Deck 11: Establishing Strategic Pay Plans

Question 1

Jill works as a cashier at a grocery store. She earns $10 an hour (or $400 for a 40-hour week). Last week, she worked 46 hours. What is the minimum amount that Jill earned last week?

A)$460
B)$490
C)$520
D)$550

Answer 1

B
Explanation: B)The FLSA says employers must pay overtime at a rate of at least one-and-a-half times normal pay for any hours worked over 40 in a workweek. Jill worked 46 hours in one week, so she was paid for 6 of those hours at a rate equal to one-and-a-half times the hourly rate of $10. The 6 overtime hours were at a rate of $15, so Jill earned at least $490.

Question 2

Which of the following terms refers to all forms of pay or rewards going to employees and arising from their employment?

A)salary
B)employee benefits
C)wage reimbursement
D)employee compensation

Answer 2

D
Explanation: D)Employee compensation refers to all forms of pay going to employees and arising from their employment. It has two main components, direct financial payments (wages, salaries, incentives, commissions, and bonuses)and indirect financial payments (financial benefits like employer-paid insurance and vacations).

Question 3

Which compensation-related law contains provisions for minimum wage, maximum hours, overtime pay, equal pay, record-keeping, and child labor?

A)Davis-Bacon Act
B)Fair Wages Act
C)Fair Labor Standards Act
D)Walsh-Healey Public Contract

Answer 3

C
Explanation: C)The Fair Labor Standards Act, originally passed in 1938 and since amended many times, contains minimum wage, maximum hours, overtime pay, equal pay, record-keeping, and child labor provisions that are familiar to most working people. It covers the majority of U.S. workers-virtually all those engaged in the production and/or sale of goods for interstate and foreign commerce.

Question 4

Which of the following jobs is most likely categorized as nonexempt from the overtime pay provisions of the Fair Labor Standards Act?

A)taxicab driver
B)personnel director
C)newspaper writer
D)computer systems analyst

Question 5

Which of the following was enacted in 1931 for the purpose of setting wage rates for laborers and mechanics employed by contractors working for the federal government?

A)Walsh-Healey Public Contract
B)Fair Labor Standards Act
C)Civil Rights Act
D)Davis-Bacon Act

Question 6

Which of the following is NOT a type of direct financial payment?

A)wages
B)insurance
C)incentives
D)commissions

Question 7

Which of the following states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work?

A)Americans with Disabilities Act
B)Title VII of the Civil Rights Act
C)Social Security Act
D)Equal Pay Act

Question 8

Which of the following terms refers to pay in the form of financial benefits, such as insurance?

A)direct financial payments
B)out-of-pocket expenses
C)indirect financial payments
D)sales commissions

Question 9

John is a sales representative in a jewelry store. He typically works 40 hours per week and his pay is completely based on his sales. He earns a 5% commission for every sale he makes. Which of the following terms best describes John's situation?

A)pay for performance
B)indirect financial compensation
C)time-based compensation
D)piecework pay

Question 10

Which act regulates vesting rights and portability rights?

A)Fair Labor Standards Act
B)Title VII of the Civil Rights Act
C)Employer Retirement Income Security Act
D)Equal Pay Act of 1963

Question 11

In most cases, which of the following occupations is NOT exempt from the overtime provisions of the Fair Labor Standards Act?

A)physicians
B)engineers
C)paralegals
D)teachers

Question 12

Which of the following factors has the LEAST effect on the design of an organization's pay plan?

A)legal
B)union
C)company vision
D)company policy

Question 13

Which of the following is true for employers who use independent contractors?

A)Fair Labor Standards Act overtime requirements do not apply.
B)Social Security taxes are higher than for regular employees.
C)Federal income taxes are charged at a reduced rate.
D)Payroll taxes are paid by the employer.

Question 14

Which of the following sets basic labor standards for employees working on any government contract that amounts to more than $10,000?

A)Davis-Bacon Act
B)Walsh-Healey Public Contract
C)Fair Wages Act
D)Fair Labor Standards Act

Question 15

Which of the following issues is NOT addressed by the Fair Labor Standards Act?

A)record-keeping
B)overtime pay
C)child labor
D)termination

Question 16

Which of the following terms refers to the ownership employees build up in their pension plans should their employment with a firm end prior to retirement?

A)portability
B)equity
C)vesting
D)shares

Question 17

Joseph worked 6 hours of overtime this week but has decided to take time off instead of overtime pay. How many hours will Joseph receive in time off from work?

A)3 hours
B)6 hours
C)9 hours
D)18 hours

Question 18

According to the Fair Labor Standards Act, what rate of normal pay would a covered employee receive for working more than 40 hours in a workweek?

A)50%
B)100%
C)150%
D)200%

Question 19

Which law makes it illegal to discriminate against any individual with respect to compensation because of race, color, religion, sex, or national origin?

A)Fair Labor Standards Act
B)Title VII of the Civil Rights Act
C)Equal Pay Act
D)Taft-Hartley Act

Question 20

Anita, a manager at a department store, needs to determine whether one of her employees is exempt or nonexempt under the Fair Labor Standards Act. Which of the following would be the best resource for Anita?

A)organizational chart
B)performance appraisal
C)business plan
D)job description

Question 21

Which form of equity refers to the fairness of an individual's pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each individual's performance?

A)internal
B)distributive
C)individual
D)procedural

Question 22

What theory of motivation states that people are strongly motivated to maintain a balance between what they perceive as their contributions and their rewards?

A)Two-factor theory
B)Equity theory
C)Learned needs theory
D)Expectancy theory

Question 23

Which of the following gives employees the right to organize, bargain collectively, and engage in concerted activities for the purpose of collective bargaining?

A)Equal Pay Act
B)Civil Rights Act
C)Fair Labor Standards Act
D)National Labor Relations Act

Question 24

Which form of equity refers to the fairness of a job's pay rate in comparison to other jobs within the same company?

A)external
B)internal
C)distributive
D)individual

Question 25

Trevor, a sales manager at IBM, recently learned that an IBM human resources manager with comparable responsibilities and spans of control earns a higher salary than Trevor. Which form of equity is of most concern to Trevor?

A)external
B)internal
C)distributive
D)individual

Question 26

Which of the following is used to maintain internal equity?

A)job analysis comparisons
B)organizational charts
C)incentive pay
D)salary surveys

Question 27

Which form of equity refers to the perceived fairness of the processes used to make decisions regarding the allocation of pay?

A)internal
B)distributive
C)individual
D)procedural

Question 28

Bonnie, a data analyst, needs to take time off from work to care for her elderly mother. According to the Family and Medical Leave Act, what is the maximum number of weeks of unpaid, job-protected leave that Bonnie may take?

A)4
B)6
C)12
D)16

Question 29

Which of the following terms refers to a compensation plan that advances a firm's strategic goals?

A)strategic management
B)performance pay plan
C)aligned reward strategy
D)workers' compensation package

Question 30

Which form of equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies?

A)distributive
B)internal
C)external
D)procedural

Question 31

External equity refers to ________.

A)how a job's pay rate in one company compares to the job's pay rate in other companies
B)the fairness of an individual's pay as compared to a co-worker's pay for the same job
C)the perceived fairness of the processes and procedures used to make decisions about compensation
D)the use of salary surveys and job evaluation comparisons to monitor pay levels within an industry

Question 32

Audrey is a lawyer in a mid-size firm in Chicago. She recently learned that another lawyer who joined the firm at the same time earns a lower salary than she does. Which form of equity is most relevant to Audrey's situation?

A)internal
B)distributive
C)individual
D)procedural

Question 33

Which of the following best defines internal equity?

A)how a job's pay rate in one company compares to the job's pay rate in other companies
B)how fair the job's pay rate is, when compared to other jobs within the same company
C)the fairness of an individual's pay as compared to a co-worker's pay for the same job
D)the perceived fairness of the processes and procedures used to make compensation decisions

Question 34

Which of the following issues would LEAST likely be negotiated by unions?

A)income security
B)time off with pay
C)health care benefits
D)unpaid medical leave

Question 35

Which of the following is NOT one of the forms of equity related to compensation issues?

A)group
B)external
C)individual
D)procedural

Question 36

What has historically been the key issue in collective bargaining?

A)wage rates
B)income security
C)health care benefits
D)cost-of-living adjustments

Question 37

Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the past few years, the company's market share has dropped significantly, and employee turnover has increased. Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around. Historically, the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following questions is LEAST relevant to Homelife's decision to develop an aligned reward strategy?

A)What compensation programs should Homelife use to reinforce necessary employee behaviors?
B)How well does Homelife's current compensation program match the company's strategic aims?
C)What compensation programs should Homelife use to reinforce desired employee behaviors?
D)What are the results of Homelife employee salary surveys in regards to wage satisfaction?

Question 38

Which of the following is the LEAST likely way that an employer would address a cost-of-living differential?

A)paying a nonrecurring amount spread over one to three years
B)paying a nonrecurring, lump sum amount
C)raising an employee's base salary
D)raising commission percentages

Question 39

Jason is an information systems technician in a town in North Carolina with a population of 100,000. He receives an annual salary of $35,000. He recently found out that a nearby town with a similar population pays people in the same position $40,000 annually. With which form of equity is Jason most concerned?

A)distributive
B)procedural
C)internal
D)external

Question 40

Which of the following laws has the LEAST amount of influence on compensation decisions?

A)Americans with Disabilities Act
B)Labor Management Relations Act
C)Family and Medical Leave Act
D)Age Discrimination in Employment Act

Question 41

While laws exist to protect against discrimination in compensation based on gender and age, no law protects against such discrimination against persons with disabilities.

Question 42

A union is entitled to know the salary of each employee it is representing.

Question 43

According to the court system, the test that distinguishes an independent contractor from an employee is whether or not the firm provides the worker with health insurance benefits.

Question 44

Indirect payments that contribute to an employee's compensation include variable pay like commissions and bonuses.

Question 45

External equity refers to how fair the job's pay rate is when compared to other jobs within the same company.

Question 46

The Equal Pay Act states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work.

Question 47

Direct financial payments may be based on increments of time and on performance.

Question 48

Employers prefer to give time off in lieu of overtime pay because they only have to grant the same number of hours off as the employee worked overtime, while overtime pay is calculated at 150% of normal pay.

Question 49

Beth, a small business owner, wants to ensure external equity when establishing pay rates. Beth should most likely ________.

A)use wage curves to price each pay grade
B)compare performance appraisals
C)conduct a salary survey
D)check online pay sites

Question 50

Because the minimum wage is set by the Fair Labor Standards Act, there is no variation from state to state in the minimum wage paid to hourly workers.

Question 51

Performance-based pay is more popular than time-based pay among most employers in the U.S.

Question 52

Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the past few years, the company's market share has dropped significantly, and employee turnover has increased. Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around. Historically, the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following, if true, best supports the argument that Homelife should distribute salary surveys before establishing new pay rates?

A)Homelife executives want to identify benchmark jobs before determining the worth of other jobs.
B)Homelife executives plan to use the compensable factors emphasized by the Equal Pay Act.
C)Computerized job evaluation systems will be used by Homelife to generate questionnaires.
D)A wage curve needs to be established by Homelife for the purpose of federal compliance.

Question 53

The provision of the Family and Medical Leave Act that entitles employees to take up to 12 weeks of unpaid, job-protected leave for the birth of a child only applies to women.

Question 54

Financial benefits like employer-paid insurance and vacations are not a part of employee compensation.

Question 55

What type of equity is a manager most likely trying to maintain through the use of performance appraisals and incentive pay?

A)internal
B)external
C)individual
D)procedural

Question 56

Wage rate has been the main issue negotiated by unions in collective bargaining.

Question 57

According to the Davis-Bacon Act, when employees work more than 40 hours per week, employers must pay overtime at a rate of at least one-and-a-half times the normal pay for any hours worked over 40 in a workweek.

Question 58

Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the past few years, the company's market share has dropped significantly, and employee turnover has increased. Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around. Historically, the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following, if true, best supports the argument that Homelife executives should primarily address internal equity issues when developing a new compensation plan?

A)Homelife employees receive annual performance appraisals at which time they set career goals.
B)Salary surveys indicate dissatisfaction among the Homelife managers in different departments.
C)Online pay sites show the pay range for sales associates at both Homelife and its competitors.
D)Homelife pays its sales managers commissions in addition to base salaries and health benefits.

Question 59

According to the FLSA, agricultural employees, live-in maids, and taxi drivers are always eligible for overtime pay.

Question 60

Portability rights refer to an employee's ability to transfer his or her vested rights from one organization to another.

Question 61

An advantage of the job classification method is that the objective nature of the system makes it easy to write the class and grade descriptions.

Question 62

Which of the following terms refers to a systematic comparison done in order to determine the worth of one job relative to another?

A)job analysis
B)job evaluation
C)job description
D)job classification

Question 63

Salary surveys are used by firms to collect data on employee benefits as well as wage rates for the purpose of pricing jobs.

Question 64

What are the advantages for employers of claiming that someone doing work for them is an independent contractor rather than an employee? What generally makes a worker classified as an "independent contractor"?

Question 65

Which of the following best describes the point method of job evaluation?

A)ranking each job relative to all other jobs based on pay grade
B)categorizing jobs into grades and classes based on specific rules
C)deciding which jobs have a higher number of compensable factors
D)identifying and quantifying the compensable factors present in a job

Question 66

If a job evaluation committee uses the ranking method, then the pay grade consists of all jobs that fall within two or three ranks.

Question 67

What are your compensation options if you are an employer who needs to transfer an employee from a low cost-of-living area to a high cost-of-living area?

Question 68

In most cases, the majority of the members on a job evaluation committee are ________.

A)managers
B)employees
C)HR specialists
D)union representatives

Question 69

What are the two primary components of computerized job evaluations?

A)compensable factors and benchmark jobs
B)grade definitions and factor comparisons
C)structured questionnaires and statistical models
D)structured questionnaires and grade definitions

Question 70

Central basic factors that establish how several jobs compare to one another and that determine the pay for each job are called ________.

A)compensable factors
B)job evaluation factors
C)ranking factors
D)analysis factors

Question 71

Explain the equity theory of motivation. What are the four forms of equity?

Question 72

Which job evaluation method is a quantitative technique involving the identification of several compensable factors and the degree to which each of these factors is present in the job?

A)ranking method
B)point method
C)job grading method
D)job classification method

Question 73

When using the job evaluation method of job classification, raters categorize jobs into groups of similar jobs called ________.

A)classes
B)sections
C)grades
D)cohorts

Question 74

Which of the following is used to anchor the employer's pay scale?

A)grades
B)job metric
C)benchmark job
D)human resource metric

Question 75

The Equal Pay Act focuses on three compensable factors-know-how, problem solving, and accountability.

Question 76

Large corporations are more likely than small businesses to use a market-based approach to setting pay rates because it is easier for a large firm to conduct formal job evaluations.

Question 77

Which job evaluation method is used by most modern employers?

A)job classification method
B)job grading method
C)ranking method
D)point method

Question 78

What are the two primary ways to make direct financial payments to employees? How does compensation for managers or professionals differ from compensation for clerical or production workers at a firm?

Question 79

The market-based approach to setting rates involves conducting formal or informal salary surveys to determine what others in the relevant labor markets are paying for particular jobs.

Question 80

Which of the following is NOT one of the typical methods used by job evaluation committees to determine the worth of a job?

A)ranking
B)point method
C)job classification
D)paired comparison