Question 1

The Federal Insurance Contributions Act requires employers to do which of the following?
A)Contribute to a defined benefit plan
B)Contribute to a deferred compensation plan
C)Withhold Social Security tax from pay
D)Provide health insurance for all employees

Accepted Answer

FICA requires employers to pay Social Security and Medicare for employees and to withhold an equal amount from employee paychecks.
Key Takeaway: There is no federal law requiring employers to provide pension plans (defined benefit plan or deferred compensation plan). No federal law requires employers to provide health insurance to its employees.

Question 2

A total rewards philosophy can help achieve an organization's strategic goals by doing which of the following?
A)Attracting and retaining employees with the necessary KSAs
B)Establishing a pecking order for jobs within the organization
C)Positioning the company to lead the competition for employees
D)Maintaining an entitlement culture

Accepted Answer

A total rewards philosophy helps determine what kind of employees will be attracted to the organization.
Key Takeaway: Developing a philosophy to target employees with the knowledge, skills, and attributes (KSAs) needed by the organization can help advance the organization's mission. The pecking order for jobs is based on the value of those jobs to the organization. The philosophy defines leading the competition as a strategy. An entitlement culture is maintained by continuing to pay employees for time on the job instead of for performance.

Question 3

An entitlement culture is appropriate for a business that needs what type of workforce?
A)One that continues to show productivity increases over time
B)One that has a line of sight to retirement
C)One that is highly competitive in completing daily assignments
D)One that has a skill set in high demand

Accepted Answer

An entitlement culture rewards longevity in the job. If increased productivity is a function of time in the job, an entitlement culture will encourage employees to stay with the company.
Key Takeaway: Line of sight occurs when employees know that their performance impacts their pay. A highly competitive workforce is more likely to exist in a pay for performance culture. A workforce with a highly desired skill set would be better served by a pay for performance culture.

Question 4

A company that wants to reduce the cost of its unemployment insurance should do which of the following?
A)Aggressively fight unjustified claims for unemployment
B)Establish an effective performance management program
C)Terminate employees who violate company policy
D)All of the above

Accepted Answer

Options A and B are both obviously correct. Although option C may seem counterintuitive to some because many employers are hesitant to terminate employees for policy violations, those terminated for cause are generally not eligible for unemployment insurance.
Key Takeaway: Since retaining an employee who is not contributing to the organization is a poor business decision, maintaining adequate records to demonstrate the reasons for termination provides the tools to fight claims that are unjustified.

Question 5

A reduced FMLA leave schedule is which of the following?
A)The employee is absent from work multiple times for the same illness or injury.
B)The employee works fewer hours each day or week.
C)The employee's leave schedule is disruptive to the work schedule.
D)Accurate records of time off are maintained.

Accepted Answer

A reduced FMLA leave is one in which the employee's regular work schedule is reduce by some number of hours per day or days per week.
Key Takeaway: Disruption to the work schedule is not a factor in this type of FMLA leave. An intermittent FMLA leave is one in which an employee is absent from work multiple times for the same illness or injury. Although accurate records of time off should be maintained for all FMLA leaves, they are most critical for intermittent leaves.

Question 6

The Older Worker Benefit Protection Act requires that an employee age 40 or older who is asked to waive their rights under the act must be given what?
A)7 days to consider the agreement before signing it
B)21 days to consider the agreement before signing it
C)45 days to consider the agreement before signing it
D)60 days to consider the agreement before signing it

Accepted Answer

Workers age 40 or older who are asked to sign a waiver of their rights must be given 21 days to consider the agreement before signing it.
Key Takeaway: Unless they are part of a group termination or layoff, then in that case, they must be given 45 days to sign the agreement. In both instances, they may revoke the agreement within 7 days. The OWBPA does not require 60 days to consider the agreement before signing it.

Question 7

The Omnibus Budget Reconciliation Act of 1993 does not require which of the following?
A)Group health coverage be offered for children placed for adoption before the adoption is final
B)Group health plans honor qualified medical child support orders
C)Tax deductions for executive pay be capped at $1,000,000 per year
D)Income tax be withheld from some distributions to rollover accounts

Accepted Answer

The Unemployment compensation amendments of 1992 required 20 percent withholding from some distributions.
Key Takeaway: OBRA capped executive pay, required that group health coverage be offered when children are placed for adoption before it is finalized, and required health plans to honor qualified medical child support orders.

Question 8

A summary plan description is required for all of the following except
A)Defined contribution plans
B)Defined benefits plans
C)Flexible spending accounts
D)AD&D insurance

Accepted Answer

Summary plan descriptions are required only for group health plans.
Key Takeaway: A summary plan description (SPD) provides plan participants with information about the provisions, policies, and rules established by the plan and advises them on actions they can take in utilizing the plan. ERISA requires that the SPD include the name and other identifying information about plan sponsors, administrators, and trustees, along with any information related to collective bargaining agreements for the plan participants. The SPD must describe what eligibility requirements must be met to participate in the plan and to receive benefits.

Question 9

Which of the following statements about workweeks is not true?
A)A workweek is any fixed and regular recurring period of 168 hours.
B)The employer can select any day (and any hour) of the calendar week on which to begin the workweek.
C)The employer can establish different workweeks for different employees or groups of employees.
D)The hours than an employee works during different workweeks within the same pay period can be "averaged."

Accepted Answer

The hours that en employee works during different workweeks cannot be averaged, even when those weeks are during the same pay period.
Key Takeaway: Options A, B, and C each make a true statement about the definition of a "workweek."

Question 10

Which of the following would not be considered an affirmative defense under the Equal Pay Act?
A)Seniority
B)Diversity
C)Quality of production
D)Merit

Accepted Answer

Diversity is not considered to be an affirmative defense under the Equal Pay Act.
Key Takeaway: Options A, C, and D are not the best choices, since seniority, quality of production, and merit would all be considered affirmative defenses under the Equal Pay Act. The Equal Pay Act was an amended to the FLSA in 1963 and was the first antidiscrimination act to protect women. Equal pay for equal work applies to job with similar working conditions, skill, effort, and responsibilities. The Equal Pay Act applies to employers and employees covered by the FLSA and is administered and enforced by the Equal Employment Opportunity Commission (EEOC).

Question 11

Which of the following statements about the point factor method of job evaluation is true?
A)Point factor systems do not establish levels of performance within each compensable factor, since that would constitute making the error of evaluating the person instead of the position.
B)There is a greater likelihood of rater subjectivity with point factor methods of job evaluation than with whole job methods, since point factor systems require the evaluator to make more judgments.
C)The product of a completed job evaluation will generate information that will be helpful to establishing a job worth hierarchy.
D)While point factor systems address evaluative information about different compensable factors, they do not address the relative importance of each compensable factor.

Accepted Answer

The information that is generated through the job evaluation process will provide information that is helpful to establishing a job worth hierarchy.
Key Takeaway: Option A is not the best choice, since point factor systems do establish levels of performance within each compensable factor. The potential for rater subjectivity is lower with the point factor job evaluation method than it is with the whole job methods of job evaluation. The point factor systems also do address the relative importance of each compensable factor.

Question 12

Which of the following was established by ERISA?
A)Enhanced protection for plan members with preexisting medical conditions.
B)A clearer definitions of "hours worked" for purposed of minimum wage and overtime payments.
C)Whistleblower protection for employees who report fraud against shareholders.
D)Minimum participation and vesting standards for retirement programs.

Accepted Answer

ERISA did establish minimum participant and vesting standards for retirement programs.
Key Takeaway: Enhanced protection for plan members with preexisting medical conditions was established by COBRA. A clearer definition of "hours worked' for purposes and minimum wage and overtime payments was established by the Portal-Portal Act. Whistleblower protection for employees who report fraud against shareholders was established by Sarbanes-Oxley.

Question 13

Fiduciaries must do all of the follow except
A)Protect plan participants by diversifying plan investments
B)Act with skill, care, prudence, and diligence
C)Avoid conflicts of interest
D)Follow the terms of plan documents without deviation

Accepted Answer

Under ERISA, fiduciaries must follow the terms of plan documents to the extent that those terms are consistent with ERISA, not simply without deviation.
Key Takeaway: Protect plan participants by diversifying plan investments; act with skill, care, prudence, and diligence; and lastly avoid conflict of interest all are something fiduciaries are required to do.

Question 14

Which of the following did the REA not accomplish?
A)Lowered the minimum age requirements for pension plan participation, and increased the years of service that count for vesting purposes
B)Prohibited plans from counting maternity and paternity leaves as breaks in service for participation and vesting purposes
C)Required qualified pension plans to provide automatic survivor benefits that could be waived only with the written consent of the plan participant
D)Clarified that pension plans may obey certain qualified domestic relations orders without violating ERISA

Accepted Answer

The Retirement Equity Act requires that the participant and his or her spouse must waive the provision that provides for automatic survivor benefits. This provision cannot be waived independently by the plan participant, as Option C implies.
Key Takeaway: Options A, B, and D all state an accomplishment of the REA.

Question 15

"PHI" refers to
A)Health information that relates to a specific individual
B)A managed care health option offered to federal and state government employees
C)Information that was used as part of the "long form" test under the old provision of the FLSA
D)Information that must be maintained in accordance with the record-keeping requirements of the FLSA

Accepted Answer

"PHI" stands for "protected health insurance" that relates back to one individual.
Key Takeaway: Options B, C, and D are all fabricated definitions that are totally unrelated to PHI. Protected health insurance is patient information that must be kept private, including physical or mental conditions, information about health-care given, and payments that have been made.

Question 16

Which of the following is not one of the three main provisions of the Social Security Act?
A)Retirement benefits
B)Pension protection
C)Survivor's benefits
D)Disability benefits

Accepted Answer

Pension protection is addressed through ERISA, not through the Social Security Act.
Key Takeaway: Retirement benefits, survivor's benefits, and disability benefits are the three major provision of the Social Security Act. The Social Security Act of 1935 introduced Old Age, Survivors, and Disability Insurance and established unemployment insurance for workers.

Question 17

Which of the following is not required of covered entities by the HIPAA privacy rule?
A)Designation of a privacy officer
B)Creation of a code of ethics that applies to all employees who have access to health-related information
C)Establishment of a complaint handling and resolution process for issues related to the HIPAA privacy rule
D)Agreements signed by business associates stating that they will respect the confidentiality of patient information

Accepted Answer

The HIPAA privacy rule requires creation of a code of ethics that applies to the company's key officers.
Key Takeaway: At a minimum, this code must apply to the company's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. It does not, however, have to apply more broadly within the organization. All covered entities are required by the HIPAA privacy rule to designate a privacy officer, establish a compliant handling and resolution process, and sign agreements stating business associates will respect confidentiality of patient information.

Question 18

As the HR manager, you've been looking for creative ways to provide employees with greater benefits without incurring significant additional costs. Your company already has a POP in place. Which of the following would you be most likely to recommend?
A)FSAs
B)PCAs
C)ESOPs
D)PNGs

Accepted Answer

Like a POP (premium only plan) an FSA (flexible spending account) falls under Section 125. An FSA goes one step further than a POP by allowing employees to set aside pre-tax dollars to pay for medical expenses that are not covered by insurance. This lowers the employee's taxable income, which benefits the employer as well as the employee.
Key Takeaway: PCA refers to the Walsh-Healey Public Contracts Act, which was passed in 1936. An ESOP (employee stock ownership plan) involves the distribution of stock, and establishing one is much more complex than establishing and FSA. Creating an ESOP has many implications and would not constitute an appropriate solution for a problem such as this. PNG is not a commonly known acronym in HR.

Question 19

You're the HR manager at your organization and report directly to the president (whose sister died of cancer about six months ago). One afternoon, an employee comes to you with a problem. Her sister (who lives out of state) has been diagnosed with a very aggressive form of cancer and has less than 6 months to live. The employee wants to spend the last few months of her sister's life with her, to share time and care for her in her final days. The employee has already requested a leave of absence but was advised by an HR representative and her manager that this sort of leave isn't covered under FMLA. Your department is going into its "busy season," so her manager in unwilling to grant any other type of leave. She is concerned about how she will support herself while she is staying with her sister. She asks you whether it is possible for the company to call this a layoff and approve of her getting unemployment insurance. Sadly, she knows that her sister won't live longer than six months, so unemployment insurance benefits would carry her through. After you express your concern and sympathy, which of the following responses would be the best?
A)Tell the employee that it is up to the state, not the company, whether or not unemployment insurance will be granted and that, while you do sympathize with her situation on a personal level, it's not possible for you to code the termination as a layoff.
B)Tell the employee that it's up to the state, not the company, whether or not unemployment insurance will be granted. However, as long as the president approves (and you're pretty sure he will), you're willing to code the termination as a layoff.
C)As HR, your role is that of employee advocate, and you are willing to advocate on her behalf to the president. You are fairly confident that he will approve this request and will get back to the employee either way as soon as possible.
D)You remind the employee, as gently as possible, that, as HR, your role is to ensure that all of the company's policies and procedures are followed, and falsifying the termination code would be a violation of policy. As such, you just can't code the termination as a layoff.

Accepted Answer

First, it is important for the employee to understand how the process works, so it is appropriate to share that information with her. No matter how much you feel for her, however, and regardless of any other personal circumstances that might be "pulling at your heart strings," there are many reasons (ethical, legal, procedural, financial, etc) why you would not falsify a termination code.
Key Takeaway: You don't need to go into all those reasons with the employee. Although the factual information at the beginning of Option B is correct, there are many reasons why you should not falsify the termination code. As HR, your role is to be a "truth advocate," not an employee advocate, and in truth the employee wasn't laid off. Prattling on about policies and procedures at this moment isn't the best approach and might only serve to reinforce the notion of HR as the "personnel police."

Question 20

A manager who you know fairly well, and with whom you have a good working relationship, leaves a voice mail message for you asking you to please call her back about a benefits question. You return her call, and she comes down to your office to speak with you in person. She explains that her former assistant, who left nearly a year and a half ago to go back to college, is about to run out of COBRA. She explains to you that he still is one semester away from earning his degree and can't get decent health insurance through the college plan. She asks if you wouldn't mind leaving him on COBRA, just for a few more months. You know that you've got to formulate a response that accomplishes a number of things, including providing accurate facts. Which of the following facts would be the most appropriate to share?
A)You inform the manager that, under COBRA, former employees who are full-time students at the time that COBRA runs out are entitled to an extension for as long as the former employee remains a full-time student (up to 18 months).
B)You inform the manager that although COBRA only requires an employer to continue benefits coverage for 18 months, the employer has the option to extend COBRA benefits for an additional 18 months.
C)You inform the manager that COBRA can be continued for another 18 months, as long as the employee pays the company 110% of the monthly premium costs.
D)You inform the employee that COBRA cannot be continued beyond 18 months in this particular situation, but there are other situation that would warrant an extension and that you would be happy to share that information with her.

Accepted Answer

According to the facts you have been given, COBRA can't be extended, but it's also true that there may be other facts of which you're not aware. You should be helpful, factual, and accurate.
Key Takeaway: There is no provision under COBRA that states that an extension beyond 18 months is available for former employees who are full-time students. COBRA does not allow employers to continue benefits coverage beyond legally specified time frames. COBRA allows for participation to continue for up to another 18 months only under specific circumstances (and those circumstances cannot be "bought" with a 10% surcharge).

Quiz 4: Rewards

The Federal Insurance Contributions Act requires employers to do which of the following?

A total rewards philosophy can help achieve an organization's strategic goals by doing which of the following?

An entitlement culture is appropriate for a business that needs what type of workforce?

A company that wants to reduce the cost of its unemployment insurance should do which of the following?

A reduced FMLA leave schedule is which of the following?

The Older Worker Benefit Protection Act requires that an employee age 40 or older who is asked to waive their rights under the act must be given what?

The Omnibus Budget Reconciliation Act of 1993 does not require which of the following?

A summary plan description is required for all of the following except

Which of the following statements about workweeks is not true?

Which of the following would not be considered an affirmative defense under the Equal Pay Act?

Which of the following statements about the point factor method of job evaluation is true?

Which of the following was established by ERISA?

Fiduciaries must do all of the follow except

Which of the following did the REA not accomplish?

"PHI" refers to

Which of the following is not one of the three main provisions of the Social Security Act?

Which of the following is not required of covered entities by the HIPAA privacy rule?

As the HR manager, you've been looking for creative ways to provide employees with greater benefits without incurring significant additional costs. Your company already has a POP in place. Which of the following would you be most likely to recommend?