM, or human capital management, is the set of practices and software an organization uses to recruit, manage, develop, pay, and retain its workforce.

HDHP

An HDHP, or high-deductible health plan, is a health insurance plan with a higher deductible and usually lower premiums than a traditional plan.

Headcount

Headcount is the total number of individual people employed by an organization at a point in time, counting each person once regardless of hours worked.

Hostile work environment

A hostile work environment is a form of illegal harassment where unwelcome conduct based on a protected characteristic, such as sex, race, age, or disability, is severe or pervasive enough to create a workplace a reasonable person would find intimidating, hostile, or abusive.

HR business partner

An HR business partner, or HRBP, is an experienced HR professional assigned to a specific business unit or leadership team to align people practices with that group's goals.

HRA

An HRA, or health reimbursement arrangement, is an employer-funded plan that reimburses employees tax-free for qualified medical expenses and, in some types, health insurance premiums.

HRIS

An HRIS, or human resources information system, is software that stores and manages core employee data, such as personal details, job and pay history, time off, benefits elections, and documents.

HSA

An HSA, or health savings account, is a tax-advantaged account employees can use to pay medical expenses if they're enrolled in a qualifying high-deductible health plan.

I

ICHRA

An ICHRA, or individual coverage health reimbursement arrangement, lets employers of any size reimburse employees tax-free for individual health insurance premiums and medical expenses instead of offering a traditional group plan.

J

Job requisition

A job requisition is a formal request to fill a position, created by a hiring manager and approved by leaders, finance, or HR before recruiting begins.

Joint employer

A joint employer is a business that shares legal responsibility for workers employed by another business, because both control the essential terms of their work.

L

LMS

An LMS, or learning management system, is software that delivers, tracks, and reports on employee training, such as onboarding courses, compliance training, and skill development.

Long-term disability

Long-term disability insurance replaces part of an employee's income when an illness or injury keeps them from working for an extended period, after a waiting period that often matches the end of short-term disability.

M

Merit increase

A merit increase is a raise in base pay given to reward an employee's performance, usually during an annual compensation review.

N

Net pay

Net pay is the amount an employee actually receives on payday after all taxes and deductions are subtracted from gross pay.

Nine-box grid

The nine-box grid is a talent review tool that places employees on a three-by-three matrix of current performance against future potential.

Non-compete agreement

A non-compete agreement is a contract in which an employee agrees not to work for a competitor or start a competing business for a set time and in a set area after leaving.

O

Off-cycle payroll

An off-cycle payroll is any payroll run outside the regular pay schedule, such as a final paycheck, a bonus, a commission payment, or a correction.

Offer letter

An offer letter is a written document an employer sends to a selected candidate confirming the job offer, including the job title, start date, pay, exempt or non-exempt status, benefits eligibility, and any conditions such as a background check.

OKR

OKR stands for objectives and key results, a goal-setting method in which an objective describes what you want to achieve and three to five key results define how you'll measure it.

Open enrollment

Open enrollment is the yearly window when employees can sign up for, change, or drop their employer-sponsored benefits, such as health, dental, vision, FSA, and life insurance.

OSHA

OSHA, the Occupational Safety and Health Administration, is the federal agency that sets and enforces workplace safety and health standards under the Occupational Safety and Health Act of 1970.

P

Pay compression

Pay compression happens when there's little difference in pay between employees with very different experience, skills, or responsibility, often because new hires are paid near or above long-tenured staff.

Pay equity

Pay equity means employees doing the same or substantially similar work receive equal pay, regardless of gender, race, or other protected characteristics, unless differences are explained by legitimate factors such as experience, performance, or location.

Pay period

A pay period is the recurring span of days for which an employee's wages are calculated and paid, such as one week or two weeks.

Pay stub

A pay stub is the statement an employer gives an employee each payday showing gross pay, every tax and deduction, and the resulting net pay for that period and year to date.

Payroll tax

Payroll tax is any tax calculated on wages paid to employees.

PEO

A PEO, or professional employer organization, is a company that enters a co-employment relationship with a business to handle payroll, benefits, tax filings, workers' compensation, and HR compliance.

People analytics

People analytics is the practice of collecting and analyzing workforce data to make better decisions about hiring, retention, performance, pay, and organization design.

Performance calibration

Performance calibration is a meeting or process in which managers compare and discuss the performance ratings they've proposed for employees, so the same standards are applied across teams before ratings are finalized.

Performance improvement plan

A performance improvement plan, or PIP, is a formal document that tells an employee which performance gaps must be fixed, what success looks like, what support they'll get, and how long they have, usually 30, 60, or 90 days.

Pre-tax deduction

A pre-tax deduction is money taken from an employee's gross pay before taxes are calculated, which lowers the wages subject to tax.

Probationary period

A probationary period, often called an introductory period, is the first few months of employment, commonly 60 to 90 days, during which an employer closely evaluates a new hire's fit and performance.

Progressive discipline

Progressive discipline is a step-by-step approach to correcting employee performance or conduct problems, where consequences increase if the issue continues.

Protected class

A protected class is a group of people legally shielded from employment discrimination because of a shared characteristic.

Q

Qualifying life event

A qualifying life event is a change in an employee's circumstances, such as marriage, divorce, birth, adoption, or loss of other health coverage, that allows them to change their benefit elections outside open enrollment.

Quality of hire

Quality of hire is a measure of how much value new employees add to the organization, usually based on their performance, retention, time to productivity, and hiring manager satisfaction during the first year.

Quiet quitting

Quiet quitting describes employees who do the minimum their job requires, without going above and beyond, while staying in the role.

R

Reasonable accommodation

A reasonable accommodation is a change to a job, the work environment, or the way things are usually done that lets a qualified employee or applicant with a disability, pregnancy-related limitation, or religious need do the job or have equal access.

Regular rate of pay

The regular rate of pay is the hourly rate the FLSA uses to calculate overtime, found by dividing an employee's total pay for a workweek, minus specific exclusions, by total hours worked.

Retaliation

Workplace retaliation is when an employer takes an adverse action against an employee because they engaged in legally protected activity, such as complaining about discrimination, requesting an accommodation, reporting a safety issue, or taking protected leave.

S

Semi-monthly pay

Semi-monthly pay means employees are paid twice a month on two fixed dates, such as the 15th and the last day of the month, for 24 paychecks a year.

Severance pay

Severance pay is money an employer gives an employee at the end of employment, usually after a layoff or termination without cause, often in exchange for signing a release of legal claims.

Shift differential

Shift differential is extra pay for working less desirable hours, such as nights, weekends, holidays, or rotating shifts.

Short-term disability

Short-term disability is insurance that replaces part of an employee's income when an illness, injury, or pregnancy keeps them from working for a limited time, often up to three to six months.

Skills-based hiring

Skills-based hiring is an approach that evaluates candidates on the specific skills a job requires, rather than relying on degrees, job titles, or years of experience as proxies.

Stay interview

A stay interview is a one-on-one conversation between a manager and a current employee about what keeps them at the organization and what might cause them to leave.

Structured interview

A structured interview is a hiring interview in which every candidate for a role is asked the same job-related questions, in the same order, and rated against the same predefined scoring guide.

Succession planning

Succession planning is the process of identifying critical roles, assessing who could step into them, and developing those people so the organization is ready when a leader or key employee leaves.

Summary plan description

A summary plan description, or SPD, is the plain-language document ERISA requires employers to give participants explaining how a benefit plan works, including eligibility, benefits, claims procedures, and participant rights.

Supplemental wages

Supplemental wages are payments to employees beyond their regular wages, such as bonuses, commissions, severance, back pay, and some overtime.

SUTA

SUTA is state unemployment tax, the payroll tax each state charges employers to fund unemployment benefits for workers who lose their jobs.

T

Talent acquisition

Talent acquisition is the ongoing strategy and process an organization uses to find, attract, assess, and hire the people it needs, now and in the future.

Time-to-fill

Time-to-fill is the number of days between when a job requisition is approved or posted and when a candidate accepts the offer.

Title VII

Title VII of the Civil Rights Act of 1964 is the federal law that prohibits employment discrimination based on race, color, religion, sex, and national origin.

Total rewards

Total rewards is the full package of value an employer gives employees in return for their work, including pay, benefits, well-being programs, development, and recognition.

V

Variable pay

Variable pay is compensation that changes based on performance or results rather than being fixed, such as bonuses, commissions, profit sharing, and spot awards.

Vesting

Vesting is the process by which an employee earns full ownership of employer-provided benefits, such as 401(k) matching contributions or stock awards, over time.

W

Wage garnishment

Wage garnishment is a legal order requiring an employer to withhold part of an employee's pay and send it to a creditor or government agency.

WARN Act

The WARN Act, or Worker Adjustment and Retraining Notification Act, requires employers with 100 or more employees to give 60 days' written notice before a plant closing or mass layoff.

Workers' compensation

Workers' compensation is state-mandated insurance that pays medical costs and part of lost wages for employees injured or made ill by their work, regardless of who was at fault.

Workforce management

Workforce management, or WFM, is the set of processes and software used to make sure the right people are scheduled at the right times at the right cost.