Glossary

(For Training Purposes Only)

 GLOSSARY

403(b) Plan: An annuity or mutual fund that provides retirement income for employees of
public schools and certain tax-exempt organizations; similar to a 401(k) plan.

457 Plan: ​A deferred compensation plan available for employees of certain state and local
governments and certain non-governmental tax-exempt organizations.

[Form] I-9 :​This is a form used to verify if an employee is legally eligible to work in the
United States. A new version of this was just released. Learn all about it and find the new
form here.

[Form] W-2: Wage and Tax Statement A statement of an employee’s annual wages and
taxes provided by an employer; used by the employee on his federal, state, and/or local
income tax returns.

[Form] W-4: Employee's Withholding Exemption Certificate An Internal Revenue form used
to indicate the number of personal exemptions an employee claims for the purpose of
calculating federal income tax withholding. Some state income tax withholding is also based
on the employee's Form W-4.

ACH (Automated Clearing House): – This is an electronic network for processing direct
deposits and other payroll transactions.

Accrued: benefit or sum of money) be received by someone in regular or increasing

amounts over time.

Base pay rate: ​The rate that has been agreed upon to be the starting point for employee
earnings. This can be an hourly rate, a daily rate, a piece rate, or salary per pay.

Carrier:​ Payroll specialist (TBD)

Check stub:​A part of a check that is kept for record keeping purposes. For example, the
stub is the part of a payroll check that includes information about the current paycheck as
well as payments to date. The check stub can also be a carbon copy of a check that is made
when the original check is written.

Compensation: Refers to the act of providing a person with money or other things of
economic value in exchange for their goods, labor, or to provide for the costs of injuries that
they have incurred.

Deductions: Deductions are amounts taken from the employee’s paycheck (not to be
confused with taxes). These can be voluntary amounts that the employee chooses, such as
health insurance premiums, retirement plan contributions, and miscellaneous deductions, or
involuntary deductions, such as a child support order or a tax garnishment. These items can
be considered pre-tax or post-tax, depending on the actual deduction.
Department:​ Area or division of a large organization or business.

Division:​ The dIfferent PEOs companies acquired by Vensure.

EFTPS: This stands for the Electronic Federal Tax Payment System. It’s used for an
employer to pay federal taxes online.

Employer Identification Number (EIN): Nine-digit number issued by IRS; required for
entities reporting employment taxes or giving tax statements to employees or annuitants.

Exempt:​ free from an obligation or liability imposed on others.

Exempt Employee Based on the Fair Labor Standards Act (FLSA): an employee who is
exempt from overtime provisions and, therefore, paid a salary per pay period (flat rate of
pay).

Fair Labor Standards Act (FLSA)​: Defines Federal rules for minimum wage, overtime and
other aspects of compensation for covered employees; usually overrides conflicting state
rules.

Federal Income Tax (FIT): Personal income tax with progressive rates; liability amount
calculated on Form 1040.

Federal Insurance Contributions Act (FICA): Federal program providing retirement and
other benefits; funded by employer/employee contributions during working years.

Federal Unemployment Tax Act (FUTA): ​Employer-paid contribution (effectively 0.8

percent of the first $7,000 of each employee’s wages) paid to IRS to supplement state
unemployment compensation systems.

Flexible Spending Account (FSA): A Health Care FSA enables employees to pay for
eligible out-of-pocket medical, dental, and vision care expenses on a pre-tax basis. A
Dependent Care FSA enables employees to pay for dependent day care expenses, which
must be for the purpose of allowing the employee and, if married, the employee’s spouse, to
be employed. FSAs are funded by employees via pre-tax payroll deductions. There are
annual limits on the amount that can be contributed to Health Care and Dependent Care
FSAs and accounts assets can only be used for qualified expenses incurred during the
calendar year. Per IRS regulations, unused FSA balances are forfeited.

Family and Medical Leave Act (​FMLA)​: a law in the US which allows employees up to
twelve weeks leave from w​ork each year because of a new baby or to look after a fami​ly
member​ who is ill.
Full time: ​Companies commonly require from 32 to 40 hours per week to be defined as
full-time and therefore eligible for benefits. Full-Time status varies between company and is
often based on the shift the employee must work during each work week.

Garnishment: A legal proceeding authorizing an involuntary transfer of an employee’s

wages to a creditor to satisfy a debt.

General Ledger (G/L): A general ledger is a tool used to record a business’s financial
transactions. It includes amounts for assets, liabilities, revenue, and expenses.

Gross Pay - This amount includes the total of the employee's pay calculated before anything
is taken out (such as taxes, deductions etc). How do you calculate gross pay for either
salaried or hourly employees? 1. Hourly - Rate of pay multiplied by hours worked equals
total gross pay. 2. Salary - Set salary amount for employee for that pay period equals total
gross pay.

Hazardous Materials: is any item or agent (biological, chemical, radiological, and/or

physical), which has the potential to cause harm to humans, animals, or the environment,
either by itself or through interaction with other factors.

Health Spending Account (HSA): An HSA enables employees who are enrolled in high
deductible health plans to pay for eligible out-of-pocket medical, dental, and vision care
expenses on a pre-tax basis. The HSA is funded by employees via pre-tax payroll
deductions. There are annual limits on the amount that can be contributed to an HSA but,
unlike an FSA, unused funds are not forfeited. Funds roll over and accumulate from year to
year.

Income Tax: Income tax is a tax that only employees pay. There are several taxes that fall
into this category: Federal Income tax, state income tax, and local income tax. Federal
income tax is paid with FICA as part of federal tax liability. This is calculated by considering
taxable compensation on a wage-bracket method but can also be taken as a flat dollar
amount or percentage. State and local income tax withholding methods vary, as do whether
or not that tax is taken in that state.
Social Security (OASDI) – Social Security is both an employee withholding tax and an
employer payroll tax. The employer is responsible for remitting a total of 12.4% of an
employee’s taxable earnings to the IRS. They are permitted to take 6.2% from the employee
as a withholding tax and “match” the other 6.2% as a payroll tax. There is a wage base limit,
which means that the tax stops at a certain amount of wages for the year. This varies per
year. In 2016, the wage base limit was $118,500. For 2017, the limit is $127,200.

Individual Retirement Account (IRA): A personal retirement savings account, that satisfies
the Internal Revenue Code Section 408; contributions and account earnings are not subject
to income tax until distribution.
Invoice: is a commercial document issued by a seller to a buyer, relating to a sale
transaction and indicating the products, quantities, and agreed prices for products or
services the seller had provided the buyer.

Mileage code: the code for actual or potential benefit or use to be derived from a situation
or even.

Net Pay ​- This amount includes employee's gross pay, or total amount, minus all tax
withholdings and deductions. The net pay equals what the employee is paid on their
paycheck or direct deposit.
Minimum Wage Requirement

Onboarding: Also known as organizational socialization, refers to the mechanism through

which new employees acquire the necessary knowledge, skills, and behaviors in order to
become effective organizational members and insiders.

OSHA:​Occupational Safety and Health Administration.

Overtime:​ ​time worked in addition to one's normal working hours.

Part time: ​A part-time contract is a form of employment that carries fewer hours per week
than a full-time job. They work in shifts. The shifts are often rotational. Workers are
considered to be part-time if they commonly work fewer than 30 hours per week.

Payroll: ​The term "payroll" is a general term, and it has several meanings. It can be The
amount of money paid to all employees in a payday, as in "we ran payroll this morning for
tomorrow's payday." • The financial records of a company relating to the payment of wages
and salaries to employees, (as in "the payroll department," or • The total record of earnings
of all employees for a year.

Payroll specialist: ​Payroll specialists make sure the hours worked are accurate, the checks
are cut correctly and employees are paid on time. Payroll specialists often create data for
accountants or other financial specialists at tax time or during financial reviews.

PEO: A professional employer organization (PEO) is a firm that provides a service under
which an employer can outsource employee management tasks, such as employee benefits,
payroll and workers' compensation, recruiting, risk/safety management, and training and
development.

PTO (PERSONAL TIME OFF): As part of a compensation package, many employers offer
paid vacation, sick, and personal time. There are many ways to provide this time. Often
employers choose to allow the employee to earn (or accrue) a certain amount of time per
pay period. Others may give a bulk amount at one time.
Reimbursement: The act of compensating someone for an out-of-pocket expense by giving
them an amount of money equal to what was spent.

Social Security Administration (SSA): Federal agency that administers the Social Security
and Medicare programs.

Social Security Number (SSN): The unique 9-digit number assigned by SSA to workers
and other taxpayers; used to record contributions toward employee’s retirement and other
benefits.

State unemployment tax act (SUTA): ​The State Unemployment Tax Act, better known as
SUTA, is a form of payroll tax that all states require employers to pay for their employees.
SUTA is a counterpart to FUTA, the federal unemployment insurance program.

State Unemployment Insurance (SUI): State-provided emergency income benefits for

qualified workers who have lost jobs but are able and available to work.

Time Sheet - A method should be used to track each employee's time for when they clock in
and out of work, for lunch and any personal time off taken during the work day. This is
especially important for hourly employees as their hours worked is used to calculate their
regular pay as well as any overtime.

Taxpayer Identification Number (TIN): For individuals, this is usually the Social Security
Number (SSN); for business entities, this is the Employer Identification Number (EIN). A
foreign individual who is not authorized to work in the U.S. may be issued an Individual
Taxpayer Identification Number (ITIN) - for other non employment tax reporting purposes.

Turnover: ​An organization's ​turnover is measured as a percentage rate, which is referred

to as its ​turnover rate. ​Turnover rate is the percentage of employees in a workforce that
leave during a certain period of time. Organizations and industries as a whole measure their
turnover​ rate during a fiscal or calendar year.

Retirement plan: A retirement plan is a financial arrangement designed to replace

employment income upon retirement. These plans may be set up by employers, insurance
companies, trade unions, the government, or other institutions.

U.S. Citizenship and Immigration Services (USCIS): Federal agency regulating work
privileges of foreign nationals in the U.S.; controls worker status by type of visa issued.

Voucher: ​synonym for receipt and is often used to refer to receipts used as evidence of, for
example, the declaration that a service has been performed or that an expenditure has been
made.
Withholding: ​refers to amounts taken from an employee's paycheck for federal and state
income taxes. Withholding is determined for federal income tax by a Form W-4 completed
by the employee at hire, and for state income tax by a state W-4 or other tax form.
The calculation for withholding includes:
• The employee's gross pay for the pay period, • Information on the employee's status as
salaried or hourly, • Information on marital status from the W-4 form, • And information on
any additional withholding amounts the employee directs on the W-4 form. • Exempt means
"exempt from overtime." Exempt and non-exempt employees are categorized typically by the
work they do. • Exempt employees (sometimes called a "white collar exemption") work in
professional, managerial, and executive positions. Other workers are non-exempt. As noted
above, your business may be required to pay overtime to some exempt employees.