Payroll ID is only used if processing payroll through a third party (such as ADP).
Inactive employee: If an employee no longer works at the practice, check the Hidden box. The employee will no longer be a selection in other lists.
Delete all unused employees: This is fairly safe to use. Employees that have time clock events attached to them will not be deleted.
For steps to take when an employee leaves the practice, see Employee Leaving the Practice.