Human Resources Glossary
A Helpful List of Important Terms For HR Professionals
Human Resources is a complex, ever-changing industry. It’s no surprise that HR has its own terminology, abbreviations, and industry jargon. This glossary aims to define the most common terms you are likely to encounter as an HR professional.
Whether you are new to HR or a seasoned veteran with decades under your belt, we hope this resource serves as a convenient reference for the most common HR terms!
Accrued leave is the time off an employee earns based on the amount of time they've worked. Over time, employees accrue a certain amount of leave as they complete their work hours.
An adaptive device helps a disabled person to do daily activities, like reading. An example of an adaptive device is speech recognition software. The software can help anyone who does not have full use of their hands to perform their duties.
Adverse impact is an employment practice that has a discriminatory consequence on a protected group. It often appears to be neutral, but that is not the case. The adverse impact can happen during a performance appraisal, layoffs, or transfers.
Affirmative Action (AA)
Affirmative Action policies ensure equal employment opportunities for people in minority groups. Affirmative action plays an essential role in the employment of people with disabilities, minorities, women, and veterans. It also provides civil rights protection for all individuals.
Ageism involves discrimination or prejudice against people of a certain age bracket. The law does not support workplace discrimination because of age. Furthermore, bias in the workplace can limit work efficiency.
It happens when a company can adapt to the customers’ needs when the market changes. Companies often have ready procedures that ensure they can meet the industry changes. The guidelines provide that they can redeploy employees to meet the changes. An agile organization is essential in ensuring that a company runs well.
Americans with Disabilities Act (ADA)
The Americans with Disabilities Act is a federal law prohibiting discrimination against people with disabilities. The law is essential in the workplace as it protects employees with disabilities. For instance, it is against the law for companies to discriminate against a person with a disability during the application process.
Annualized salary is a way to calculate your salary based on a year's work. Instead of just looking at your weekly or monthly pay, you consider the expected earnings for the entire year. Figuring out your annualized salary is just a matter of doing some simple math.
Applicant Tracking System (ATS)
ATS is a record hiring system that ensures effective recruiting takes place. The system starts from the candidate application to the hiring process. The best thing about ATS is that it is available in different sizes and features. Thus, ensuring its ideal for all company sizes. The system promotes efficiency in the workplace. It also encourages good talent acquisition.
Attrition is the rate at which employees reduce over time. It involves the voluntary retirement or resignation of employees. It also consists of a situation where a company does not move to replace the employees. Attrition ensures that an organization’s workforce reduces.
At-will employment means an employer can end someone's job anytime for almost any reason without warning. The employee can also leave a job anytime and for any reason.
The generation born between 1946 & 1964. As of 2022, Baby Boomers make up approximately 25% of the US workforce. They grew up experiencing the Vietnam War and the Civil Rights Movement. They are often motivated by loyalty to the organization and seeking opportunities to be mentors.
Behavior-based interviewing is a type of interviewing in which the interviewer asks questions about the interviewee’s past behavior to predict their future behavior. This type of interviewing is based on the idea that past behavior is the best predictor of future behavior.
Benchmarking involves using various metrics to measure a team or company’s performance. The metrics include turnover rates, sales, retention, and customer satisfaction. Companies can use benchmarking to compare their competitors’ and internal performances. The metrics can help determine whether there are any performance changes.
Bereavement is a type of leave granted to employees following the death of a family member, such as a spouse, child, parent, or sibling. Most companies offer this type of leave to employees who have experienced a death in their immediate family.
Biweekly pay means employees get paid every two weeks. In this structure, employees will get two paychecks each month.
Bona Fide Occupational Qualification
A Bona Fide Occupational Qualification is a legal provision that lets employers make decisions about hiring based on protected characteristics like age, gender, race, religion, or national origin.
Companies use business necessity to justify their employment technique. The techniques often impact a specific group of people. The defense helps to legitimize the reasons why a company uses strict employment practices. Some of the most common business necessities include; experience and education requirements.
A career plateau phase is where an individual perceives a lack of growth or advancement in their career progression. This halt is not merely a pause but a perceived stagnation in gaining new skills, knowledge, responsibilities, or a rise in job rank.
Compa-ratio compares an employee's salary or total compensation to the midpoint or market rate for their job. It's expressed as a percentage, with a compa-ratio of 100%, meaning that an employee's pay is at the midpoint or market rate for their role.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a health insurance plan that gives workers and their dependents who lose their health benefits due to certain circumstances (such as job loss, reduction in hours, death, divorce, etc) the chance to continue health benefits provided by their group plan for a limited time.
COBRA generally requires that group health plans (sponsored by employers with 20 or more employees in the prior year) offer employees and their families the opportunity for a temporary extension of health coverage. This is called the continuation of coverage, which may occur when coverage under the plan would otherwise end.
For employers under 20 employees, continued coverage is handled at the state level rather than the federal, and will vary by state.
Co-employment happens when two or more organizations use the same employee. Organizations often have legal responsibility for that worker. Co-employment often happens in employment service providers or staffing firms.
HR compliance is the development of procedures and policies that ensure a firm carries out fair practices according to state and federal laws and regulations. The objective is to adhere to all laws and regulations while also making ensuring the firm’s human capital resources objectives are met.
Constructive discharge is a breach of contract by the employer. It occurs when the behavior of an employer causes an employee to resign. The behavior involves incidents that establish an unfavorable environment for working. The employer’s conduct gives the employee a right to sue for compensation.
Contingent workers are a temporary workforce that companies use to supplement their employees. They include; freelancers, independent contractors, temps, or consultants. Employers pay contingent workers to complete specific tasks.
Direct reports are employees who work under an immediate supervisor or manager and report directly to them. They are an essential part of the workforce, providing the necessary skills and labor to make an organization thrive.
A direct threat is a risk of significant harm to the safety or health of employees. One cannot reduce or end it via a reasonable accommodation.
Disciplinary action involves actions against employees who do not observe company policies. The non-compliance could be; rules violation, poor performance, misbehavior, and misconduct. Companies often create measures to ensure employees follow company regulations and policies.
Disparate employment offers discriminated employees a chance to validate employment discrimination. The employee can prove that a company did not treat them the same despite being in a similar situation as other employees. They can also claim that the difference in treatment is in protected characteristics.
A disregarded entity is a business that's not considered separate from its owner for income tax purposes. The entity's income, deductions, and credits are reported directly on the owner's tax return.
The EEO-1 Report is a form used by the U.S. Equal Employment Opportunity Commission (EEOC) to collect data about an employer’s workforce. The survey collects information about the employer’s workforce demographics, job categories, and compensation levels.
Emotional intelligence is an essential tool for individuals to have. It is one’s ability to manage and understand emotions. People with high emotional intelligence can determine how their emotions affect others and what they mean.
Employee Assistance Program
An employee assistance program (EAP) is an employer-offered benefits program designed to help employees with issues such as stress or burnout that could potentially impact their workplace performance.
Employee engagement involves how enthusiastic and involved an employee is. It is a business management concept that explains an employee’s commitment to a company’s goal. The more engaged employees are, the higher the chances they achieve company objectives.
An employee handbook contains valuable information that employees need. It often includes a company’s mission, history, and policies. Employers can use the handbook to protect themselves from claims of unfair treatment.
An exempt employee does not get minimum wage or overtime. The employee is also exempted from protections that employers give to non-exempt workers. Employers pay the workers a salary instead of hourly wages.
An exit interview involves a conversation between an employee who wants to leave a company and the employer. The employer asks the employee why they want to leave employment.
Fair Labor Standards Act (FLSA)
FLSA is the federal law that determines the child labor and employee overtime pay standards. It also establishes minimum wage standards that impact part-time and full-time workers. FLSA applies to local, state, federal, and private workers. All US employees have an FLSA status and are classified as "exempt" or "non-exempt".
Families First Coronavirus Response Act (FFCRA)
A law requiring certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. Generally, the FFCRA provides that covered employers must provide up to two weeks of paid leave to all employees.
Family and Medical Leave Act (FMLA)
Family and Medical Leave Act (FMLA) is the federal law that provides employees with unpaid, job-protected leave and benefits continuation in certain circumstances. FMLA generally provides 12 weeks of leave in a 12-month period (more if caring for an injured or ill service member).
Federal Unemployment Tax Act (FUTA)
FUTA is a federal law that created a system of unemployment insurance to help people who lose their jobs find other work. Unemployment taxes are a type of tax collected by the government and then redistributed to the unemployed.
Form 2106 lets employees deduct expenses for work, including transportation, lodging, meals, or entertainment. Employees must have receipts for these expenses.
Form 2553 is a document required by the IRS for a company to file as an S Corporation. It has four main sections: Election Information, Selection of Fiscal Tax Year, Qualified Subchapter S Trust (QSST) Election, and Late Corporate Classification Election Representations.
Form 2555 is used by US citizens and resident aliens to calculate their foreign-earned income exclusion and their housing exclusion or deduction.
Employers can use Form 5884 to claim the Work Opportunity Tax Credit (WOTC). The WOTC is available to employers who hire people from groups that have faced barriers to employment.
Form W-3 is a document that employers use to report how much money they paid their employees and how much tax they took out.
Full Time-Equivalent (FTE)
Companies often use FTE to determine their employee’s workload. It calculates the number of full-time or part-time workers that make up the full-time workers. FTE can help in company cost management.
A furlough is a temporary leave a company gives employees due to special needs. The special needs can be due to social or economic factors. Employers expect employees to return to work at the end of the leave.
The generation born between 1965 & 1980. As of 2022, they make up approximately 33% of the US workforce. Gen X grew up experiencing the AIDS epidemic and the dot-com boom. They are often motivated by work-life balance, and more so than previous generations, tend to seek flexible work arrangements.
The generation born between 2001 & 2020. As of 2022, they make up approximately 5% of the US workforce. Gen Z grew up experiencing broad access to the internet and technology, the Great Recession, and life after 9/11. More so than previous generations, they tend to be motivated by the chance to be independent, self-directed, and creative. Sometimes referred to as Zoomers
This analogy describes career and professional obstacles encountered by women and minorities in an attempt to make it to top positions. The word “glass” is because the barrier is considered invisible.
The term refers to grave deviation from the workplace’s prescribed code of conduct. It is considered severe and yields adverse consequences like dismissal (through a fair and legal procedure), disciplinary hearing, or pay in place of notice. Examples in the US include illegal drug use at the workplace, fraud, serious policy breaches, and theft.
Workplace harassment is unfair treatment—physical or verbal—inflicted by the employer, supervisor, client, or coworker resulting in humiliation or negative mental health issues. It could attack one’s sexual orientation, gender, race, age, or disability. The Equal Employment Opportunity Commission (EEOC) lists offensive jokes, insults, and physical assaults as examples.
An account set up and funded by employers for employee reimbursement of out-of-pocket medical expenses. It covers costs like medical expenses not typically covered by the existing health plan or medical bills incurred before meeting a deductible. The reimbursement is tax-free in the US.
Health Savings Account (HSA)
An HSA is an employee’s tax-free interest-earning account that caters to qualified medical expenses. It can be funded by the employee or employer and has an annual limit. To qualify, the employee must:
Have a high-deductible health plan
Have no health coverage or Medicare
Not be dependent on someone else’s tax returns
Human Capital Management (HCM)
Human Capital Management (HCM) is the process of workforce management to deliver HR administrative functions effectively for productivity and revenue generation. It governs functions like recruitment, training and development, and performance management.
Human Resource Management System (HRMS)
HRMS refers to a collection of systems used in HR management processes. You can call it a smart digital personal assistant for managing HR functions like payroll administration, leave management, appraisal, tax filing automation, employee re-hiring, and onboarding. HRMS empowers employees through self-service portals, online training, and complaint reporting.
Imputed income is the value of employees’ non-monetary fringe benefits added to their gross income for Social Security and Medicare taxes. Examples include company cars and large gifts.
The practice of exercising workplace equality is called inclusion. It enables HR managers to provide fair and equal access to opportunities and resources regardless of employee gender, race, or physical and mental state.
An independent contractor is a service provider that an organization outsources on a contractual basis. Their payments are exempted from withholding tax. Hiring these professionals, also called freelancers or consultants, saves costs like recruitment expenses, payroll taxes, and employee benefits.
It is the process of analyzing and creating a job description by defining responsibilities, salary, and candidate qualifications. Job analysis helps select the right candidate and provides clear expectations and guidelines.
In job classification, HR reviews the job’s responsibilities to determine its most accurate standard, title, and rank.
A job description is a document that outlines expectations and what the position covers, extracted from the job analysis. It includes:
Who performs the job
Duties and responsibilities
The job’s purpose in the company’s objectives
Job Dissatisfaction refers to employees’ discontentment with their job due to issues like:
Minimal work-life balance,
Poor working conditions,
Limited career growth,
Personal goals are misaligned.
It results in frustration, unproductivity, demotivation, and workplace attrition.
The term means the total number of employed individuals and the unemployed seeking employment. It can define the population of your organization, industry, or country. You can also use the term “workforce.”
A layoff means you are terminating your worker’s employment either temporarily or permanently. Temporary layoffs can happen if your company closes down entirely for several days, weeks, etc., but plans to reopen in the future. Permanent layoffs happen when you terminate a worker’s employment, and rehiring isn’t an option. Some of the causes of permanent layoffs can be a business closing down, a reduction of the labor force, or employee performance.
The generation born between 1981 & 1996. As of 2022, they make up approximately 35% of the US workforce. Millennials grew up experiencing events like Columbine and 9/11. They also tend to be motivated by work-life balance and interesting work experiences and are often seeking challenge, growth, and development.
An unfair workplace practice where the powerful favor their relatives and friends without basis on professional qualifications is nepotism. For example, authoritative managers or executives can use their influence to facilitate favors like placement or salary increments.
New Hire Checklist
HR professionals use a new hire checklist to ensure a smooth onboarding process. The document should include tasks associated with preboarding, onboarding, and follow-up.
A Non-Compete Agreement
A non-compete agreement safeguards a firm against employees who leave one company to work for another in the same field. A non-compete agreement forbids an employee from working for a direct rival for a specific amount of time and in one particular geographic area.
Nondisclosure Agreement (NDA)
A nondisclosure agreement (NDA) protects proprietary information in a business. New employees may have access to a company’s business plans, employee contact information, client information, and other confidential information. A nondisclosure agreement requires them to promise to maintain confidentiality.
It is the disentanglement process when an employee leaves. An offboarding checklist includes a formal handover, returning company assets, deactivating access rights, and exit interviews.
The onboarding process entails assimilating new employees into the organization. It includes training, filling in employee onboarding documents, orientation, and the allocation of a buddy.
Organizational culture is a set of rules that describe how the organization expects employees to behave. It lays down the company’s values, beliefs, expectations, objectives, mission, and vision.
An organizational chart, or org chart, is a document that contains key information about everyone in a company, including their names, job titles, and what department they’re a part of. The chart visually organizes this information into an aerial view of the organization’s hierarchy.
Employee orientation is the introduction of a new employee to the organization. For successful orientation, you may include a workplace tour, introduction to colleagues, familiarization with the organization’s dress code, culture, and policies, and answering the employees’ questions.
A member of the workforce who has neither applied for a job nor is actively looking. Usually, you (the employer) are considering them for a position or have sought them out.
When there is little—usually higher—or no pay difference between a new employee and a long-serving one in the same position, regardless of any difference in experience or knowledge.
This occurrence, also called wage or salary compression, results from the new employee’s negotiation, previous salary, or changes in the industry’s stipulated starting salaries.
While it is not illegal in the US, it may cause demotivation and inequalities, contravening equal pay laws.
Performance Improvement Plan (PIP)
A PIP is a plan to improve an employee’s performance upon failure to meet their KPIs. It specifies the areas of improvement, timelines, and practical consequences and includes periodic reviews.
It is the process where HR managers plan, set, and communicate objectives on job performance expectations. A proper performance management plan must be aligned to the organization’s objectives and include monitoring, reviews, feedback, and rewarding employees.
As an HR professional, you can use the balanced scorecard, management by objectives, or budget-driven performance management plans with the help of smart performance management tools.
Protected classes are groups of people that the law protects from being unfairly treated because of specific characteristics they have (called protected characteristics).
Qualifying Life Event
Shortened as QLE, it is a health insurance term referring to an employee’s change in life situation, warranting adjustment to their existing benefits plan. The changes could be child adoption, divorce, marriage, having a baby, or permanent relocation. They trigger special open enrollment, allowing employees to enroll in a health plan outside the yearly Open Enrollment Period.
Reasonable accommodation refers to provisions made in a work environment and hiring process through specific changes to cater to employees and applicants with disabilities. The adjustments aim to provide equal opportunities to enable qualified disabled employees to perform their job. Examples include the introduction of flexible schedules, user-friendly software, reserved parking, accessible work areas, and machinery modification.
The term describes an employer’s disciplinary or unfair response to punish an employee for engaging in protected activity. According to the Equal Employment Opportunity Commission (EEOC), a protected activity where an employee filed a formal complaint about workplace discrimination or harassment. Examples of retaliation are:
Withholding workplace privileges
Risk Management is the process of analyzing employees’ risks to the organization. The company then uses the information to manage (minimize, avoid or transfer) the risks to mitigate their impacts. Threats can be from employee behaviors or HR processes.
The sharing of information about employee salaries within an organization. This can be done through a variety of means, such as posting salaries online, sharing salary ranges with employees, or being open about salaries during the hiring process.
Section 125 Plan
A Section 125 plan is a written plan that allows employees to receive cash or benefits on a pre-tax basis. These plans are also known as Premium Only Plans (POP).
A skills gap is the misalignment between your employees’ skills and the essential skills needed for their job.
This term defines looking for and identifying qualified candidates for current or future positions. It helps lessen the recruitment process by identifying the candidate in advance.
A statutory employee is a service provider contracted by a business for a certain period, treated as staff, but subject only to two tax withholdings—Medicare and Social Security tax. Usually, they have more freedom over their work than typical employees.
When an HR manager starts developing potential talent for positions, they are said to be working on a succession plan. It is a strategy to fill a current or anticipated vacancy in a critical role.
Talent acquisition is an HR department’s function that entails acquiring skilled labor. It is achieved by identifying the company’s future and current workforce needs and sourcing and recruiting the right talent to fulfill those needs.
In talent management, HR managers engage in a process to attract, recruit, and retain employees. It is achieved through the HR department’s functions like employee engagement and development, motivation, and training to retain high performers. Talent management also entails performance management and succession planning.
These rewards are physical benefits, with monetary value awarded to employees to recognize for excellent performance. For example, paid holidays, cash bonuses, and gift cards.
Time-to-Hire refers to the period between the company’s first contact with a potential candidate and the time of employment (offer acceptance). Hiring managers must utilize intelligent systems and methods like an e-signature-embedded offer letter to ensure an efficient process.
This generation was born between 1925 and 1945. They grew up experiencing The Great Depression and World War II. They’re often motivated by recognition and seeking stability and opportunities to contribute. As of 2022, they make up approximately 2% of the US workforce.
The term transgender refers to individuals whose gender identity does not correspond with their assigned sex at birth. It is vital to know that terms like “transgenders” and “transgendered” are inappropriate. Instead, HR professionals should use the term “transgender people.”
Employee turnover rate indicates the percentage of employee attrition—voluntary or involuntary—within a specified period. To measure it, compare the number of leavers against that period’s average workforce headcount.
How to calculate turnover rate:
The number of employees who left within a specified timeframe/Average number of employees during that period (headcount at the start + headcount at the end/2) X 100.
Uniformed Services Employment and Reemployment Rights Act (USERRA)
The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal law that provides employment protections for individuals who serve or have served in the United States military, including the National Guard and Reserves.
Utilization analysis is scrutiny of an organization’s demographics in comparison to the demographic of the industry’s available workforce. It can help HR managers determine if the company’s rate of employing a certain group aligns with the available workforce’s ratio. With the data, a company can ensure inclusion and equal employment opportunities. For ease of accessing the statistics, a company can utilize compliance software to help with the accurate collection and storage of employee data.
Volunteer Time Off (VTO)
Volunteer Time Off is a form of paid leave that is specifically designed for employees who are volunteering in the community. This can be volunteering at an event, or otherwise providing assistance to a community-based nonprofit or charity. While some employers designate an organization (or a list of several organizations) that they already have a relationship with for approved VTO, other employers leave it to the discretion of the employee to determine where to spend their VTO.
Employees who disclose a company’s dangerous or illegal activity are called whistleblowers.
The term refers to a chunk of the employee’s wages retained from their paycheck. The amount goes towards taxes and is indicated in the W-2 forms, generated by placing calculations from W-4 alongside the employee’s annual earnings.
Work-life balance is symmetry between the time available for an employee’s professional life and personal life. A fair work-life balance grants the employee fair working hours and adequate rest and leisure away from work, ensuring their well-being. Work-life balance is a critical employee retention factor.
Also known as employee compensation, it refers to benefits paid to workers upon injury or disability on the job. It can cover medical expenses, lost wages, death benefits, and rehabilitation costs. The coverage aims to protect both the employee and the employer. Important to note: When employees accept this benefit, they relinquish their right to sue the employer when an issue occurs.
This term refers to a mutually agreed leeway for employees to decide how to run their work day. It includes factors like when, where, how, and how long the employee works, as long as they deliver
The workforce planning process involves examining an organization’s human resources (workforce) to determine future needs. In this analysis, the company looks into future expected skills supply and demands and formulates a plan to acquire new or build its existing workforce to satisfy the needs when the time comes.
A work week is a period of seven consecutive 24 hours, totaling 168 hours. A typical work week for hourly workers totals 40 hours, with any extra considered overtime. Salaried employees, on the other hand, earn only their salary despite any additional hours, except in companies that provide overtime as a benefit. An easy way to determine accuracy is by using employee time-tracking software.
When an employer dismisses an employee illegally, they are said to have practiced wrongful termination. Illegal reasons include any ground that violates employment law or the employee’s contract.
A yellow-dog contract is an employment agreement that stops employees’ or potential candidates’ existing labor union memberships. It also stops them from joining a new one. The conditions state that failure to adhere to these conditions results in termination or denial of an employment opportunity.
This term refers to the percentage of candidates progressing from one stage of the hiring process to another. For example, it measures the time between first contact and the interview. The ratios enable HR professionals to evaluate the success of different recruitment methods to select the best hiring process.
Zero-based budgeting is a funding method of formulating a new budget, starting with zero funds. It is an alternative to beginning with the previous period’s budget with necessary adjustments. This method provides the foundation and budget guide for effective budget-tracking, justification of operating expenses, and insight into the most profitable areas.
A 147c letter is a document that requests an organization's Employee Identification Number (EIN) or verifies an EIN that has been provided.