Skip to main content

«  View All Posts

HCM, ASO, and FMLA: Understanding Payroll Acronyms 

January 19th, 2023 | 3 min. read

By Mark Gresham

If you've started a business, you may have heard folks throw around payroll acronyms like HCM, FICA, and ERC. That's because no matter what group you interact with, you will find that they have their own original lingo. Whether it’s a sports fanbase (Grit N Grind!) to a friend group from high school, it can be easy to get lost in their nomenclature and find yourself lost in the conversation with no clue what anyone is talking about.  

When I first started in this business, I felt like I had been dropped in another country with those around me speaking in a completely different language. It was English but I didn’t have a clue what my new colleagues were talking about. “Are they an EA?” “How many EE’s have come from using their ATS?” I was completely lost! And I learned to become comfortable asking the question, “What does that mean” or “What does that abbreviation stand for?”  

You don’t know what you don’t know, and, as a business owner, we don’t expect that you are fluent when it comes to payroll language. So, I’d like to give you the cliff notes version and provide you with a quick and easy guide to the most used acronyms that I hear every day working in the payroll industry. 

Payroll acronyms you should know 

EE- Employee  

EA- Enrolled Agent  

DBA- Doing Business As  

PEO- Professional Employer Organization 

PEPM- Per Employee/ Per Month  

EIN- Employer Identification Number 

HRIS- Human Resource Information Systems 

HCM = Human Capital Management System  

This is a big one, so we decided to highlight it a little more. Human capital management is a set of practices related to people (human) resource management. These practices are focused on the organizational need to provide specific competencies and are implemented in three categories: workforce acquisition (pre-employment), workforce management and optimization (employment), and workforce separation (post- employment). 

ASO- Administrative Services Organization 

An organization that provides outsourced solutions to meet the administrative needs of a client, with the client retaining all employment related risks and liabilities. 

PEO- Professional Employer Organization 

ATS- Applicant Tracking System  

Software application that enables the electronic handling of recruitment and hiring needs; it acts like a database for job applicants. 

E- verify 

A web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the United States. 

Exempt Employee 

An employee who is exempt from receiving premium overtime pay. 

PAYGO- Pay as you go workers’ comp 

A way of reporting payroll figures to the employers’ worker comp insurance provider that eliminates the need for year-end policy adjustments. Employers only pay based on their actual payroll data and not on an estimated amount.  

ERC- Employee Retention Tax Credit  

A refundable tax credit against certain employment taxes up to 70% of the qualified wages paid to employees in the late 2020 and almost all of 2021. 

All things Benefits and Compliance  

BA- Benefits Administration 

The process of creating, managing, and updating an organization’s employee benefits program including health insurance, retirement accounts, vacations, PTO, and parental leave. 

FICA- Federal Insurance Contributions Act 

The taxes that largely fund Social Security retirement, disability, survivors, spousal, and children’s benefits. The total due every pay period is 15.3% of an individual’s wage- half of which is paid by the employee and the other half by the employer. 

FUTA- Federal Unemployment Tax Act 

Legislation that allows the government to tax businesses with employees for the purpose of collecting revenue that is then allocated to state unemployment agencies and paid to unemployed workers who are eligible to claim unemployment benefits.  

COBRA- Consolidated Omnibus Budget Reconciliation Act 

Gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.  

FMLA- Family and Medical Leave act 

FLSA- Fair Labor Standards Act 


While this doesn’t hit every term and acronym in the payroll and benefits industry, it is a great start. Don’t be afraid to ask questions to your support specialist so they can help educate you, because remember, you don’t know what you don’t know!  In the end, you’ll become an expert and sound like you are speaking another language. Although it doesn’t roll off the tongue quite as sweet as French or Spanish, it’s a necessary language when building your business. 

Whirks is here to help guide you through the lingo, frustrations, and questions you have as a business owner, like "When should I have a separate legal entity for my small business?" Keep exploring our resources to learn more and make sure you're avoiding the 3 most common payroll mistakes business owners make.