Knowledge base
PEO glossary
51 terms buyers run into, defined in plain English and linked to the guides, industries and services where they matter.
- 51 terms
- 8 categories
- Browse the knowledge base
A
- ACA employer mandate · ALEBenefitsThe Affordable Care Act rule requiring employers with 50 or more full-time equivalent employees to offer affordable coverage or face penalties.
- Admin fee · Administrative feePricing and feesThe PEO's charge for its services, separate from the pass-through costs of benefits, insurance and taxes.
- ASO · Administrative services organizationAlternatives and modelsA provider that handles payroll and HR administration without co-employment, so you keep your own benefits and tax accounts.
B
- Benefits run-outBenefitsThe period after leaving a plan when claims incurred before the end date are still processed, including FSA claims.
- Bundled pricing · Unbundled pricingPricing and feesBundled pricing rolls the admin fee, workers' comp and taxes into one rate; unbundled pricing shows each cost separately.
C
- Certified PEO · CPEOPEO basicsA PEO certified by the IRS under a program created in 2014, which makes it solely responsible for federal employment taxes on wages it pays.
- Class code · Workers' comp classificationWorkers' comp and riskA code assigning each job to a risk category, which sets the workers' comp rate per $100 of payroll.
- Client service agreement · CSAPEO basicsThe contract between you and a PEO that sets services, fees, responsibilities, term and termination rules.
- Co-employmentPEO basicsThe shared employer relationship between you and a PEO, with responsibilities divided by contract.
- COBRABenefitsFederal continuation coverage that lets departing employees keep group health insurance for a period at their own cost.
E
- Employee censusContracts and transitionsA spreadsheet of your employees (roles, pay, location, age, coverage) that PEOs use to quote rates.
- Employee handbookHR and complianceYour written workplace policies, which a PEO often helps draft and keep current with state requirements.
- Employee onboardingHR and complianceGetting new hires set up: offer letters, tax forms, I-9, benefits enrollment and policy acknowledgments.
- Employer of record · EOR (role)Payroll and taxThe party legally responsible for paying wages and filing employment taxes for an employee.
- Employment law complianceHR and complianceFollowing federal, state and local rules on wages, hours, leave, safety, postings and records.
- EOR service · Employer of record serviceAlternatives and modelsA service that legally employs workers on your behalf, most often in countries where you have no entity.
- EPLI · Employment practices liability insuranceWorkers' comp and riskInsurance covering claims such as wrongful termination, discrimination and harassment.
- ESAC accreditation · ESACPEO basicsAccreditation from the Employer Services Assurance Corporation, which reviews a PEO's finances, tax payments and practices.
- Exit fee · Early termination feeContracts and transitionsA charge for leaving a PEO before the contract term ends or without the required notice.
- Experience mod · EMRWorkers' comp and riskA multiplier on workers' comp premiums based on your claims history compared with similar businesses; 1.0 is average.
F
- Form I-9 · E-VerifyHR and complianceThe federal form employers use to verify each new hire's identity and authorization to work in the US.
- FSA · Flexible spending accountBenefitsAn employer-sponsored account employees fund with pre-tax pay to cover eligible medical or dependent care costs.
- FUTA · Federal unemployment taxPayroll and taxThe federal unemployment tax employers pay on the first $7,000 of each employee's wages per year.
H
- HRIS · HR softwareAlternatives and modelsHR software for payroll, records, time off and onboarding, run by your own team without outsourcing employer duties.
- HSA · Health savings accountBenefitsA tax-advantaged savings account paired with a high-deductible health plan; the money belongs to the employee.
M
- Markup · LoadPricing and feesA margin a PEO adds to a cost it passes through, such as workers' comp premiums or state unemployment tax.
- Master health plan · Master policyBenefitsA benefits plan the PEO sponsors for many client companies together, giving small employers access to large-group plans.
- Mid-year transitionContracts and transitionsJoining, switching or leaving a PEO during the year, which can restart deductibles and tax wage bases.
- Minimum employee requirement · Minimum headcountPEO basicsThe smallest number of employees a PEO will accept, from one at some PEOs to five or more at others.
- Monopolistic stateWorkers' comp and riskA state where employers must buy workers' comp from a state fund: Ohio, North Dakota, Washington and Wyoming.
- Multi-state payrollPayroll and taxRunning payroll for employees in several states, each with its own registrations, withholding, unemployment tax and leave laws.
- Multiple employer 401(k) plan · MEPBenefitsA retirement plan sponsored by a PEO or provider and shared by many unrelated employers.
N
O
P
- Pass-through costsPricing and feesCosts the PEO collects and pays on your behalf, such as benefits premiums, payroll taxes and insurance.
- Pay-as-you-go workers' compWorkers' comp and riskWorkers' comp premiums calculated and paid each payroll from actual wages, instead of a large deposit and year-end audit.
- PEO · Professional employer organizationPEO basicsA company that becomes a co-employer of your staff and handles payroll, benefits, workers' comp and HR compliance under one agreement.
- PEO exit · Leaving a PEOContracts and transitionsMoving off a PEO: replacing payroll, benefits, workers' comp and tax accounts without gaps.
- PEPM · Per employee per monthPricing and feesPricing by headcount: a flat fee for each worksite employee every month, regardless of their pay.
- Percentage of payroll pricingPricing and feesPricing where the PEO's fee is a percentage of your gross payroll, commonly 2% to 12%.
R
S
- Section 125 plan · Cafeteria planBenefitsA plan that lets employees pay for certain benefits, such as health premiums, with pre-tax wages.
- Staffing agencyAlternatives and modelsA firm that recruits and employs temporary workers placed with clients; unlike a PEO, it supplies the workers.
- SUTA · State unemployment taxPayroll and taxState unemployment insurance tax, charged at a rate that depends on the state, your industry and your layoff history.
T
- Termination notice · Notice periodContracts and transitionsHow far ahead you must tell the PEO you're leaving, often 30 to 90 days; month-to-month PEOs allow shorter notice.
- Total cost of employment · Total PEO costPricing and feesEverything you pay through the PEO: admin fees, benefits, workers' comp, payroll taxes and any setup or exit fees.
U
W
- Wage base restartPayroll and taxPaying Social Security, FUTA or state unemployment tax again on wages already taxed earlier in the year, after switching employers of record.
- Workers' compensation · Workers' compWorkers' comp and riskInsurance that pays medical costs and lost wages for work-related injuries, required for most employers by state law.
- Worksite employee · WSEPEO basicsAn employee of a PEO client who is co-employed by the PEO; PEOs usually price and count by worksite employees.