The Entravia PEO Glossary

A service model that handles HR, payroll, and benefits administration without entering a co-employment relationship.

A contractual arrangement in which two entities — typically a PEO and its client — share legal and operational responsibilities for the same workforce.

A PEO certified by the IRS under the Small Business Efficiency Act, providing client businesses explicit federal employment-tax liability assurance.

The contract that defines the co-employment relationship between a PEO and its client, including allocation of obligations, fees, and termination rights.

A third-party that legally employs workers on behalf of a client, typically used to hire in jurisdictions where the client has no entity.

An independent accreditation body that audits PEOs for financial reliability, ethical standards, and regulatory compliance.

A PEO that has earned ESAC accreditation and is backed by surety bonds covering payment of wages, taxes, and benefit premiums to its clients.

An entity that legally employs workers in a country where the client lacks a local entity, handling payroll, benefits, and statutory compliance.

A broad category of outsourcing arrangements in which an external provider takes on some or all HR functions for a client business.

The U.S. trade association for the PEO industry, publishing research, advocacy, and standards used by buyers and brokers to evaluate PEOs.

A PEO is a firm that co-employs a client's workforce to deliver payroll, benefits, HR, and compliance services under a shared-employment arrangement.

The structural distinction between a PEO (co-employment, bundled HR, benefits, and compliance) and a payroll bureau (transactional payroll only).

An employee who works at the client's premises under the client's direction but is co-employed by the PEO for tax and benefits purposes.

A PEO billing approach that combines administrative fees, taxes, and certain benefits into a single bundled rate.

A signed designation establishing one broker as the client's exclusive representative for placing and servicing a specific insurance or PEO arrangement.

A signed client letter designating a specific broker as the exclusive representative on a benefits or PEO account, displacing any prior broker.

A structured roster of an employer's workforce — including demographics, location, compensation, and benefits enrollment — used to underwrite PEO and benefits quotes.

The contractual obligation of a PEO to disclose to the client the components of its billing — admin fee, taxes, benefits premium, comp premium — separately.

A scheduled, scripted product and service demonstration by short-listed PEOs to a buying committee, usually following the RFP scoring step.

The decision-stage meeting where 2–3 PEO finalists present their solution, team, and implementation plan to the buying committee.

A claims-history report from an insurance carrier listing past claims, payouts, and reserves — required for accurate PEO and workers' comp quoting.

A PEO billing approach where statutory taxes, benefits premiums, and workers' comp are billed at cost, separate from the administrative fee.

A licensed insurance broker who specializes in evaluating, placing, and servicing PEO arrangements on behalf of employer clients.

An initial qualification conversation between a prospect and a PEO sales representative to scope fit, services needed, and quote requirements.

The structured workstream of moving an employer's payroll, benefits, and HR records from a current state (no PEO or prior PEO) into a new PEO.

The risk-assessment process a PEO uses to decide whether to offer terms to a prospect and at what rates for benefits, workers' comp, and admin.

A pricing model in which a PEO charges a fixed monthly administrative fee per worksite employee, separate from pass-through costs like benefits and taxes.

A PEO pricing model where the administrative fee is calculated as a percentage of gross payroll instead of a fixed per-employee amount.

A renewal cycle in which a PEO presents materially higher pricing than the initial year, often due to claim experience or rate-action delay.

A pre-quote inquiry used to gather basic information about a PEO's services, technology, and qualifications before issuing a formal RFP.

A structured solicitation document used by buyers to request comparable proposals from multiple PEOs.

RFI (Request for Information) is exploratory and capability-focused; RFP (Request for Proposal) is commercial and includes pricing and contract terms.

The component of PEO billing that compensates the PEO for HR, payroll, benefits, and compliance services — distinct from pass-through costs.

A third-party report on a service organization's controls relevant to client financial reporting, frequently requested in PEO due diligence.

A federally required weekly payroll report (Form WH-347) submitted by contractors on Davis-Bacon and other prevailing-wage projects.

An IRS arrangement allowing related corporations to designate a single entity to pay employees who concurrently work for multiple related entities.

A pandemic-era refundable payroll tax credit for eligible employers who retained employees during qualifying COVID-19 periods.

Federal payroll tax funding Social Security (6.2% each on employer and employee, up to the wage base) and Medicare (1.45% each, no wage cap).

IRS form used by Applicable Large Employers to report each full-time employee's health-coverage offer and enrollment under the ACA.

Federal payroll tax of 6% on the first $7,000 of each employee's wages, partially offset by SUI credits.

A state that has not repaid federal unemployment-trust-fund loans and whose employers therefore receive a reduced FUTA credit, increasing effective FUTA tax.

The taxable value of non-cash compensation or benefits that must be added to an employee's W-2 wages.

A type of employee stock option that, if held long enough, qualifies for capital-gains tax treatment rather than ordinary income at exercise.

The process of registering an employer with the income-tax and unemployment-tax agencies of every state where it has employees creating nexus.

The connection between an employer and a state that triggers payroll-tax registration, withholding, and reporting obligations in that state.

An elective state-level tax on pass-through entities used to work around the federal $10,000 SALT deduction cap for owners.

Equity compensation that vests over time and is taxed as ordinary income on vest, requiring W-2 reporting and tax withholding by the employer.

A reporting-only payroll run in a second jurisdiction used to satisfy local tax obligations for an employee who is paid from a primary jurisdiction.

Bilateral state arrangements that allow employees who live in one state and work in another to pay income tax only to their state of residence.

A worker treated as an employee for FICA tax purposes by statute, even if treated as an independent contractor for income tax purposes.

State payroll tax that funds unemployment benefits. Rates are experience-rated based on an employer's claims history.

A formal challenge filed with a state unemployment agency to contest the calculation of an employer's SUI rate.

An optional payment to a state unemployment fund that lowers an employer's assigned SUI rate by improving its reserve-account balance.

The maximum amount of an employee's wages subject to a particular payroll tax in a calendar year.

The phenomenon where employees can be re-subjected to Social Security or SUI taxable wage bases when an employer transitions PEOs mid-year.

A federal tax credit available to employers that hire individuals from specified target groups facing barriers to employment.

A federal tax credit for employers who hire individuals from targeted groups including veterans, long-term unemployed, and SNAP recipients.

The maximum percentage of an employee's household income that the employee's required contribution for self-only coverage may equal under the ACA employer mandate.

A stop-loss policy that reimburses the self-funded plan when total annual claims exceed a defined attachment point (typically 120–125% of expected).

A plan feature that automatically enrolls eligible employees at a default contribution rate unless they affirmatively opt out.

The end-to-end process of notifying qualified beneficiaries, collecting premiums, and tracking coverage continuation under federal COBRA rules.

The specific events (termination, reduction in hours, divorce, child losing dependent status, etc.) that trigger COBRA continuation rights.

Insurance covering employer liability for employment-related claims including discrimination, harassment, retaliation, and wrongful termination.

A multiplier applied to workers' comp premium based on the employer's actual loss history relative to industry peers (1.0 is average).

Insurance protecting the personal assets of plan fiduciaries against breach-of-duty claims under ERISA.

An employer-sponsored, pre-tax account allowing employees to fund qualified medical or dependent-care expenses with payroll-deducted contributions.

Non-cash compensation provided to employees in addition to wages, including health coverage, retirement, life insurance, and qualified transportation.

An employer-sponsored, employee-funded pre-tax account used to pay qualified medical or dependent-care expenses, with limited carryover.

A health plan in which the employer pays a fixed premium and the insurance carrier assumes all claim-cost risk.

An employer-funded account that reimburses employees for qualified medical expenses on a tax-advantaged basis.

A tax-advantaged savings account paired with a qualified high-deductible health plan, owned by the employee with portable balances.

An Individual Coverage HRA introduced in 2020 allowing employers of any size to reimburse employees for individual market premiums and qualified expenses.

A self-funded plan structured with predictable monthly payments that cover expected claims, administration, and stop-loss premium.

A single health insurance plan sponsored by a PEO that aggregates risk and purchasing power across all of its client employers.

The ACA-required ratio of premium dollars spent on medical claims and quality improvement vs. administration and profit, with rebates owed if thresholds are missed.

A welfare benefit arrangement that provides benefits to employees of two or more unrelated employers, regulated by the DOL and (often) state insurance departments.

The base level of health coverage an Applicable Large Employer must offer to substantially all full-time employees to avoid the 4980H(a) penalty.

The percentage of health-insurance premiums spent on medical claims and quality improvement, as opposed to administration and profit.

A state in which workers' compensation insurance is provided exclusively by a state-run fund rather than through private carriers.

A retirement plan sponsored by a PEO or industry association that covers employees of multiple unrelated participating employers under a single plan document.

A retirement plan structure that allows multiple unrelated employers to participate in a single 401(k) plan, reducing per-employer administrative burden.

The annual testing required by the IRS to ensure 401(k) plans do not disproportionately benefit highly compensated employees.

The annual window during which employees can elect or change benefits coverage outside of qualifying-event special enrollments.

A workers' compensation program in which premium is calculated and paid each pay period based on actual payroll, eliminating large up-front deposits and audit surprises.

The plan provisions defining which employees qualify for benefits, typically based on hours, classification, and waiting period.

A 401(k) created under the SECURE Act that allows unrelated employers with no shared characteristics to participate in a single retirement plan.

A Qualified Small Employer Health Reimbursement Arrangement that lets employers under 50 FTEs reimburse employees tax-free for individual health coverage.

Medical expenses defined under IRS Section 213(d) that qualify for tax-advantaged reimbursement from HSAs, FSAs, and HRAs.

A pre-tax employee benefit covering commuter transit, vanpool, and qualified parking up to monthly IRS limits.

An event (marriage, birth, loss of coverage, etc.) that allows an employee to make mid-year changes to elections outside open enrollment.

A 401(k) plan design that satisfies nondiscrimination testing automatically by providing a defined employer contribution to all eligible employees.

A health plan in which the employer assumes the financial risk of providing benefits, typically with stop-loss insurance to cap exposure.

A plain-language summary of an ERISA-covered plan's features, rights, and obligations, required to be distributed to participants.

A stop-loss policy that reimburses the self-funded plan for individual member claims exceeding a defined deductible (e.g., $50,000 per member per year).

Insurance protecting a self-funded health plan against catastrophic individual claims (specific stop-loss) or aggregate claim levels (aggregate stop-loss).

A four-digit code (typically NCCI) that categorizes a job by injury risk and drives the rate applied to payroll for that class.

A single ERISA plan document and SPD that "wraps" multiple welfare benefits (medical, dental, vision, life, disability) into one plan for compliance purposes.

A single ERISA plan document that consolidates multiple employer-sponsored welfare benefits into one plan for administrative and reporting simplicity.

California statute codifying the ABC test for distinguishing employees from independent contractors, with limited statutory exemptions.

Federal law governing employer-sponsored health coverage, including employer-mandate, reporting (1094/1095), and minimum-essential-coverage requirements.

The ACA requirement that employers with 50+ FTEs offer affordable, minimum-value health coverage to substantially all full-time employees or face penalties.

Federal civil-rights law prohibiting discrimination based on disability and requiring reasonable accommodations in employment.

The Fair Credit Reporting Act framework governing employer use of consumer reports for hiring, including disclosure, authorization, and adverse-action notices.

An Illinois law regulating collection and storage of biometric identifiers (fingerprints, retina scans, voiceprints) by private entities, including for timekeeping.

A HIPAA-required contract between a covered entity (or business associate) and a downstream service provider that handles Protected Health Information.

The shared exposure between a PEO and its client for employment-related claims, governed by the Client Service Agreement and applicable state and federal law.

Federal law requiring employers with 20+ employees to offer continuation of group health coverage to qualified beneficiaries after qualifying events.

State legislation prohibiting workplace discrimination based on hair texture and protective hairstyles historically associated with race.

A federal law requiring contractors and subcontractors on federally funded construction projects to pay locally prevailing wages and fringe benefits.

An investigation by the Department of Labor's Wage and Hour Division into employer compliance with FLSA, FMLA, and related statutes.

A federal online system that compares Form I-9 information to U.S. government records to confirm employment eligibility.

Federal agency that enforces laws prohibiting workplace discrimination and processes employee charges of discrimination.

The set of state and federal rules governing how employers collect, store, share, and dispose of personally identifiable information about workers.

Insurance protecting employers against claims of wrongful employment practices including discrimination, harassment, and wrongful termination.

A workplace evaluation that identifies and mitigates physical risk factors for musculoskeletal injuries.

Federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry.

A multiplier applied to workers' compensation premium that reflects an employer's claims history relative to industry peers.

Federal law establishing minimum wage, overtime pay, recordkeeping, and youth-employment standards for private and public sector employment.

Federal law providing eligible employees of covered employers up to 12 weeks of unpaid, job-protected leave per year for specified family and medical reasons.

Federal form U.S. employers must complete to verify each new hire's identity and authorization to work in the United States.

Federal law governing the privacy and security of protected health information (PHI), with administrative and technical safeguards required of covered entities and their business associates.

A 2013 update to HIPAA that extended privacy and security requirements directly to business associates and tightened breach-notification rules.

The legal determination of whether a worker is an employee or an independent contractor, governed by varying federal and state tests.

A labor-law doctrine under which two entities are deemed jointly responsible for the wage, hour, and discrimination obligations of the same workforce.

A state in which workers' compensation insurance must be purchased from a single state-run fund rather than the private market.

Federal agency that sets and enforces workplace safety and health standards under the Occupational Safety and Health Act of 1970.

The federal record of work-related injuries and illnesses required for most employers with 11+ employees.

State-level wage-replacement programs allowing employees paid time off to bond with a child or care for a seriously ill family member.

State and city laws requiring employers to disclose salary ranges in job postings and/or to applicants and employees on request.

A workers' compensation billing model in which premium is calculated and paid each payroll based on actual wages, eliminating large deposits and audit surprises.

A subset of state paid-leave programs covering bonding with a new child or caring for a family member with a serious health condition.

State-mandated paid leave programs that fund time off for family and medical reasons, typically through payroll-tax contributions.

A category of state and city laws requiring advance notice of work schedules and premium pay for last-minute changes.

The DHS-authorized alternative procedure allowing E-Verify employers to inspect Form I-9 documents over live video for remote hires.

A formal program that brings injured employees back to modified or transitional duty as soon as medically appropriate, reducing comp claim duration and cost.

An independent audit report on a service organization's controls over financial reporting, evaluated for design and operating effectiveness over time.

A third-party audit framework evaluating service organizations against trust service criteria (security, availability, confidentiality, processing integrity, privacy).

Federal law imposing financial-reporting and internal-control requirements on U.S. public companies and their auditors.

State-mandated retirement-savings programs that require employers without a qualified plan to auto-enroll employees in a state-run Roth IRA.

An illegal practice in which employers manipulate corporate transactions to shift to a more favorable state unemployment insurance rate.

State-mandated insurance providing wage replacement for non-occupational illness or injury, currently active in CA, HI, NJ, NY, RI, and PR.

A reimbursement to remote employees for home-office expenses, required as a business expense reimbursement in some states (notably California).

A US Department of Labor Wage and Hour Division audit of an employer's compliance with FLSA, FMLA, and related federal wage and hour laws.

Treating a worker as an independent contractor when the legal facts establish an employee relationship under federal or state tests.

State-mandated insurance covering employee injuries and occupational illness. Premiums are class-coded by job duty.

A four-digit code (NCCI or state-specific) that classifies a job's injury risk and determines the workers' compensation rate applied to its payroll.

The post-policy-period reconciliation in which a workers' comp carrier compares estimated payroll and class codes against actual exposure and adjusts premium.