The world of human resources is full of specialized jargon and easily confused abbreviations.

Here, we’ll demystify 26 tricky HR terms you’re likely to encounter as a small-business owner:

Under the ADA, employers are required to provide reasonable accommodations to qualified individuals with disabilities.

  1. Affordable Care Act (ACA)
    A U.S. federal law requiring employers with 50 or more employees to provide affordable health insurance. Smaller businesses can buy group plans through the Small Business Health Options Program, or SHOP, Marketplace.
  2. Americans with Disabilities Act (ADA)
    A U.S. federal law prohibiting discrimination against people with disabilities. Under the ADA, employers are required to provide reasonable accommodations to qualified individuals with disabilities to allow them to perform the essential functions of their job.
  3. Attrition
    The natural reduction in a company’s workforce due to retirement, resignation, or other reasons.
  4. Cafeteria Plan
    An employee benefits program that allows employees to choose from a variety of pretax benefits.
  5. Compensatory Time (“Comp Time”)
    A policy that allows employees to accrue additional paid time off in exchange for working overtime hours.
  6. Defined Contribution Plan
    A retirement savings plan in which the employer and/or employee contribute a fixed amount or percentage of the employee’s salary to a retirement account.
  7. DEI (Diversity, Equity, Inclusion)
    A set of policies, practices, and initiatives that aim to create a workplace culture that respects and values the unique backgrounds, perspectives, and experiences of all individuals, and actively works to eliminate biases and discrimination.
  8. Employment-At-Will
    A legal doctrine allowing employers to terminate employees for any reason, as long as it is not discriminatory or in violation of a specific employment contract.
  9. Employee Handbook
    A comprehensive document that outlines the policies, procedures, expectations, and rules of conduct for employees within an organization.
  10. Exempt/Nonexempt
    A classification of employees under the Fair Labor Standards Act (FLSA) in the United States, with exempt employees being salaried and exempt from overtime pay, and nonexempt employees usually being paid hourly and entitled to overtime pay for hours worked over 40 hours in a workweek.
  11. Exit Interview/Stay Interview
    An exit interview is a meeting conducted by HR to get feedback from departing employees. A Stay Interview is a similar process to get feedback from current employees to improve retention.
  12. Family and Medical Leave Act (FMLA)
    A U.S. federal law that provides job-protected unpaid leave to eligible employees for qualifying family or medical reasons.
  13. Independent Contractor
    A self-employed worker who provides services to a company without being an employee.
  14. Nondisclosure Agreement (NDA)
    A legal contract that prohibits individuals from sharing confidential or proprietary information with others.
  15. Payroll Deduction
    An amount deducted from an employee’s paycheck, such as for taxes, insurance premiums, or retirement contributions.
  16. Per Diem
    A payment of a specific amount of money to employees to cover daily expenses, such as food and lodging, when traveling for business.
  17. Protected Concerted Activity
    A legal term that refers to employees’ right to engage in group activity, such as collective bargaining, to improve working conditions.
  18. Quid Pro Quo
    Latin for “something for something.” In an HR context, this can refer to a form of harassment in which an employee is pressured to engage in unwanted activity in exchange for job benefits or opportunities.
  19. Quiet Quitting
    A situation in which an employee disengages from their job responsibilities without formally resigning. The employee may continue to physically show up for work but may not actively contribute due to feelings of burnout or a lack of job satisfaction.
  20. Retention
    The efforts made by an employer to keep employees and reduce turnover rates by creating a positive work environment, providing growth opportunities, and offering competitive benefits.
  21. Succession Planning
    The process of identifying and developing employees to fill key positions in the company, ensuring a smooth transition when someone leaves or retires.
  22. Turnover Rate
    A measurement of the percentage of employees who leave a company within a specified period of time, usually a year. It is calculated by dividing the number of employees who left during the period by the average number of employees during that same period and multiplying the result by 100.
  23. Upskilling
    The process of teaching employees new skills or providing training to improve their existing skills, making them more valuable to the company.
  24. Withholding
    The process of deducting taxes, such as federal and state income tax, Social Security, and Medicare, from an employee’s paycheck.
  25. Workers’ Compensation
    A type of insurance that provides benefits to employees who are injured or become ill as a result of their job.
  26. Zoom Fatigue
    A feeling of exhaustion and burnout that can result from excessive use of video conferencing tools, due to prolonged screen time and lack of in-person interaction.

Defining Success

If you’re ready to put your knowledge into action, consult your financial institution.

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