Payroll Glossary - C
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Cafeteria Plan: A plan that offers flexible benefits under IRC section 125. Employees choose their benefits from a .menu. of cash and benefits, some of which can be paid for with pretax deductions from wages.
Cash or Deferred Arrangement (CODA): An arrangement under a retirement plan that allows employees to either receive cash or have the employer contribute an equivalent amount to the plan.
Catch-up Contributions: Elective deferrals by an employee to a defined contribution retirement plan or
IRA above any statutory or plan-mandated limit
CCPA: Consumer Credit Protection Act.
Central Information File (CIF): A file maintained by an Automated Clearing House (ACH) that contains
depository financial institution names, routing numbers, addresses of contact persons, settlement and
delivery information, and output medium requested.
Child Support Withholding: The process of withholding amounts from an employee's compensation to
satisfy a child support order from a court or a state child welfare administrative agency. The employer
is responsible for withholding the amounts and paying them over to the party named in the withhold-
ing order.
Circular E: IRS Publication 15, Employer's Tax Guide. This publication contains the basic rules, guide-
lines, and instructions for withholding, depositing, reporting, and paying federal employment taxes.
COBRA: Consolidated Omnibus Budget Reconciliation Act of 1985.
CODA: Cash or deferred arrangement.
COLA: Cost-of-living adjustment.
Common Law Employee: A worker who is an employee under the common law test.
Common Law Test: A test that measures the control and direction that an employer has the authority to
exercise over a worker. Where the employer has the right to direct the worker as to how, where, and
when the work will be completed, in addition to controlling the result of the work, the worker is a common law employee.
Common Paymaster: One of two or more related corporations that pay employees who work concurrently for the related corporations. Under this arrangement, the related corporations are treated as a single
employer for employment tax purposes.
Compensation: All cash and noncash remuneration given to an employee for services performed for the
employer.
Compensatory Time: Paid time off granted to an employee for working extra hours. The Federal Wage-
Hour Law places severe restrictions on the use of compensatory time to avoid paying overtime,
although special exemptions are allowed for public sector employees.
Concurrent Employment: Working for more than one related corporation under a common paymaster
arrangement.
Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA): Federal law that requires
employers with group health care coverage to offer continued coverage to separated employees and
other qualifying beneficiaries.
Constructive Payment: An IRS rule that considers wages to have been paid to an employee when the
employee has access to the wages without substantial limitations or restrictions.
Consumer Credit Protection Act (CCPA): Federal law that restricts the amount of an employee's earn-
ings that can be garnished to pay creditor debts, including child support.
Consumer Price Index (CPI): A measure of the change in prices of certain basic goods and services (e.g.,
food, transportation, housing) developed and published by the Bureau of Labor Statistics (BLS).
Control Group: A group of key or highly compensated employees in a company whose proportion of benefits is limited under the qualification requirements of certain benefit plans (e.g., §125 or §401(k) plans). Also, employers may not use the commuting valuation method for such employees when determining the value of their personal use of a company-provided vehicle.
Cost-of-Living Adjustment (COLA): An adjustment of wages or benefit payments to account for changes
in the cost of living, generally based on changes in the Consumer Price Index (CPI).
Cost-of-Living Index: See Consumer Price Index..
Covered Employees: For each law affecting payroll and human resources, this term defines those workers
who are subject to the law.
CPA: Certified Public Accountant.
CPI: Consumer Price Index.
CPP: Certified Payroll Professional.
Credit: An accounting entry that increases liabilities and revenues and decreases assets and expenses.
Credit Reduction: A reduction in the credit an employer receives against FUTA tax owed for state unemployment taxes paid, where the state has not repaid a federal loan under the joint federal/state unemployment compensation program.
Critical Path: Management strategy that maps out deadlines that must be met to finish a project within
the time allowed.
CSEA: Child Support Enforcement Agency.