Reference
Plain-English definitions of the acronyms and terms that come up when you're hiring across borders, running payroll, or figuring out how an EOR is different from a PEO. Written by the HR Options team.
U.S. tax forms issued to non-employee workers. 1099-NEC reports payments of $600 or more to independent contractors; 1099-MISC covers other miscellaneous payments. Issuing a 1099 to a worker who legally qualifies as an employee is one of the most common — and most expensive — classification mistakes.
U.S. federal law requiring employers with 15+ employees to provide reasonable accommodations to qualified workers with disabilities and prohibiting discrimination in hiring, firing, pay, and promotion. Interacts with FMLA and workers' comp in most leave cases.
A third party that engages and pays independent contractors on behalf of a client, handling contracts, invoicing, and payment. Unlike an EOR, an AOR works only with contractors — not W-2 or T4 employees — and does not assume employer-of-record liability.
The practice of contracting an entire business function — payroll, IT support, customer service — to an external provider. Broader than an EOR: a BPO owns a whole process, while an EOR specifically owns the legal employment relationship for named workers.
Senior HR designation granted by Canadian provincial HR associations (e.g. HRPA in Ontario). Signals experience in strategic HR leadership; often a hiring requirement for HR Director and CHRO roles in Canada.
A provider that formally engages independent contractors on a client's behalf, similar to an AOR. The COR handles contractor onboarding, IP assignment, and payments, and absorbs some classification risk — but the underlying worker is still a contractor, not an employee.
An arrangement where two entities share legal employer responsibilities for the same worker. Common in PEO relationships. When structured poorly it exposes both parties to joint liability for wage, tax, and discrimination claims — one reason many U.S. companies prefer a sole-employer EOR model instead.
A third-party organization that legally employs workers on behalf of a client company. The EOR runs payroll, withholds taxes, administers benefits, files employment paperwork, and carries employer liability, while the client directs the worker's day-to-day duties.
U.S. FLSA classification determining overtime eligibility. Non-exempt employees must be paid overtime for hours over 40 in a week; exempt employees (typically salaried executive, administrative, or professional workers meeting a salary threshold) are not. Misclassifying non-exempt workers as exempt is a leading source of wage-and-hour lawsuits.
U.S. federal law establishing minimum wage, overtime pay, recordkeeping, and youth employment standards. Sets the exempt / non-exempt classification framework and the 40-hour overtime threshold most private-sector U.S. employers must follow.
U.S. federal law entitling eligible employees at covered employers (50+ employees) to up to 12 weeks of unpaid, job-protected leave per year for a serious health condition, a family member's serious health condition, or the birth or adoption of a child.
A provider that acts as the legal employer for workers in countries where the client has no entity. Functionally similar to an international EOR; the term GEO is more common outside the U.S. and typically implies multi-country coverage through partner entities.
U.S. non-immigrant visa allowing employers to hire foreign workers in specialty occupations. Capped annually and awarded by lottery, with significant cost, delay, and denial risk. Many U.S. employers now hire H-1B-caliber candidates in Canada via an EOR to sidestep the lottery entirely.
U.S. federal form used to verify a new hire's identity and legal authorization to work in the United States. Must be completed within three business days of the first day of employment; violations carry per-form fines. An EOR completes I-9s on the client's behalf.
A self-employed worker who provides services to a business under contract, controls how the work is done, and pays their own taxes. Classification depends on multi-factor tests (IRS common-law rules in the U.S., CRA common-law tests in Canada); getting it wrong triggers back taxes, penalties, and benefits liability.
A U.S.-specific model where the PEO and client share employment of the client's workers under a co-employment agreement. The PEO handles payroll, benefits, and HR administration; the client remains a joint employer. Distinct from an EOR, which is the sole legal employer.
The contract between a client and a payroll provider governing scope, fees, data handling, and liability for payroll processing. A PSA does not transfer employer status — the client remains the employer of record — so it is not a substitute for an EOR or PEO arrangement.
An arrangement where an external provider takes over some or all of a client's recruiting function — sourcing, screening, scheduling, offer management — often embedded with the client's talent-acquisition team. Distinct from an EOR: RPO fills roles; EOR employs the people filling them.
A Canadian federal document issued by an employer when an employee experiences an interruption of earnings (termination, layoff, leave). Filed with Service Canada and used to determine EI (Employment Insurance) eligibility. Deadlines are tight — usually within five calendar days of the interruption.
Certifications from the Society for Human Resource Management. SHRM-CP is aimed at operational HR practitioners; SHRM-SCP at senior HR strategists. Widely recognized in the U.S. as a baseline HR credential — a signal of formal HR expertise on a résumé or vendor's roster.
The Canadian tax slip an employer must issue to every employee by the end of February each year, reporting the previous year's employment income and deductions (CPP, EI, income tax). The Canadian counterpart to the U.S. Form W-2.
A structured research exercise that identifies where target talent works, what they earn, and how they move — used to inform hiring plans, org design, and expansion decisions before an active search begins. Common in RPO engagements and executive search.
The U.S. federal agency that administers work visas, green cards, and naturalization. Handles H-1B petitions, L-1 transfers, and I-9 audit referrals to ICE. Employer immigration compliance is largely a matter of getting USCIS filings and I-9 records right.
U.S. tax form employers must issue to every employee by January 31, reporting the prior year's wages and taxes withheld. A worker on a W-2 is an employee, not a contractor. An EOR issues W-2s to workers it employs on a client's behalf.
U.S. form collected from an independent contractor or vendor before payment. Captures the payee's legal name and TIN so the payer can later issue a 1099. Not used for employees.
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