MWorld has compiled a list of some terms that every manager and executive should be aware of in order to protect his or her company against employee compensation claims. We hope this will be the first step in providing those dot.com “kids” with valuable information that will make your job a little easier.

Accumulated Pension Benefit Obligation (APBO): The Accumulated Pension Benefit Obligation (APBO) as of a measurement date is the actuarial present value of benefits attributable by the pension benefit formula to employee service rendered prior to that date and based on current and past compensation levels. The APBO does not include assumptions about future compensation levels.

Backup Withholding refers to withholding 20% of payments for federal income taxes unless the payee has on file with the employer a correct social security number or is otherwise not subject to withholding. This is usually in regards to a qualified retirement plan.

Beneficiaries: The beneficiary is the person designated by the participant or by the terms of an employee benefit plans that is or may become entitled to a benefit. In health plans, a qualified beneficiary is an employee, an employee's spouse, or dependents, covered under the employer's group health care plan on the day before a qualifying event.

Bereavement Leave, or funeral leave, provides time off for workers following the death of a family member. Policy on such leave defines the number of days and defines who is considered to be a relative under the policy. Some companies allow employees to take bereavement leave as unpaid leave, sick leave, or annual leave.

Business Travel Accident Plans: An insurance plan that covers employees and the employer for accidents while traveling on company business. The definition of a business travel accident plan is usually such that any accident away from home or the job site is included.

Cash Basis Compensation implies two things. The first is that the person is paid cash and not in kind, such as room and board or provided transportation. The second is that the company records labor expenses as they occur or are paid and not as accrued.

Cliff Vesting is a schedule for vesting in which all accrued benefits derived from employer contributions become non-forfeitable after a participant has completed a specified period of service for the employer, but, before the end of that period, such benefits are completely un-vested. The maximum amount of time a qualified plan, using cliff vesting, can make participants wait until they become fully vested is five years.

CHAMPUS is health coverage provided by the U.S. government to members of the armed services. For these people it is primary coverage. CHAMPUS also covers military dependents but is secondary to any other health coverage.

Disclosure Requirements: Under the Employee Retirement Income Security Act (ERISA), employers must make a series of disclosures to employees to inform them about benefit plan provisions, as well as the legal protections that are provided under ERISA. The types of information that ERISA requires companies to provide to employees include: Summary plan descriptions (SPDs), Summaries of material modifications (SMMs) and Summary annual reports (SARs). Note: SPDs and SMMs must be filed with the Department of Labor at the time they are given to employees.

Flexible Spending Accounts (FSA): Flexible spending accounts (FSA) are arrangements that allow employees to pay for qualified health care or dependent care expenses on a pre-tax basis. Employers may offer a flexible spending account as an option within a comprehensive flexible benefit program or as a stand-alone plan.

Fiduciary Bonding Requirements: No bonding is required for plans where the only assets from which benefits are paid are the general assets of the employer. Banks, trust companies, and insurers that meet certain capitalization requirements and that are bonded under state law also may be exempt from fiduciary bonding requirements.

Golden Parachutes: A golden parachute is a part of many executive compensation packages. It is an arrangement that provides key executives a pay off and continuation of benefits when the organization has been the subject of a takeover that wants to replace top management. Thus, a golden parachute provides the executive with financial protection from the possibility that the acquiring corporation will terminate the executive in order to make room for its own management team.

Qualified Medical Support Order: A qualified medical support order is a court order requiring group health care plans to provide benefits to an alternate recipient of a participant eligible to receive benefits under the plan.

Profit Sharing Plan distributes a portion of the profits of a company to the workers according to some formula. Typically a pot of money is established based upon the total profits of the company. This is then distributed to all employees or the designated group by some criterion, such as the employees' percentage of the total wages of the group.

Safe harbors are regulations that describe certain acts or behaviors, which are not illegal under a specific law, even though they might otherwise be illegal.

Severance Pay: In many countries, but not the U.S., severance pay is required to be paid any time an employee is terminated. Severance pay is paid to an employee upon termination to temporarily soften the blow of unemployment. The most typical formula for severance pay is one week’s pay for each year of service.

Separate Lines of Business Plans: Organizations may seek to have different benefit plans for different segments of the company. They may do this by seeking to establish separate lines of business. Identifying all the property and services provided to customers during the testing year does this and then designating which portion of the property and services is provided by each business. Employers may use their discretion to determine their lines of business in a manner that conforms to their business operations.

Split dollar life insurance is insurance paid jointly by the employer and the employee, wherein at the employee’s death both the employer and the employee’s beneficiaries receive a portion of the benefits policy. Generally, the employer pays an annual premium equal to the increase in the policy's cash surrender value for the year, and the employee pays the balance of the annual premium. When the employee dies, the employer receives from the policy's proceeds an amount equal to the cash surrender value of the policy, and the balance of the proceeds are paid to the employee's beneficiary.

Underwriting Requirements: Underwriting is the process of identifying and classifying the potential risk represented by a proposed insured. Acceptance of an insuree by an insured is always based on acceptance of truthful application as applied to the insured's underwriting requirements.

Unemployment Compensation may be defined as temporary partial wage payments for individuals unemployed through no fault of their own. These payments are made under state-administered programs to workers who are unemployed and meet requirements of the law. These requirements are: 1. The worker not be unemployed voluntarily, 2. The worker has been employed in "covered" work, 3. The worker is able and willing to take work, and 4. The waiting period had expired.

Voluntary Exit Incentive Program: A voluntary exit incentive program or plan, sometimes called a "golden handshake," is usually a part of a restructuring and/or downsizing of an organization. The plan provides an incentive for employees close to retirement to retire early. This usually means increasing the amount of retirement benefit of the employee and allowing the retirement age to be moved downward. In a defined benefit plan, ordinarily, the number of years of service is increased. In a defined contribution plan there is ordinarily a lump sum added to the employees account.

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