Question 1

You've recently been promoted to a position as an HR generalist, and you're anxious to get down to work. One day, a manger that you haven't worked with before comes to you to talk about a problem he's having with one of his direct reports. This employee happens to be an executive assistant, and he is a highly trusted and valued member of the department. He handles confidential information and is always looking to grow and learn. The employee feels, however, that he has been "held back" because he's classified as non-exempt and therefore can't join in with the team on special projects that require overtime or weekend work (there is no money in the budget for overtime hours). This employee ends up feeling excluded and less important. The manager wants you to help him find a way to reclassify the position as exempt. Which of the following responses would be the least appropriate?

Accepted Answer

First, reclassifying a position from "non-exempt" to "exempt" is a decision that must be made after much analysis. It is a decision that should be grounded in actual job responsibilities, not on the basis of a particular incumbent and their feelings.
Key Takeaway: Also, FLSA status is determined on the basis of the responsibilities that are performed, not on the basis of job title. Lastly, it is best to refer to this process as "reclassifying," not "upgrading," in that the word "upgrading" seems to reinforce the fallacy that it is better or more desirable to be exempt than it is to be non-exempt. Option A is not the best response because it is appropriate for a manger to help the employee understand how he contributes to, and is valued by, the team. It is possible that the position might have changed enough to warrant a reclassification, and a job evaluation would provide information that is necessary for making that assessment. This situation is also an appropriate opportunity for a manager to have a discussion with the employee about his career objectives.

Question 2

The Retirement Equity Act enacted a number of important provisions, including

Accepted Answer

The Retirement Equity Act did prohibit plans from counting maternity and paternity leaves as breaks in service for participation and vesting purposes.
Key Takeaway: REA lowered, rather than increased, the minimum age requirement for pension plan participation. REA required qualified pension plans to provide automatic survivor benefits and allow for waiver of survivor benefits only with the consent of the participant and the spouse. REA clarified that pension plans may obey certain qualified domestic relations orders requiring them to make benefit payments to a participant's former spouse without violating ERISA's prohibitions against assignment or alienation of benefits.

Question 3

Of the following four types of pay that an employee could earn, which one needs to be included in an employee's regular rate of pay?

Accepted Answer

Incentive pay would be included in an employee's regular rate of pay.
Key Takeaway: Jury duty pay, like pay granted through other types of pay-for-time-not-worked programs, would not be included in an employee's regular rate of pay. Premium pay for weekend (or holiday) work would not be included in an employee's regular rate of pay. Bonus pay (which, unlike incentive programs, is discretionary) would not be included in an employee's regular rate of pay.

Question 4

An organization's total compensation program should do all of the following except

Accepted Answer

The decision whether to lag, match, or lead the market with respect to total compensation is just that - a decision. It is not universally true that an organization's total compensation program should be competitive with (i.e. match) the total compensation programs offered by labor market competitors.
Key Takeaway: An organization's total compensation program should be consistent with the culture of the organization. An organization's total compensation program should attract, motivate, and retain targeted/appropriate employees.

Question 5

Which of the following statements about defined contribution plans is untrue?

Accepted Answer

Defined contribution plans are increasing, not decreasing, in popularity.
Key Takeaway: It is true that, unlike defined benefits plans, defined contribution plans do not promise a specific monthly benefit (or total benefit) at retirement. Defined contribution plans do shift the risk away from the employer and back onto the employee. 401(k) plans, employee stock ownership plans, and profit-sharing plans are examples of defined contribution plans.

Question 6

Which law implemented changes in two sections of the United States tax code that resulted in the creation of two new - and ultimately very important - employee benefits?

Accepted Answer

The Revenue Act of 1978 resulted in the creation of two very important employee benefits: section 125 plans and 401(k) plans.
Key Takeaway: COBRA requires employers who employed 20 or more people during the prior year to offer continuation of group health care coverage to employees and their family members who experience certain qualifying events. HIPAA has two main focuses: privacy considerations and the security and portability of health care coverage. The Retirement Equity Act, which is an amendment to ERISA, incorporated a number of key revisions, many of which addressed the concerns of former spouses and surviving spouses.

Question 7

A cash balance plan is

Accepted Answer

A cash balance plan is a defined benefit plan that expresses the promised benefit in terms of a stated account balance.
Key Takeaway: A cash balance plan is a defined benefit plan, but it doesn't express the promised benefit in terms of a specific monthly benefit (like other defined benefit plans do). A cash balance plan is not a defined contribution plan.

Question 8

According to the Older Worker's Benefit Protection Act (OWBPA), individuals are prohibited from waiving their rights or claims under ADEA unless such a waiver is "knowing and voluntary." OWBPA established nine specific criteria for ensuring that such waivers are "knowing and voluntary," one of which requires that employers must allow employees time to consider any right-to-sue waivers that the employer offers in exchange for early retirement benefits. How many days must an employer allow?

Accepted Answer

Employers must allow at least 21 days to consider any right-to-sue waivers that the employer offers in exchange for early retirement benefits.
Key Takeaway: The OWBPA amended the ADEA to prohibit discriminating against older workers in benefit plans and defined requirements for employee waivers of their right under the act. Older employees who are part of a group termination or layoff must be given 45 days to sign the agreement. In both instances, they may revoke the agreement within 7 days.

Question 9

True or False:
Restricted stock is subject to special SEC regulations before it can ever be sold on the market.

Accepted Answer

True.
Key Takeaway: Restricted stock is subject to special SEC regulations before it can ever be sold on the market. Typically, restricted stock is given as a reward to insiders after an acquisition or a merger. Doing so will prevent an adverse impact on the market price of the stock, as it will be required that stockholders actually hold onto the stock for a prescribed period of time before they may sell it publicly.

Question 10

During what kind of economic conditions are cost of living adjustments generally used?

Accepted Answer

Cost of living adjustments are generally used during periods of high inflation.
Key Takeaway: Using cost of living adjustments during periods of high inflation can help to reduce the overall effects of wage compression. Usually, these kinds of adjustments are more popular in public sector jobs that in the private sector.

Question 11

If an employee is entitled to minimum wage, protections under child labor and equal pay, and overtime if he or she works in excess of 40 hours per week, is the employee exempt or non-exempt?

Accepted Answer

If an employee is entitled to minimum wage, protections under child labor and equal pay, and overtime if he or she works in excess of 40 hours per week, the employee is non-exempt.
Key Takeaway: According to the FLSA, an employee in any given business must be classified as either exempt or nonexempt. In order to be exempt, an employee must be paid a salary of at least $23,660 per year. An employee who is entitled to hourly pay (at minimum wage or above), overtime, and protections under child labor and equal pay, that employee is considered to be non-exempt.

Question 12

Sione earns roughly $22,000 per year, manages and supervises three other employees, and spends about 35 hours per week on job duties that require a fair amount of discretion and independence. Which of the following is true about Sione?

Accepted Answer

In this situation, Sione is nonexempt, based upon the salary requirements.
Key Takeaway: According to the FLSA, an employee in any given business must be classified as either exempt or nonexempt. In order to be exempt, an employee must be paid a salary of at least $23,660 per year. An employee who is entitled to hourly pay (at minimum wage or above), overtime, and protections under child labor and equal pay, that employee is considered to be non-exempt.

Question 13

What act requires all government contractors with contracts exceeding $10,000 (for everything that is not construction work) to pay their employees the real, prevailing wage for their locality, as established by the Secretary of Labor?

Accepted Answer

The Walsh Healey Act requires all government contractors with contracts exceeding $10,000 to pay their employees the real, prevailing wage for their locality, as established by the Secretary of Labor.
Key Takeaway: The 1936 Walsh-Healey Act is a federal law that protects the employees of government contractors who have holdings over $10,000. Under the act, which was part of the New Deal, the employees where guaranteed overtime if they worked more than eight hours a day or 30 hours a week, set the minimum age, and set basic standards for child labor laws.

Question 14

Of the following acts, which one requires that companies with federal construction contracts must pay their laborers and mechanics the standard wage of employees in the geographic area in which the work is being performed?

Accepted Answer

The Davis-Bacon act requires that companies with federal construction contracts must pay their laborers and mechanics the standard wage of employees in the geographic area in which the work is being performed.
Key Takeaway: The Davis-Bacon Act, also known as Prevailing Wage law, requires that bidding contractors and sub-contractors must pay minimum wages to workers who provide construction work on federal or public work projects that are in excess of $2,000. The Act was amended in 1964 to include fringe benefits in the definition of "minimum wages."

Question 15

As of 2007, what is the federal minimum wage set at?

Accepted Answer

As of 2007, the federal minimum wage is set at $7.25 per hour.
Key Takeaway: As of 2007, the federal minimum wage in the United States was set at $7.25. It is always important to remember that this is the federal minimum. Some individual states have set their own higher minimum wages. The 2007 increase was signed into law as part of the Fair Minimum Wage Act of 2007.

Question 16

Which of the following is the correct term for an arrangement in which an employee is paid a portion of their income at a later stage in life?

Accepted Answer

Deferred pay is the correct term for an arrangement in which an employee is paid a portion of their income at a later stage in life.
Key Takeaway: Deferred compensation is an arrangement for a portion of an employee`s income to be paid out at a future date to compensate the actual income. Good examples of deferred compensation are retirement plans, pensions, life insurance plans, and stock options.

Question 17

If a company employee is earning a salary that is deemed to be excessive when compared to their counterparts of equal ability, their pay rate may be identified as what type of rate?

Accepted Answer

If a company employee is earning a salary that is deemed to be excessive when compared to their counterparts of equal ability, their pay rate may be identified as a red circle rate.
Key Takeaway: A red circle rate occurs when a company employee is determined to be earning a salary that is above the maximum range for a job or when it is deemed excessive when compared to their peers. In the case of a red circle rate, the employee with the inflated salary may be ineligible for pay increases until the point when the maximum range for the position surpasses the employee's pay level.

Question 18

What type of compensation system is directly related to the employee's individual performance?

Accepted Answer

A merit pay plan is directly related to the employee's individual performance.
Key Takeaway: A performance based pay system, where an individual`s pay is determined solely by his or her individual performance, is also called a merit based pay system.

Question 19

What is required annually by the Employee Retirement Income Security Act to ensure that highly compensated employees do not receive greater benefits from a company's 401k plan than the benefits received by other employees?

Accepted Answer

An actual deferral percentage test is required annually by the Employee Retirement Income Security Act.
Key Takeaway: The Employee Retirement Income Security Act (shortened to ERISA) requires an actual deferral percentage test each year to check that employees who are considered to be highly compensated do not receive greater 401(k) benefits than other employees. If ERISA determines that HCEs do receive greater 401(k) benefits, the employer must make corrective measures or they will lose the tax benefits of their 401(k) plan.

Question 20

In which managed care plan is the care provider formed by an insurance company, an employer, or a group of employers who negotiate discounted fees with networks of health care providers?

Accepted Answer

In PPOs, the care provider is formed by an insurance company, an employer, or a group of employers who negotiate discounted fees with networks of health care providers.
Key Takeaway: In a preferred provider organization managed care plan (usually seen in the shortened form PPO), the care provider is formed by the employer, a group of employers, and/or an insurance company who work together to negotiate discounted fees with specific networks of health care providers.

Quiz 4: Rewards