| Term | Definition |
|---|
| 401K Plans | Plans that allow employees to make tax-favored pay deferrals toward retirement savings through a payroll deduction plan |
| 403B Plans | Plans that allow employees of certain tax-exempt organizations to contribute pre-tax dollars toward retirement savings |
| 457 Plans | Plans that allow employees of states, political subdivisions or agencies of states, and certain tax-exempt organizations to defer receipt of wages |
| ADEA (Age Discrimination in Employment Act) | Act that determined that older workers may not be discriminated against by performance-based pay systems |
| ASO (Administrative Services-Only health-care plan) | type of health-care plan in which the employer assumes the risk of high costs and hires an insurance claims department to handle claims |
| Base Pay | Basic compensation an employee receives, usually as a wage or salary |
| Benchmark Jobs | Jobs used as reference points when setting up a job classification system and when designing or modifying a pay structure |
| Broadbanding | An effort to make job evaluation more compatible with the de-layering of organizations by combining several salary grades or job classifications with narrow pay ranges into one band with a wider salary spread |
| Call-Back Pay | Pay that employees receive when they are called back for an extra shift in the same workday |
| Capitated Health Care Plan | Type of health-care plan in which the physician is paid on a per capita (per head) basis rather than for actual treatment provided |
| Career-Average Formula | Type of formula used to determine benefits under a defined benefit pension plan, based on a percentage of pay for each year the employee is in the plan or a percentage of career-average pay times years of service |
| Cash Balance Plan | Form of defined benefit plan that defines the promised benefit in terms of a hypothetical account balance and features benefit portability |
| Cash Profit-Sharing Plans | Provide employees with payments based on the organization's profitability that are additional to the employee's normal rates of pay |
| Cliff Vesting | Requires participants to complete a specific number of years of service with an employer before they get any vested benefits, after which they are 100% vested |
| COBRA (Consolidated Omnibus Budget Reconciliation Act) | Act that provides for continuation of group health-care benefits for former employees and their families |
| Coinsurance | Specified percentage (typically 20-30%) of covered medical expenses that employee pays or the fixed dollar amount that a covered person pays each time he or she visits a physician; also known as copayment |
| COLA (Cost of Living Adjustment) | Pay adjustment given to employees regardless of their performance or company profitability; usually linked to inflation; also referred to as a standard percentage raise |
| Comission | Payment paid to salespeople, usually calculated as a percentage of sales |
| Comparable Worth | Concept that states that jobs filled primarily by women should have the same job classification and salary as similar jobs filled by men |
| Compa-Ratio | The pay level divided by the midpoint of the pay range |
| Compensable Factors | Reflect the dimensions along which a job is perceived to add value to the organization; these factors are used to determine which jobs are worth more than others |
| CPI (Consumer Price Index) | Instrument that measures change over time for costs of a group of goods and services |
| Coordination of Benefits | Eliminates the duplication of payments when the employee, spouse, or dependents have coverage under two or more plans |
| Copayment | Specified percentage (typically 20-30%) of covered medical expenses that employee pays or the fixed dollar amount that a covered person pays each time he or she visits a physician; also known as coinsurance |
| Copeland "Anti-kickback" Act | Act that prohibits federal contractors from receiving kickbacks from employees or subcontractors for wages earned on federal projects |
| Davis-Bacon Act | Act that established the prevailing wage and fringe benefit requirements for contractors on federally funded construction projects |
| Deductible | Initial amount of covered medical expenses an individual must pay before receiving paid benefits under a health-care plan; usually expressed in terms of an individual and/or family deductible or a per-service fee |
| Defense Authorization Bill | Excluded federal contractors from overtime pay requirements after eight hours of work in a day; in their case, time and a half must be paid only for hours in excess of 40 per week |
| Deferred Profit-Sharing Plan | Refers to a qualified, tax deferred retirement plan where the employer contributes a percentage of profits to employee accounts |
| Defined Benefit Plan | Plan that promises employee a retirement benefit amount based on a formula |
| Defined Contribution Plan | Plan in which the employer and sometimes the employee make an annual payment to the employee's retirement plan account |
| Differential Pay | Pay that is based on when the employee works (e.g. overtime pay, shift pay differential) or where the employee works; also called variable pay |
| Direct Compensation | Refers to pay that is received by an employee, including base pay, differential pay, and incentive pay |
| Disability Benefits | Monthly benefits paid under Social Security to workers (and eligible dependents) younger than the Social Security retirement age if they have a disability |
| Draw | Amount advanced on future commissions |
| Dual-Ladder Career Progression | Allows employees to advance via either a management or technical track within the organization |
| EAP's (Employee Assistance Programs) | Provide counseling and help to employees having emotional, physical or personal problems |
| EGTRRA (Economic Growth & Tax Relief Reconciliation Act) | Act that adjusts certain minimum vesting schedules, increases retirement plan compensation and contribution limits, permits catch-up contributions by participants over age 50 in certain retirement plans, and modifies distribution and rollover rules |
| Emergency-Shift Pay | Describes the extra pay that employees receive when they are called into work during an emergency (e.g. power outage) |
| Employee Commuting Flexibility Act | Amendment to the Portal to Portal Act; Clarifies that commuting time is not paid working time |
| ERISA (Employee Retirement Income Security Act) | Act that established the basic uniform standards that must be met by employer-sponsored pension, health and welfare benefit programs |
| ESOP's (Employee Stock Ownership Plans) | Stock bonus plans by which employees gain ownership in the organization for which they work |
| Employees | Workers who are covered under FLSA regulations as determined by the IRS 20-factor test |
| EPA (Equal Pay Act) | Act that prohibits wage discrimination by requiring equal pay for equal work |
| Equal Work | Work having equal skills, equal effort, equal responsibility, and equal working conditions, all performed at the same location |
| Excess Deferral Plans | Non-qualified deferred compensation plans that provide benefits to selected management or highly compensated employees beyond section 401 or 415 limitations |
| Excess Group-Term Life Insurance | Amount of employer-provided group-term life insurance over $50,000 |
| Exempt Employees | Employees who are excluded from FLSA minimum wage and overtime pay requirements |
| Expatriates | Persons who live in one country and are employed by an organization based in another country; also called international assignees |
| Experience Rating | Bases employer unemployment insurance on the employer's number of terminated workers |
| External Equity | Occurs when an organization's pay rates are at least equal to market rates |
| Factor Comparison Method | Job comparison method that involves the ranking of each job by each selected compensable factor and then identifying dollar values to develop a pay rate |
| FLSA (Fair Labor Standards Act) | Act that regulates employee overtime status (exempt and nonexempt), child labor, minimum wage, overtime pay, record keeping, and other administrative concerns |
| FMLA (Family and Medical Leave Act) | Act that provides employees with the opportunity to take up to 12 weeks of unpaid leave to care for family members or because of a serious health condition of the employee |
| FASB (Financial Accounting Standards Board) | Private body that decides how financial executives should report their firms' financial information to their share-holders |
| Fee-for-Service-Health-Care Plan | Full-choice health-care plan that allows covered employees to go to any qualified physician or hospital and submit claims to the insurance company |
| Final-Pay Formula | Type of formula used to determine retirement plan payments based on the average earnings during a specified number of years |
| Flat-Dollar Formula | Type of formula used in determining retirement plan payments where the employer pays a set dollar amount for each year of service under the plan |
| Flat-Rate Pay | Provides each incumbent of a job with the same rate of pay, regardless of performance or seniority; also known as single-rate pay |
| FSA's (Flexible Spending Accounts) | Type of Section 125 plan that allows employees to use pretax dollars to pay for certain out of-pocket health and dependent-care expenses |
| Frequency Distribution | Listing of grouped data, from lowest to highest |
| Frequency Table | Shows the number of people or organizations associated with data organized in a frequency distribution |
| Full Cafeteria Plans | Type of Section 125 plans that allow employees to choose from a menu of benefits and allocate pretax dollars to pay for those benefits |
| Fully Insured Health-Care Plan | Health-Care plan in which the employer pays a third party provider to assume all costs for health-care coverage for its employees |
| Gainsharing Plans | Group incentives where a portion of the gains on organization realizes from group efforts is shared with the group |
| Gatekeeper | Individual, usually a primary-care physician, who is given control of patient access to specialists and services in a managed care organization |
| General Scheduled (GS) System | System used by federal government to classify jobs |
| Geographic Differential Pay | Pay based on where an employee works |
| Golden Handcuffs | System of overlapping short- and long-term incentives to make it less likely that employees will leave the company |
| Golden Parachutes | Clauses written into executive contracts that provide special payments to key executives who might lose their position or be otherwise disadvantaged if another company took control of the organization through a merger or acquisition, also known as parachutes |
| Graded Vesting | A system by which qualified retirement plan participants become incrementally vested over a period of years of service |
| Green-Circle Rates | Describes a situation where an employee's pay is below the minimum of the range |
| Gross Earnings | The total earnings before taxes; includes regular wages plus additional earnings such as tips, bonuses and overtime pay |
| Group-Term Life Insurance | Form of insurance carried by employers for their employees that provides a lump-sum payment to the employee's beneficiaries |
| Guide Chart-Profile | Point-factor job evaluation system developed by Hay Associates a large consulting organization, also known as the Hay Plan |
| Hay Plan | Point-factor job evaluation system developed by Hay Associates, a large consulting organization; also known as the Guide Chart-Profile |
| Hazard Pay | Refers to pay earned by employees who work in an environment that is considered more risky from a safety or health point of view |
| HCE(Highly compensated employee) | Determined by an array of issues such as business ownership (employee owns more than 5% of the firm) and/or salary (for 2003, and 2004, $90,000) |
| Health Insurance Portability and Accountability Act(HIPAA) | Act that made changes to improve health-care coverage portability and accessibility |
| Health Insurance purchasing cooperative (HIPC) | Purchaes health-care plans for large groups of employers to provide small businesses the economic advantages large companies have |
| HMOs(Health maintenace organizations) | Form of health care that provides services for a fixed period on a prepaid basis |
| Hourly wage | Form of base pay that is dependent on the number of hours worked |
| HRA(Health reimbursement account) | Employer-funded plan that reimburses employees only for eligible and substantiated health care expenses |
| Improshare plan | Premium ammount that a company pays on behalf of an employee; the employee does not receive the benefit in dollars but does pay taxes on it |
| Imputed income | Premium ammount that a company pays on behalf of an employee; the employee does not receive the benefit in dollars but does pay taxes on it |
| In loco parentis | "In place of a parent"; term used in expansion of FMLA coverage to employees who stand in place of a parent with day-to-day responsibilities to care for and financially support a child or who have a day-to day responsibility to care for or financially support parents who stood "in loco parentis" for them. |
| Incentive pay | Form of direct compensation where employers pay for performance beyond normal expectations to motivate employees to perform at higher levels |
| Indemnity health-care plan | Full-choice health-care plan that allows covered employees to go to any qualified physician or hospital and submit claims to the insurance company |
| Independent contractors | workers who are not under FLSA regulations as determined by the IRS 20-Factor Test |
| Indirect compensation | Form of compensation commonly referred to as benefits |
| Individual retirement accounts (IRAs) | Tax-deferred accounts to which wage earners can contribute an amount up to a yearly maximum |
| Internal equity | Occurs when people feel that performance or job differences result in corresponding differences in pay rates |
| International assignees | Persons who live in one country and are employed by an organization based in another country |
| International social security agreements | Bilateral social security agreements that coordinate the U.S. social security program with the comparable programs of other countries; also known as totalization agreements |
| Involuntary deductions | Payroll deductions such as tax levies and court-ordered child support that an employee must pay; withheld from paychecks before voluntary deductions |
| IRS 20-Factor Test | Set of 20 factors that the IRS uses to determine whether workers are employees or independent contractors |
| Job classification | Evaluation method that groups jobs into a predetermined number of grades or classifications, each having a class description to use for job comparisons |
| Job evaluation | Systematic determination of the relative worth of jobs within an organization |
| Job grades | Used to group jobs that have approximately the same relatve internal worth and are paid at the same rate or rate change |
| Job ranking | Evaluation method that establishes a hierarchy of jobs from lowest to highest based on overall importance to the organization |
| Lifetime maximum benefit | Maximum dollar amount of covered medical expenses that a health-care plan will pay on behalf of any covered person during that person's lifetime. |
| Line-of-sight | Refers to a concept that states that employees must be able to influence the attainment of a goal and see a direct result of their efforts in order for incentive pay plans to be effective |
| Long-term care insurance | Refers to insurance coverage that provides a daily monetary benefit to people who are chronically ill and who require living assistance either at home or in a residential facility |
| Long-term disability(LTD) coverage | Replaces a portion of an employee's lost income after short-term disability coverage ends; may be combined with Social Security disability |
| LSI (lump-sum increase) | One-time payment made to an employee, also called a performance bonus |
| Managed Care | General term for a medical plan that seeks to ensure that the treatments a person receives are medically necessary and provided in a cost-effective manner. |
| Market-based evaluation | Method similar to job evaluation systems that evaluates jobs based upon their market value |
| Maturity curves | Correlate pay with time spent in a professional field such as teaching or research |
| Medicare | Social Security Administration program that provides medical care for the aged; is taxed with no yearly maximum and is matched by the employer |
| Medicare carve-out | Health plan where benefits are reduced for employees eligible for Medicare; Medicare becomes the primary provider |
| Medicare Part A | Mandatory hospital coverage for persons covered by Medicare. |
| Medicare Part B | Optional medical coverage for persons covered by Medicare |
| Medicare supplement | Health plan that covers specific expenses not covered by Medicare |
| Mental Health Parity Act (MHPA) | Act that addresses parity between mental health benefits and medical benefits. |
| Merit pay | Refers to a situation where an individual's performance is the basis for either the amount or timing of pay increases; also called performance based pay |
| MHPA (Mental Health Parity Act) | Act that addresses parity between mental health benefits and medical benefits |
| Minimum wage | Minimum hourly amount, determined by Congress, that nonexempt employees can be paid |
| MNCs (multinational companies) | Companies that conduct business and have offices in a number of different countries |
| Modified-duty programs | Offered to employees who are on leave for injuries under FMLA; job tasks are modified to meet the employee's restrictions |
| Money purchase plans | Plans in which employers make mandatory payments (a fixed percentage of an eligible employee's compensation) to a retirement plan. |
| Nonduplication of benefits | In health plans, requires a secondary carrier to reimburse only up to the level of reimbursement they would have paid. |
| Nonexempt employees | Employees covered under FLSA regulations, including minimum wage and overtime pay requirements |
| Nonqualified deferred compensation plan | Income deferral benefit offered to a select group of management or highly compensated employees in the organization |
| Nonsubscriber plans | Workers' compensation plans set up by employers/industries in place of their state's compensation plan |
| OBRA (omnibus budget reconciliation act) | Act that reduced the compensation limits in qualified retirement programs |
| On-call pay | Pay that employees receive when they are on call but not actually working |
| Out-of-pocket maximum | Stated amount out of pocket the insured can pay for medical costs in a 12-month period before copayments end |
| Overtime pay | Required for nonexempt workers under FLSA at 1.5 times the regular rate of pay for hours over 40 in a workweek. |
| OWBPA (older worker's benefit protection act) | Act that amended ADEA to include all employee benefits; also provided terminated employees with time to consider group termination or retirement programs and consult an attorney |
| Paid-time-off (PTO) bank | Large bank of time comprising all an employee's paid time off (i.e., vacation, sick leave, and holidays) that the employee can use as they see fit |
| Paired-comparison method | Refers to a job ranking method in which evaluator compares each job with every other job being evaluated |
| Parachutes | Clauses written into executive contracts that provide special payments ot key executives who might lose their position or be otherwise disadvantaged if another company took control of the organization through a merger or acquisition; also known as golden parachute. |
| Pay compression | Occurs when there is only a small difference in pay between employees regardless of their skills, experience, or seniority; also known as salary compression |
| Pay ranges | Associated with pay grades; they set the upper and lower bounds of possible compensation for individuals whose jobs fall in the range. |
| Pay surveys | Collect information on prevailing market rates and include topics such as incentive plans, overtime pay, base pay, and vacation and holiday practices. |
| PBGC (Pension benefit guaranty corporation) | Set up by ERISA to insure payment of defined benefit pension plan benefits in the event that private-sector defined benefit pension plan terminates with insufficient funds to pay the benefits |
| Percentiles | Show measures of dispersion, or how groups of data relate to each other |
| Performance-based pay | Pay systems in which employee characteristics, rather than the job, determine pay. |
| Point-factor method | Most commonly used method of job evaluation; it involves using specific factors to evaluate job worth |
| POPS(premium-only plans) | Type of Section 125 plan that allows employees to pay for certain qualified benefits with pretax dollars |
| Portal-to-portal act | act that defines what is incuded as hours worked and is therefore compensable and a factor in calculating overtime |
| Preexisting conditions | Medical conditions that existed before a health-care policy is taken out |
| Premium pay | extra pay for working holidays or vacation days. |
| Premium sharing | Situation in which employee pays a portion of the required monthly preium for health-care coverage |
| Private-letter rulings | Rulings issued by the IRS to specific taxpayers or organizations who request an interpretation of the law |
| Productivity-based pay | Pay based on the quantity of work and outputs that can be accurately measured |
| Profit-sharing plans | Distribute a portion of an organization's profits to its employees |
| Prudent person rule | States that an ERISA plan fiduciary has legal and financial obligations not to take more risks when investing employee benefit program funds than a reasonably knowledgeable, prudent investor would under similar circumstances. |
| QDROs(qualified domestic relations orders) | Create or recognize the right of an alternative payee to receive all or a portion of the benefits under a pension plan |
| Qualified deferred compensation plan | Retirement benefit offered to all employees in the organization; provides tax advantages and is protected under ERISA |
| Qualifying event | Under COBRA, an event, such as termination for reasons other than gross misconduct, that allows employees to continue their group health-care coverage for a specified period of time |
| Quartiles | Show measures of dispersion, or how groups of data relate to each other. There are four quartiles to any set of data, with 25% of the data falling into each quartile. |
| Rabbi trust | a grantor trust designed to segregate nonqualified deferred compensation benefits from an employer's general accounts |
| REA (Retirement equity act) | Act that provided certain legal protections for spousal beneficiaries of qualified retirement plans |
| Reasonable and customary | A reimbursement standard used by insurance companies to determine how much providers should be paid for their services |
| Red-circle rates | Describe situations where employees' pay is above the range maximum |
| Reporting pay | Pay provided to employees who report for work as scheduled but then find that no work is available |
| Retirement Equity Act (REA) | Act that provided certain legal protections for spousal beneficiaries of qualified retirement plans |
| Revenue Act | Act that added two sections to the Tax Code: Section 125 and Section 401(k) |
| Revenue Rulings | Rulings published by the IRS as general guidelines to all taxpayers |
| Salary | Uniform amount of money paid to a worker regardless of how many hours are worked |
| Salary compression | Occurs when there is only a small difference in pay between employees regardles of their skills, experience, or seniority; also known as pay compression |
| Salary continuation | Type of insurance that provides regular payments to the surviving spouse and dependent |
| Sarbanes-Oxley Act (SOX) | Requires administrators of defined contribution plans to provide notice of covered blackout periods; provides whistle-blower protection for employees |
| Savings Incentive Match Plan for employees (SIMPLE) | Retirement plan by which employees cna contribute each year to a 401(k) plan or IRA |
| SBJPA (Small Business Job Protection Act) | Act that made changes to rules regarding the ability of tax-exempt organizations to institute retirement plans modeled after 401(k) and IRA accounts and to the definition of highly compensated employees |
| Scanlon Plan | Group incentive plan developed by Joseph Scanlon; workers earn a bonus for increasing productivity |
| Section 125 benefit plans | Written benefit plans maintained by the employer that allow employees to use pretax dollars to pay for certain qualified benefits |
| Securities and Exchange Act | Act that regulated "insider trading" |
| Self-insured health-care plan | Health-care plan in which the employer assumes the role of the insurance company and assumes some or all of the risk |
| Seniority | System that shows preference to employees with the longest service |
| SEP(Simplified Employee Pension) | Tax-deferred account to whcih the self-employd and employees of very small businesses can contribute |
| Serious health condition | As defined in the FMLA, a condition that requires inpatient hospital, hospice, or residential care or continuing physician care |
| SUB (supplemental unemployment benefits) | Benefits paid to unemployed workers beyond required government unemployment benefits |
| Sunset Clause | Refers to the identified time period and ending point that should be identified in incentive pay plans |
| Supplemental wages | Refers to pay beyond base salary or wages such as bonuses and commissions |
| Survivor's benefits | Monthly benefits paid under Social Security to eligible dependents of deceased workers |
| Tax and Trade Relief Extension Act | Act that amends the Work Opportunity Tax Credit to reduce employer federal tax liability |
| Tax Reform Act | Act that made significant changes in employee benefit programs, especially retirement plans |
| Taxable Wages | Includes all renumeration for services (including noncash benefits) and wages, which are taxable when paid |
| Taxpayer Relief Act (TRA) | Act that created tax-advantaged savings mechanisms, including Roth IRAs and Education IRAs, for individual taxpayers. |
| Third-party administrator (TAP) health-care plan | Health-care plan in which the employer assumes the risk of high health-care costs and hires an independent claims department to handle claims |
| Time-based differential pay | Refers to pay rates that are affected by when an employee works |
| Time-based step-rate pay | Pay is based on longevity in the job, and pay increases occur on a predetermined schedule |
| Top hat plan | Nonqualified deferred compensation plan designed to provide retirement benefits to a select group of management or highly compensated employees |
| Total Compensation | Refers to all forms of financial returns that employees receive from their employers |
| Totalization agreements | Bilateral social security agreements that coordinate the U.S. Social Security program with the comparable programs of other countries; also known as international social security agreements |
| TPA (third-party administrator) health-care plan | Health-care plan in which the employer assumes the risk of high health-care costs and hires an independent claims department to handle claims |
| Travel pay | Typically paid to nonexempt workers for the time they spend traveling to or between work assignments |
| UCA (Unemployment Compensation Amendments) | Imposed a mandatory 20% federal income tax witholding requirement on qualified retirement plan proceeds that a recipient does not roll over into another qualified retirement plan or individual retirement account |
| Unemployment insurance | Mandatory benefits program set up as part of the Social Security Act that is designed to provide a subsistence payment to employees between jobs |
| Uniformed Services Employment and Reemployment Rights Act (USERRA) | Act that requires benefit continuation and crediting of service while an employee is on military active duty |
| Utilization review | Audit of health-care use and charges to identify which benefits are used and to make certain that care is necessary and costs are in line |
| Variable pay | Pay that is based on when the employee works (e.g., overtime pay, shift-pay differential) or where the employee works; also called differential pay |
| Vesting | Process by which a retirement benefit becomes nonforfeitable |
| Voluntary deductions | Payroll deductions selected by the employee such as charitable contributions |
| Walsh-Healey Act | Act that extended the concept of prevailing wage to employers who manufacture or supply goods under government contracts and required time and a half |
| Weighted average | Average of data that takes other factors such as the number of incumbents into account |
| Welfare-to-Work Tax Credit | Income tax credit to encourage employers to hire long-term welfare recipients |
Combine with other sets
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