Compensation Management Exam 1
The "Say on Pay," a nonbinding vote by shareholders to approve or disapprove executive pay is a provision in the_________. A) Dodd-Frank Act B) Lilly Ledbetter Fair Pay Act C) Sarbanes-Oxley Act D) Fair Labor Standards Act
Answer: A) Dodd-Frank Act
Which of the following is true of the Age Discrimination in Employment Act? A) It protects employees aged 30 and over against age discrimination. B) It was amended in 1990 to include the Older Workers Benefit Protection Act. C) It mandates employers with 50 or more employees to provide qualifying health insurance coverage or face financial penalties. D) It formed the Securities and Exchange Commission, which ensures that companies with more than $10 million in assets report information periodically.
Answer: B) It was amended in 1990 to include the Older Workers Benefit Protection Act.
Under the _________, employers can be liable for current pay differences that are a result of discrimination that occurred many years earlier. A) Sarbanes-Oxley Act B) Lilly Ledbetter Fair Pay Act C) Equal Pay Act D) Fair Labor Standards Act
Answer: B) Lilly Ledbetter Fair Pay Act
MNTX University requires that all its female professors score higher than the male professors in their appraisal rating to qualify for a pay bonus as there are more female professors than male professors in the university. Which of the following statements is true in this case? A) MNTX is liable for access discrimination against women. B) MNTX is liable for disparate treatment of women. C) MNTX's pay policy is legal as educational institutions are exempt under the Equal Pay Act. D) MNTX's pay policy is legal as its intention is to reduce the overall costs of the company and not to discriminate.
Answer: B) MNTX is liable for disparate treatment of women.
The_________ specifies the number of breaks that must be provided in an eight-hour workday. A) Portal-to-Portal Act B) Occupational Safety and Health Administration Legislation C) Walsh-Healey Public Contracts legislation D) Equal Pay Act
Answer: B) Occupational Safety and Health Administration Legislation
_________ is defined by the Department of Labor as experience, training, education, and ability as measured by the performance requirements of a particular job. A) Effort B) Skill C) Responsibility D) Working condition
Answer: B) Skill
The _________ Act extends the prevailing wage concept to manufacturers or suppliers of goods for government contracts. A) Sarbanes-Oxley B) Walsh-Healey Public Contracts C) Fair Labor Standards D) Davis-Bacon
Answer: B) Walsh-Healey Public Contracts
Compensation policy choices that affect the pay level relative to other companies are most closely associated with the_________ aspect of the pay model. A) internal alignment B) external competitiveness C) employee contribution D) pay system management
Answer: B) external competitiveness
Comparisons based on the forms of compensation used by other companies are part of: A) internal alignment. B) external competitiveness. C) employee contributions. D) corporate responsibility.
Answer: B) external competitiveness.
The degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n): A) sorting effect. B) incentive effect. C) turnover effect. D) directional effect.
Answer: B) incentive effect.
In which of the following types of cases is the focus on the discriminatory consequences rather than the intent to discriminate? A) Disparate treatment B) Access discrimination C) Disparate impact D) Valuation discrimination
Answer: C) Disparate impact
Whole Foods' shared-fate philosophy of limiting executive salaries to no more than 19 times the average pay of full-time employees is an example of which strategic pay decision? A) External competitiveness B) Employee contributions C) Corporate responsibility D) Internal alignment
Answer: D) Internal alignment
Which of the following includes a provision that requires public companies to set policies to allow executive compensation to be taken back if it was based on inaccurate financial statements that did not comply with accounting standards? A) The American Recovery and Reinvestment Act B) The Troubled Asset Relief Program C) The Financial Accounting Standards Board Statement 123 R D) The Dodd-Frank Wall Street Reform and Consumer Protection Act
Answer: D) The Dodd-Frank Wall Street Reform and Consumer Protection Act
Since 1983, in the private sector, the number of workers in unions has dropped as well as themembership rate. Which of the following is not an explanation offered for this decline? A) Workers do not view unions as a solution to their problems. B) Organization efforts have declined. C) Growing industries are less unionized. D) The structure of American industry is stagnate.
Answer: D) The structure of American industry is stagnate.
Variable pay may also be called A) relational returns. B) merit increases. C) COLAs. D) incentives.
Answer: D) incentives.
You are an HR manager, and your boss has told you to find the best way to raise job performance. After some research, you find that _________ have the greatest instrumental value. A) job responsibilities B) training and skill development programs C) goal setting and job enrichment D) monetary incentives
Answer: D) monetary incentives
Prevailing-wage laws A) set pay for work done to produce goods and services contracted by the state government. B) specify that a government-defined prevailing wage is the maximum wage that must be paid for work done on covered government projects. C) give contractors the right to drive down wages using their size. D) were passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression.
Answer: D) were passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression.
Which of the following companies is taking efforts to improve the work/life balance of its employees? A) MH Corporation, which increases the number of paid holidays given to its senior employees B) Kay Corporation, which increases the transport allowance for its employees by 10 percent C) Haywire Corporation, which allows its employees to buy company stocks at a reduced price of $30 per share D) Halo Corporation, which increases the variable pay of its employees
Answer: A) MH Corporation, which increases the number of paid holidays given to its senior employees
Which of the following statements concerning cash compensation and the Fair Labor Standards Act is true? A) Nonexempt employees have their pay calculated at an hourly wage. B) Exempt workers receive overtime pay. C) Managers and professionals usually fit the category of nonexempt worker. D) Labeling all base pay as "salary" means the employer does not have to follow the FLSA regulations.
Answer: A) Nonexempt employees have their pay calculated at an hourly wage.
The "say on pay" and clawback provisions are included in which of the following federal laws? A) The Dodd-Frank Wall Street Reform and Consumer Protection Act B) The Affordable Care Act of 2010 C) The Fair Labor Standards Act (FLSA) D) The Cost-of-Living Act (COLA)
Answer: A) The Dodd-Frank Wall Street Reform and Consumer Protection Act
Which of the following tests of competitive advantage is probably the easiest test to pass? A) The alignment test B) The differentiation test C) The integration test D) The value-addition test
Answer: A) The alignment test
In the context of the Consolidated Omnibus Budget Reconciliation Act (COBRA), which of the following statements is true? A) The biggest concern for individuals getting health insurance under COBRA is the relatively brief qualifying period, only 18 months. B) COBRA is designed to lessen an employer's ability to deny coverage for a preexisting condition. C) COBRA allows an employer to charge individuals up to 110 percent of the premium for supplying the coverage. D) Employers having 50 or more employees are covered under COBRA.
Answer: A) The biggest concern for individuals getting health insurance under COBRA is the relatively brief qualifying period, only 18 months.
Which of the following is a test that must be met to qualify for the administrative employee exemption? A) The employee must be compensated on a salary or fee basis at a rate not less than $684 per week. B) The employee's primary duty must be performance of manual work. C) The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent. D) The employee must have the authority to hire or fire other employees.
Answer: A) The employee must be compensated on a salary or fee basis at a rate not less than $684 per week.
GreenRain Corporation faces an increase in its employee turnover rate. The CEO calls for a board meeting with the senior executives to discuss the issue. Who among the following suggests increasing the relational returns that employees receive to reduce the turnover rate at GreenRain? A) Tom, who suggests increasing the decision-making authorities given to the employees to make work more challenging B) Deena, who suggests providing more work/life balance to the employees by increasing the number of paid leaves C) Syed, who suggests increasing the medical insurance coverage offered to the employees D) Liam, who suggests increasing merit bonuses
Answer: A) Tom, who suggests increasing the decision-making authorities given to the employees to make work more challenging
The denial of jobs, promotions, or training opportunities to qualified women or minorities are examples of A) access discrimination. B) valuation discrimination. C) treatment discrimination. D) hostile environment.
Answer: A) access discrimination.
Mich Incorporated, a hardware store, has a rating system in place that rates employees on their friendliness, usefulness, and product knowledge. Based on the ratings an employee receives, he or she gets an incentive. The compensation strategy followed by Mich is most closely described as a(n): A) customer-focused strategy. B) cost-cutter strategy. C) innovator strategy. D) differentiation strategy.
Answer: A) customer-focused strategy.
A difference between incentives and merit increases is that incentives A) do not increase the base wage, whereas merit increases increase the base wage. B) cannot be tied to the performance of an individual, whereas merit increases can be tied to the performance of an individual. C) rely on a subjective measure of performance, whereas merit increases rely on an objective measure of performance. D) are relational returns, whereas merit increases are part of the total compensation.
Answer: A) do not increase the base wage, whereas merit increases increase the base wage.
The executive branch of the federal government A) enforces laws through agencies and its other bodies. B) passes new laws. C) interprets laws and considers their constitutionality. D) changes existing laws
Answer: A) enforces laws through agencies and its other bodies.
Work/life balance is most closely associated with the _________ aspect of mapping a total compensation strategy. A) external competitiveness B) objectives C) internal alignment D) employee contributions
Answer: A) external competitiveness
Research investigating high-performance workplaces found that performance-based pay_________ when combined with other high-performance practices. A) improves attitudes and behaviors B) increases the number of middle men required C) reduces labor costs D) has little effect on quality
Answer: A) improves attitudes and behaviors
A compensation system using market-based pay is most likely to be part of a(n) _________strategy. A) innovator B) cost-cutter C) cost leadership D) customer-focused
Answer: A) innovator
The determination of pay discrimination on jobs of dissimilar content requires a standard that allows jobs of dissimilar content to be declared comparable and that allows pay differences for jobs that are not comparable. This standard is A) job evaluation. B) comparable worth analysis. C) disparate impact analysis. D) point factor market comparison.
Answer: A) job evaluation.
In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of A) objectives. B) internal alignment. C) external competitiveness. D) corporate responsibility.
Answer: A) objectives.
The Worker Economic Opportunity Act A) states that income from most stock plans need not be included in calculating overtime pay. B) requires the value of all employee stock options to be expensed at estimates of fair value on financial statements. C) gives the Securities and Exchange Commission the authority to grant shareholders proxy access to nominate directors. D) extends the Securities and Exchange Commission pay disclosure requirements to highly paid executives.
Answer: A) states that income from most stock plans need not be included in calculating overtime pay.
_________ is movement through the wage ranges where seniority is specified as the basis of the movement. A) Length-of-stay progression B) Automatic progression C) A merit differential D) A performance differential
Answer: B) Automatic progression
_________ is the key to attracting, retaining, and motivating employees with the abilities necessary to execute the business strategy and handle greater decision-making responsibilities. A) Transparency B) Compensation C) Prominence D) Culture
Answer: B) Compensation
Which of the following is a policy, and NOT an objective, of the pay model? A) Ethics B) Competitiveness C) Efficiency D) Fairness
Answer: B) Competitiveness
Which of the following issues most commonly reach arbitration? A) Layoffs B) Discharge and disciplinary issues C) Transfers D) Complexity of work assignments
Answer: B) Discharge and disciplinary issues
According to the text, which of the following decisions should be made jointly? A) Internal alignment and management decisions B) External competitiveness and employee contribution decisions C) Employee contribution and internal alignment decisions D) Management and external competitiveness decisions
Answer: B) External competitiveness and employee contribution decisions
When interpreting research evidence concerning compensation strategy, it is thought that embedding compensation strategy within the broader _________ affects results. A) business strategy B) HR strategy C) business unit strategies D) corporate strategy
Answer: B) HR strategy
_________ refers to comparisons among jobs or skill levels inside a single organization. A) External competitiveness B) Internal alignment C) Compliance D) Merit guidelines
Answer: B) Internal alignment
Which of the following is often the largest component in an executive pay package? A) Base pay B) Stock options C) Merit bonuses D) Incentives
Answer: B) Stock options
Robert, the CEO of GameTrack Corporation, wants to restructure its pay plan without increasing labor costs in the long run. He is most likely to achieve this, while retaining his top employees, by: A) increasing base pay and decreasing variable pay. B) increasing incentive pay and decreasing base pay. C) hiring more employees and reducing marginal product output requirements. D) providing across-the-board increases on a monthly basis.
Answer: B) increasing incentive pay and decreasing base pay.
Trying to measure an ROI for any compensation strategy implies that: A) it is possible to align and differentiate the compensation strategy and still fail to add value. B) people are "human capital," similar to other factors of production. C) adding value is the most difficult test. D) value created as a result of costs is difficult to specify.
Answer: B) people are "human capital," similar to other factors of production.
The _________ was enacted by the Congress to provide current and former employees and their spouses and dependents with a temporary extension of group health insurance when coverage is lost due to qualifying events. A) Health Insurance Portability and Accountability Act B) Social Security Act C) Consolidated Omnibus Budget Reconciliation Act D) Family and Medical Leave Act
Answer: C) Consolidated Omnibus Budget Reconciliation Act
_________ prohibits discrimination on the basis of race, color, religion, sex, or national origin. A) Executive Order 11452 B) The FMLA C) Executive Order 11246 D) The Rehabilitation Act
Answer: C) Executive Order 11246
The_________ is designed to lessen an employer's ability to deny coverage to an employee for a preexisting condition. A) Consolidated Omnibus Budget Reconciliation Act B) Contract with America Advancement Act C) Health Insurance Portability and Accountability Act D) Family and Medical Leave Act
Answer: C) Health Insurance Portability and Accountability Act
Who among the following has violated the Fair Labor Standards Act of 1938? A) Rachel, who pays all her workers a minimum wage of $13 B) Sally, who does not consider the time her employees spend traveling to work as compensable time C) Jeremy, who employs his 16-year-old cousin in his meat-packing plant D) Randy, who employs his 17-year-old son in his stationery store as a cashier
Answer: C) Jeremy, who employs his 16-year-old cousin in his meat-packing plant
Which of the following is given as an increment to base pay in recognition of past work behavior? A) Merit bonuses B) Relational returns C) Merit increases D) A short-term incentive
Answer: C) Merit increases
According to the Hudson survey, which of the following is the single thing that would make 41 percent of U.S. workers happier? A) More personal days B) A flexible work schedule C) More money D) Better health insurance
Answer: C) More money
A key provision of the _________ allows employees in publicly traded companies the freedom to sell off any employer stock purchased through deferrals or after-tax contributions. A) Consolidated Omnibus Budget Reconciliation Act B) Affordable Care Act C) Pension Protection Act D) Employee Retirement Income Security Act
Answer: C) Pension Protection Act
Total CEO annual compensation at S&P 500 companies is roughly $12.3 million. At just over half that total ($6.5 million), which compensation component comprises the majority of that total compensation amount? A) Stock option awards B) Salary C) Stock grants D) Bonuses
Answer: C) Stock Grants
Susan works in a sterile laboratory that requires her to scrub and put on protective clothing. Which of the following acts determines whether she should be paid for this time? A) The Fair Labor Standards Act B) The Occupational Safety and Health Administration Act C) The Portal-to-Portal Act D) The Health Care Workers Protection Act
Answer: C) The Portal-to-Portal Act
Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select A) more supplemental insurance. B) more job training. C) a more flexible work schedule. D) more personal days and family leave.
Answer: C) a more flexible work schedule.
A compensation system that focuses on competitors' labor costs is most closely associated with a(n) _________ strategy. A) innovator B) customer-focused C) cost-cutter D) differentiated
Answer: C) cost-cutter
Unlike merit increases, merit bonuses are A) distributed in every quarter. B) based on duration of service. C) paid in the form of a lump sum. D) included in the base salary.
Answer: C) paid in the form of a lump sum.
The Davis-Bacon Act A) states that income from most stock plans need not be included in calculating overtime pay. B) increases the burden of proof on employers to rebut some discrimination claims. C) requires that mechanics and laborers on public construction projects be paid the prevailing wage in an area. D) extends the prevailing-wage concept to manufacturers or suppliers of goods for government contracts.
Answer: C) requires that mechanics and laborers on public construction projects be paid the prevailing wage in an area.
The Equal Pay Act is a part of the A) the Securities Exchange Act. B) the Title VII of Civil Rights Act. C) the Fair Labor Standards Act. D) the Walsh-Healey Public Contracts Act.
Answer: C) the Fair Labor Standards Act.
Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and wants to continue that coverage. According to the Consolidated Omnibus Budget Reconciliation Act, how long can Larry continue his coverage through Steve's company after being laid off? A) 36 months B) 24 months C) 18 months D) 0 months
Answer: D) 0 months
Which of the following statements is true of compensation strategies? A) Compensation strategies may differ between industries but fail to differ between companies in the same industry. B) Compensation strategies are static and only rarely evolve over time. C) A simple strategy of "let the market decide our compensation" may work internationally, but not domestically. D) Compensation strategies may differ within a company, especially one with a variety of business units.
Answer: D) Compensation strategies may differ within a company, especially one with a variety of business units.
Which of the following is one of the basic steps in establishing a comparable-worth payplan? A) Adopting multiple gender-neutral point job evaluation plans for all jobs within a unit B) Paying jobs with different evaluation results with different wage rates C) Basing the wage-to-job evaluation point ratio on the wages paid for female-dominated jobs D) Identifying the percentages of male and female employees in each job group
Answer: D) Identifying the percentages of male and female employees in each job group
Which of the following actions is most likely to be favored by unions? A) Increasing the pricing of products to cover for increases in wages B) Substituting wages with gain-sharing plans C) Making each individual worker more expendable to the firm D) Introducing lump-sum awards
Answer: D) Introducing lump-sum awards
In the context of the impacts of unions on compensation, which of the following statements is true? A) Unions do not make a difference in wages, across all studies and all time periods. B) Since 2000, the union wage premium has been unstable overall and has risen slightly in the private sector. C) Employees in service or production occupations have the least from union wage advantage. D) Management and professional employees do not enjoy union wage advantage.
Answer: D) Management and professional employees do not enjoy union wage advantage.
Meltrop Corporation employs two store clerks, Sam and Stella. Stella sues Meltrop claiming unequal pay as she earns $500 a week less than Sam does despite doing the same work as Sam. Which of the following is most likely to be the result of the litigation? A) Meltrop will win the litigation as blue-collar workers are exempt from the Equal Pay Act. B) Meltrop will win the litigation if it can prove that Stella is Sam's senior. C) Meltrop will lose the litigation as it has committed access discrimination. D) Meltrop will lose the litigation as it has committed valuation discrimination.
Answer: D) Meltrop will lose the litigation as it has committed valuation discrimination.
Under the _________ Act, executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company. A) Worker Economic Opportunity B) Davis-Bacon C) Walsh-Healey D) Sarbanes-Oxley
Answer: D) Sarbanes-Oxley
