Glossary of Terms

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A

Agent of Record (AOR)

An Agent of Record acts as an authorized representative handling specific administrative, compliance, or coordination functions on behalf of a client or employer. In an AOR arrangement, legal employment responsibility remains with the client or another designated entity — not with the AOR. Distinct from Employer of Record (EOR), where legal employment status transfers.

Affordable Care Act (ACA)

Federal law that established minimum requirements for employer-sponsored health coverage. Employers with 50 or more full-time equivalent employees are subject to ACA employer mandate provisions, including requirements to offer minimum essential coverage and avoid penalties. Payrolling Services providers must manage ACA compliance for covered employees.

C

Co-Employment

A legal arrangement where two entities share employer responsibilities for the same worker. Typically, one entity handles operational control (task direction, scheduling, performance) while the other handles administrative functions (payroll, taxes, benefits). Co-employment is distinct from EOR, where a single entity assumes full employer status for compliance purposes.

D

Double Time (DT)

A pay rate equal to twice an employee’s regular rate of pay. Required in specific states (notably California) under certain conditions — for example, when an employee works more than 12 hours in a single workday or more than 8 hours on the seventh consecutive day of work in a workweek. DT obligations vary significantly by state and must be tracked separately from standard overtime.

E

Employer of Record (EOR)

The Employer of Record is the legal employer of a worker for payroll, tax, and compliance purposes. The EOR issues W-2s, withholds and remits payroll taxes, provides workers’ compensation coverage, and assumes liability for employment law compliance. A separate entity (the client) may direct the worker’s day-to-day activities while the EOR holds employer status. AllSourcePPS operates as EOR for Payrolling Services clients.

Exempt / Non-Exempt

Classification of employees under FLSA. Exempt employees meet specific salary and duties tests and are not entitled to overtime pay. Non-exempt employees are entitled to overtime pay for hours worked over 40 in a workweek. State law may impose stricter standards than FLSA — California, for example, applies a daily overtime threshold rather than weekly only. Misclassification carries significant back-pay and penalty exposure.

E-Verify

F

FICA

Federal Insurance Contributions Act. The federal law requiring both employees and employers to contribute to Social Security and Medicare. Employer FICA is 7.65% of wages (6.2% Social Security up to the wage base + 1.45% Medicare with no limit). As Employer of Record, AllSourcePPS remits both the employee and employer portions of FICA taxes.

FLSA (Fair Labor Standards Act)

The federal law establishing minimum wage, overtime pay, recordkeeping, and child labor standards. FLSA requires non-exempt employees to receive overtime pay (1.5x regular rate) for hours worked over 40 in a workweek. Exempt classification under FLSA requires meeting specific salary and duties tests. Misclassification of employees as exempt is one of the most common and costly FLSA violations.

FUTA (Federal Unemployment Tax Act)

Federal tax paid by employers (not employees) that funds federal unemployment benefits and state unemployment systems. The FUTA tax rate is 6.0% on the first $7,000 of each employee’s wages, with a credit of up to 5.4% available to employers in states that meet federal requirements — resulting in an effective rate of 0.6% for most employers. As EOR, AllSourcePPS pays FUTA under its own Employer Identification Number (EIN).

I

I-9 (Form I-9)

The Employment Eligibility Verification form required for all U.S. employees. Employers must verify that employees are authorized to work in the United States using Form I-9. As Employer of Record, AllSourcePPS collects and maintains I-9 documentation for workers under its EOR arrangement.

M

Managed Service Provider (MSP)

A company that manages an organization’s contingent workforce program — typically overseeing supplier management, compliance, reporting, and technology. MSPs operate on behalf of large enterprise clients and frequently work with VMS technology. Payrolling Services providers like AllSourcePPS must meet MSP program compliance requirements and integrate with their processes.

O

Overtime (OT)

Pay at a rate of at least 1.5 times an employee’s regular rate for hours worked over 40 in a workweek (federal standard). Some states impose additional overtime requirements — California requires daily overtime (over 8 hours in a day) in addition to weekly overtime. OT calculations must account for all forms of compensation (bonuses, shift differentials) in the regular rate.

P

PEO (Professional Employer Organization)

A company that enters a co-employment arrangement with client companies. PEOs typically assume some employer responsibilities (payroll processing, benefits administration, HR compliance) while the client retains operational control. Unlike EOR arrangements, PEOs involve shared employer status. PEOs typically require minimum employee counts, long-term contracts, and adoption of their benefits programs.

Pre-Identified Talent

Workers who have been identified by a client company’s internal resources (hiring manager, recruiter, or HR) before engaging a payrolling services provider. Distinct from agency placements where a third party sources the candidate. AllSourcePPS works exclusively with pre-identified talent — the client selects the worker, AllSourcePPS manages the employer compliance obligations.

S

SUTA (State Unemployment Tax Act)

The state-level counterpart to FUTA. Each state administers its own unemployment insurance program with its own tax rate, wage base, and experience rating system. SUTA rates vary significantly by state and by employer experience rating (claims history). As Employer of Record, AllSourcePPS pays SUTA under its own EIN and manages experience rating across all states.

T

Trust Fund Tax

Taxes withheld from employees on behalf of the government — primarily federal income tax and the employee portion of FICA taxes. Employers hold these funds ‘in trust’ for the government until remittance. Failure to remit trust fund taxes triggers the Trust Fund Recovery Penalty under which the IRS can hold responsible individuals personally liable for 100% of the unpaid amount.

V

Vendor Management System (VMS)

Technology platforms used by enterprise organizations and MSPs to manage contingent workforce programs — including supplier management, requisition tracking, time and expense capture, and reporting. Common VMS platforms include SAP Fieldglass, Beeline, and WorkSauce. Payrolling Services providers like AllSourcePPS must integrate with VMS platforms to operate within enterprise programs.

W

W-2 (Form W-2)

The Wage and Tax Statement issued annually to employees, summarizing wages paid and taxes withheld during the calendar year. Employers (or Employers of Record) must issue W-2s by January 31 each year. AllSourcePPS, as Employer of Record, issues W-2s under its own EIN for all workers in its EOR arrangements.

Workers’ Compensation

State-mandated insurance covering medical treatment and lost wages for employees who suffer work-related injuries or illnesses. Employers must maintain adequate coverage in each state where employees work. As Employer of Record, AllSourcePPS maintains master workers’ compensation policies covering all 50 states and handles classification, audits, claims administration, and experience modification management.