A performance appraisal process, where an employee is rated on his/her performance by people who are usually directly connected with his/her work or in a position to evaluate effectiveness. Peers, supervisors, managers, customers or clients, familiar with the employee’s work can be included in the feedback process. Typically used for assessing competence development needs and succession planning in the organization, more than for determining pay or promotions. Such feedback is usually anonymous. Also called multi-rater assessment, multi-source assessment or multi-source feedback.
A 401(k) is a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts, designed to provide an individual with greater retirement planning options. Employers sometimes match a certain % of the employee contribution.
Accommodation (see also Reasonable Accommodation)
Reasonable accommodation is any change to a job, the work environment, or the way things are usually done. It often allows an individual with a disability to apply for a job, perform job functions, or enjoy equal access to benefits available to other individuals within the workplace. Organizations are required by law to provide reasonable accommodation to qualified individuals with disabilities, unless doing so would impose an undue hardship to the agencies. In addition, Executive Order 13164 requires Federal agencies to develop written procedures for providing reasonable accommodation for persons with a qualified disability.
Usually refers to a negative impact to an employee or group of employees involving a material difference in the work, pay or circumstances. See also “disparate impact.”
Appraisal (also Performance Planning)
Performance appraisal is the process of reviewing employee performance and accomplishments, setting new performance objectives, documenting the performance for the prior review period. This is usually done verbally, in a face-to-face meeting between the employee and the supervisor. Annual performance appraisals often form the basis for personnel decisions, e.g. compensations and benefits and sometimes, promotions.
Attorney – Client Privilege
A client’s privilege to refuse to disclose, and to prevent any other person from disclosing, confidential communications between the client and his or her attorney. Such privilege protects communications between attorney and client that are made for the purpose of furnishing or obtaining professional legal advice or assistance.
A type of damages awarded in an employment claim against an employer that represents the amount of money the employee would have earned in the past if the alleged violation of law had not occurred. Also known as “lost pay” or “lost wages.”
Pay received for a given work period, as an hour or week, but not including additional pay, as for overtime work or commissions. It is used as the basis for calculating other allowances and benefits.
Benchmarking (also Best Practice Benchmarking or Process Benchmarking)
A process used in management and particularly strategic management, in which organizations evaluate various aspects of their processes in relation to best practice, (usually within their own sector or industry). This allows organizations to develop plans for adopting and adapting such best practices for increasing their performance. Benchmarking is considered a continuous process in which organizations continually seek to challenge and improve their practices. It is also a compensation process used to determine what the labor market is willing to pay for a given role, skill set, and proficiency level. Benefits
Some see benefits as a form of supplement paid by employers to employees over and above the amount of pay specified as cash compensation. For others, benefits are a portion of a total compensation package or total rewards for employees. A comprehensive, common set of benefits could include many components, e.g., career development, support for work-life balance, retirement plans, health insurance, life insurance, PTO or paid time off. Also known as “fringe benefits.”
The practices of an organization that enables them to achieve superior employee and organizational performance results. It usually reflects an “ideal” or hoped for standard and becomes a target for organizations to reach.
Prejudice in favor of or against one thing, person, or group compared with another, usually in a way considered to be unfair to one or more “protected” groups, often based on treating one group differently than another. Implicit Bias (or Unconscious Bias) Unlike explicit bias (which reflects the attitudes or beliefs that one demonstrates or communicates at a conscious level), implicit bias is the bias in judgment and/or behavior that results from subtle cognitive processes (e.g., attitudes and stereotypes) that often operate at a level below conscious awareness and without intentional control.
A reward or payment (may be either discretionary or nondiscretionary) based on the performance of an individual, a group of workers operating as a unit, a division or business unit, or an entire workforce. Payments may be made in cash, shares, share options or other items of value, such as a special event, travel or gift card. In the context of sales compensation, a defined, pre-established amount of money to be earned for achieving a specified performance goal. Planned bonus amounts commonly are expressed as a percentage of an employee’s base salary, salary range midpoint, percentage of target cash compensation or incentive compensation, or a defined dollar amount.
California Labor Commissioner
Sets and enforces regulations for employee wages, paycheck deductions, breaks, vacation, jury/witness duty, or temporary military leave, the workweek, minors, employee access to personnel files, “lawful conduct” discrimination, exempt status, and independent contractor status. The commissioner also assesses fines and files charges with the District Attorney on behalf of underpaid employees, and investigates, holds hearings, takes action to recover wages, assesses penalties, and makes demands for compensation. Enforces California labor laws, including those covering equal pay, minimum wage, overtime, breaks, paid sick leave, and prohibitions on retaliation and misclassification. The Labor Commissioner receives claims alleging violations of the California Equal Pay Act, investigates these claims, and where violations are found, orders appropriate relief. The Commissioner also conducts workplace investigations, issues citations for wages and penalties, hold hearings, files cases for criminal prosecution with District Attorneys, puts earned wages into workers’ pockets and helps level the playing field for law-abiding employers. The Labor Commissioner’s office is also known as the Division of Labor Standards Enforcement (DLSE).
The practice of hiring employees on an as-needed basis, either as a replacement for permanent full-time employees who are out on short- and long-term absences or to meet employer’s additional interim staffing needs during peak business periods.
COLA (Cost of Living Adjustment)
An annual adjustment in wages to offset a change in purchasing power, as measured by the Consumer Price Index (CPI).
Collective Bargaining Agreement (CBA)
A collective bargaining agreement is a labor contract between one or more employers and one or more unions about the terms and conditions of employment and employees. Typical issues covered by collective bargaining include salaries and wages, hours of work, working conditions, discipline, and grievance procedures.
A payment made to an employee based on sales of goods or services. Common measures for commissions are sales margin, volume, or units sold.
Sometimes used as a synonym for pay equity. However, comparable worth in the United States is a legal theory based on the idea that men and women should receive equal pay when they perform work that is of comparable value or worth to the employer. The California Equal Pay Act is not a comparable worth statute.
All forms of pay going to employees and arising from their employment. Typically, compensation includes base elements such as wages and salaries, variable pay such as bonus, incentives, commissions, and long term incentives such as stock options, restricted stock, or performance shares.
A compensation philosophy is a formal statement documenting the company’s approach to employee compensation. It essentially explains the “why” behind employee pay and creates a framework for compensation consistency within the organization. Compensation philosophies are typically developed by the human resources department in collaboration with the executive team and board of directors. The philosophy based on many factors, including the company’s financial position, turnover and retention, the size of the organization, the industry, business objectives, salary survey information, and the level of difficulty in finding qualified talent based on the economy, as well as unique business circumstances.
Competencies / Competency
Competencies are the defined knowledge, behaviors, skills, abilities, and attitudes an individual employee needs in order to effectively perform their job and/or lead others.
Conditions of employment
An organization’s policies and work rules that employees are expected to follow to become or remain employed.
A policy restricting the disclosure of confidential information, but see Section X on how California’s Equal Pay Act may limit the application of such policies on issues of employee pay.
Contingent workers are employed or retained without defined job security or long-term commitments. Part-time workers, temporary and contract workers, self-employed workers and independent contractors are examples.
CPI (Consumer Price Index)
An index of prices used to measure the change in the cost of certain defined basic goods and services in comparison with a fixed base period. Also called cost-of-living index.
Department of Fair Employment and Housing (DFEH)
State agency that enforces California’s non-discrimination laws. DFEH has jurisdiction over private and public employment, housing, public accommodations, and public services. DFEH receives and investigates discrimination complaints, conducts mediations and provides technical assistance to employers regarding their responsibilities under the law. They can also file a legal action and represent the interest of employees in litigation.
Department of Labor (DOL)
The United States Department of Labor is a cabinet-level department of the U.S. federal government responsible for occupational safety, wage and hour standards, unemployment insurance benefits, reemployment services, and some economic statistics; man U.S. states also have such departments.
Discrimination (including disparate impact and disparate treatment)
The different treatment or impact on a person based on … or making a distinction in favor of or against, a person based on the group, class, gender, ethnicity, sexual preferences, religion or category to which that person belongs rather than on individual performance or merit. Unfair or unequal treatment of an individual (or group) based on certain characteristics protected by law, such as race, sex, or ethnicity. In the employment context, includes unequal impact that a neutral employment policy has on a group based on certain protected characteristics, such as sex, race, or ethnicity.
Disparate (Adverse or Unequal) Impact
Refers to an employment practice that appears neutral but, in actual practice, has a negative impact against a protected class.
Disparate (Unequal) Treatment
Refers to an applicant or employee who belongs to a protected class receiving different treatment because of his or her membership in a protected class. It may be discriminatory.
Division of Labor Standards Enforcement (DLSE)
See “Labor Commissioner.”
EEO (Equal Employment Opportunity)
The concept that an employer’s decisions, policies, and practices should not be discriminatory or otherwise based on categories protected by law.
A broad term, which is used to refer to the general management and planning of activities related to developing, maintaining, and improving employee-management relationships typically by communicating with employees, processing grievances/disputes, etc. It also is a usual part of HR that focuses on addressing workplace problems and facilitating resolution.
Employment “at will”
A legal doctrine that states that an employment relationship may be terminated by the employer or employee at any time and for any or no reason, as long as it is not for an unlawful reason.
Equal Employment Opportunity Commission (“EEOC”)
A federal agency that interprets discrimination law, collects employment data and handles employee complaints, including under the federal Equal Pay Act. They also offer mediation and research plus legal advocacy.
Equity adjustments are salary changes used to position an employee’s pay relative to internal peers or the external market.
Executive Order 11246
The Executive Order prohibits federal contractors and federally–assisted construction contractors and subcontractors, who have over $10,000 in government business in one year from discriminating in employment decisions on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin. The Executive Order also requires government contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment.
A variance in pay established for same, substantially similar, or comparable jobs based on variations in cost of labor and/or living among geographic regions, cities or counties.
Incentive Compensation or Variable Pay
Compensation paid in addition to base wage used to motivate and to reward employees for reaching and/or exceeding standard performance or productivity goals.
Job analysis is a systematic study of a job to determine what activities and responsibilities are included, their relationships with other jobs, the qualifications and skills necessary for performance of the jobs, and the conditions under which work is performed.
A written description of a job which includes information such as the nature of the work to be performed, specific responsibilities and duties, and the employee skills, characteristics, education and experience required to perform the job, scope and working conditions, and job title.
Job evaluation is usually a process for analyzing and comparing different jobs according to the overall demands of each one. Job evaluations assess the content of a job, not an individual’s performance of that job.
Groups of similar occupations based on work performed and on required skills, education, training, and credentials (similar types of work and requiring similar training, skills, knowledge, and expertise).
Enforces California labor laws, including minimum wage, overtime, breaks, paid sick leave, and prohibitions on retaliation and misclassification. The Labor Commissioner receives claims alleging violations of the California Equal Pay Act, investigates these claims, and where violations are found, orders appropriate relief. The Commissioner also conducts workplace investigations, issues citations for wages and penalties, holds hearings, files cases for criminal prosecution with District Attorneys, puts earned wages into workers’ pockets and helps level the playing field for law-abiding employers. The Labor Commissioner’s office is also known as the Division of Labor Standards Enforcement (DLSE).
A geographic or economic area of exchange in which workers seek jobs and employers seek workers.
The typical rate of pay for a specific job within a given labor market.
The average wage for an employee in a specified position or occupation, which is determined by adding together the total wages for all employees in a specific position or occupation and then dividing it by the total number of employees.
The margin between the highest paid 50 percent and the lowest paid 50 percent of employees in a specific position or occupation.
A pay increase (raise) for an employee based on an employee’s past performance and impact.
The minimum requirements for a job.
The lowest hourly rate an employer is legally obligated to pay an employee, which may differ by geographic location.
Used to classify specific occupations into a specific category, such as professionals, technical/hi-tech, administrative/clerical, sales, service, retail, etc. Often used in compensation studies and in the administration on an EEO1 report.
The distribution of workers within the full range of jobs in the labor market into clusters based on gender, race, national origin or other demographic characteristics that may be out of line with the respective and relevant labor area market.
Office of Federal Contract Compliance Programs (OFCCP)
This division of the Department of Labor holds those who do business with the federal government – contractors and subcontractors – responsible for complying with the legal requirement to have an annual written Affirmative Action Plan and not discriminate on the basis of race, color, national origin, sex, sexual orientation, gender identity, religion, disability or veteran status.
Although there are exceptions, overtime pay generally refers to additional pay above the regular rate of pay for hours of work performed over eight hours in a workday or over 40 hours in a workweek. See definition provided by the Labor Commissioner’s office: https://www.dir.ca.gov/dlse/FAQ_Overtime.htm
A period of approved absence for an employee granted for the purpose of birth, adoption, or fostering children. Employers may have leave policies that provide more time or benefits than the laws require. For more information on legal requirements in California, visit the DFEH website for a comparison chart of pregnancy and paternal leave laws.
A process of identifying, evaluating, holding accountable and developing the work performance of employees in an organization. This is to help ensure that organizational objectives are more effectively achieved and understood by managers and employees, through the use of performance assessment tools, coaching and counseling as well as providing continuous feedback. It can be both verbal and written.
Method of pay based on paying a set rate for completing a particular task or making a particular item. See definition provided by the Labor Commissioner’s Office: https://www.dir.ca.gov/dlse/Wages.pdf
A questionnaire used in an organization to collect quantifiable data about the responsibilities and requirements of jobs in that particular environment within the organization.
Pregnancy leave is a period of approved absence for employees granted for the purpose of giving and recovery from birth and pregnancy-related disability. Pregnancy leave may last anywhere from several weeks to a period of months and may be paid or unpaid, depending on the employer’s policies and applicable laws. For more information on legal requirements in California, visit the DFEH website for a comparison chart of pregnancy and paternal leave laws.
Protected class / group
A legal term that describes categories of identity that employers cannot lawfully discriminate against. Individuals have multiple identify categories. For a list of protected classes in California employment law, visit https://www.dfeh.ca.gov/Employment.
Professional Development Plan
A Professional Development Plan outlines how the professional capabilities and education/training of the employee will be developed over a defined period. This plan may include formal training, participation in work related activities (projects or committees), access to coaching, mentoring or any other opportunities for experience to enhances the skills, knowledge or personal attributes of the employee.
A form of discipline with increasing penalties are awarded each time an employee is disciplined for the same or a different performance infraction, policy or work-rule violation. Generally, the sequence is incremental, beginning with an oral warning to written warnings to suspension and finally termination. Usually documented, as it progresses in seriousness.
Career advancement within an organization, which usually includes increased authority and different title, level of responsibility, status and (usually) pay.
Reasonable Accommodation (see also Accommodation)
Modifying or adjusting a job process or a work environment to better enable a qualified individual with a disability to be considered for or perform the essential functions of a job.
Number of years prescribed by a law or regulation for which certain records must be kept accessible before their final disposition/destruction. LINK TO CHART THAT DISCUSSES RECORD RETENTION
The process of researching, attracting and bringing into an organization personnel who will possess the appropriate education, qualifications, skills, competence and experience for certain positions.
Résumé / CV
A document outlining a summary of a person’s education, training, professional history, skills, competences and job qualifications, which is used typically when applying for a job. The term CV (Curriculum Vitae) can be more usual in more professional, academic or technical fields.
Retaliation occurs when an employer negatively treats an employee for engaging in “legally protected activity.” It can include a negative job action, such as demotion, discipline, firing, salary reduction, or job or shift reassignment. For a list of laws that prohibit retaliation that are under the jurisdiction of the Labor Commissioner’s Office, see: https://www.dir.ca.gov/dlse/HowToFileLinkCodeSections.htm
Employee retention is a systematic effort by employers to create and foster an environment that encourages current employees to remain employed by the employer.
A letter issued by the U.S. Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing, once a charge has been recorded and processed. It informs individuals who filed the charge that they have the right to further pursue their charges in a federal or state court within certain specified time lines.
A fixed amount of money that will be distributed to an employee for each payroll period, whether weekly, bi-weekly, semi-monthly, or monthly.
Salary grade / level
A compensation level expressed as a salary range, which has been established for each position within the organization as a part of the compensation process. Usually has an initial entry rate, midpoint and maximum.
A range of pay rates, from minimum to maximum, set for a specific pay grade, usually for a specific job.
Tools used to determine the median or average compensation paid to employees in one or more jobs in a respective labor market. Compensation data, collected from several employers, is analyzed to develop an understanding of the amount of compensation usually paid for similar positions. This is often published by the government or compiled by relevant professional associations or organizations.
Status determined by the length of time an employee has worked for a specific employer, department or position within the organization. Oftentimes, this is outlined in a CBA.
Sexual harassment involves unwanted sexual advances, or visual, verbal or physical conduct of a sexual nature. This definition includes many forms of offensive behavior and includes gender-based harassment of a person, regardless of the sex of the harasser. For more information, visit the DFEH website for frequently asked questions about sexual harassment.
Paid (usually) time off granted to employees who are out of work due to an illness or injury. Called PTO when combined with vacation time.
Skill Based Pay
A compensation system based on the repertoire of skills an employee can perform, rather than the specific skill that the employee may be using at a particular time. Pay increases generally are associated with the addition and/or improvement of the skills of an individual employee, as opposed to better performance or seniority within the system.
The right to purchase stock of the employer at a given price at some designated time in the future. Stock Options usually come in two types: Incentive stock options (ISOs) in which the employee is able to defer taxation until the shares bought with the option are sold. Nonqualified stock options (NSOs) in which the employee must pay income tax on the ‘spread’ between the value of the stock and the amount paid for the option.
Substantially Similar Work
Current California law prohibits employers from paying unequal wages to employees who perform substantially similar work, which means the employer should look at the overall job content (including skills and responsibilities) and actual duties performed to determine if the jobs are substantially similar. Job titles and job descriptions alone are not determinative. For more information on determining if employees are performing substantially similar work, please refer to the Step by Step Job Evaluation Template for Employers to Determine Wage Rate (under Employer Resources). ALSO LINK TO DEFINITIONS.
Title VII, Civil Rights Act of 1964
Federal law prohibiting employers of 15 or more employees from discriminating on the basis of race, color, religion, sex, or national origin. Enforced by the Equal Employment Opportunity Commission.
The complete pay package awarded employees, usually on an annual basis, including all forms of money, benefits, bonuses, commissions, awards, services and in-kind payments. It is the total cash remuneration plus the valued perquisites and benefits awarded employees on an annual basis. In valuing perquisites and benefits, the value of long-term benefits are usually included. Typical items included are medical and insurance expenses, vacation, terminal benefits (gratuity, provident fund, social security), stock share purchase plans, club memberships etc. Also known as total remuneration. Total compensation does not usually include training and education reimbursement.
Groups of workers who have joined together to form incorporated associations relating to the type of work that they perform in order to protect their common interests, improve and define their working conditions. They then negotiate with the employer over wages, benefits, hours, and working conditions.
Wage or Wages
Money received by an employee for labor performed (of every description), whether the amount is fixed or determined by the standard of time, task, piece, commission or other methods of calculation. (for discussion with definitions subcommittee)
A “whistleblower” is an employee who discloses information, typically to a government or law enforcement agency, that the employee believes discloses a violation of the law. See definition and additional information provided by the Labor Commissioner’s Office: https://www.dir.ca.gov/dlse/WhistleblowersNotice.pdf
- A Handbook of Human Resource Management Practice 10th Edition by Michael Armstrong. Kogan Page 2006
- Glossary of HR Terms by Rana Sinha | http://www.dot-connect.com
- HRM Guide Network | http://www.hrmguide.net
- Reward Management Associates | http://www.reward-management.com/Definitions.htm
- Society for Human Resource Management | http://www.shrm.org
- The Essential HR Handbook: A Quick and Handy Resource for Any Manager or HR Professional by Sharon Armstrong. Career Press 2008
- World At Work: The Total Rewards Association | http://www.worldatwork.org/waw/Glossary
DISCLAIMER: The materials provided on this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain legal advice about any particular issue or problem. The materials do not represent the opinions or conclusions of individual members of the Task Force. The posting of these materials does not create requirements or mandates.