Compensation
Background: Sarah works at a factory that produces parts for air conditioner units and is paid based on the number of switches produced. Sarah is paid $6 for each switch produced in a week under 100, and $10 each for switches over 100. One week, Sarah produces 150 switches. Question: How much will Sarah's paycheck be for that work?
$1,100
Background: Jesse works for the local electric company with an hourly rate of $20 per hour. Jesse get time and a half for working any hours above 40 per week. During a recent hurricane, Jesse worked 120 hours during a two-week period, with the hours split evenly between the weeks. Question: What would Jesse's paycheck be for that pay period
$2,800
What is the minimum hourly rate employers can pay tipped employees, assuming they can take the maximum allowable tip credit?
$2.13
What is the piece rate for an employee who earns $500 to produce 100 pieces of a product?
$5.00
What is the minimum taxable amount of employer life insurance?
$50,000
What is not an example of a cash award?
A trip
The Portal-to-Portal Act
Act of 1947 clarifies the type of work time for which employees should receive payment
Which pre-1995 act prohibits employers from paying members of one sex less than members of the opposite sex for performing equal work?
The equal pay act
The Civil Rights Act
Title VII prohibits discrimination, including compensation discrimination, based on certain protected classes
Which pre-1995 act prohibits discriminating against employees 40 years age and older in hiring, promotions, training, benefits, and terminations?
Age Discrimination in Employment Act
Profit sharing plans
Ascending or descending scale formula profit sharing involves percentage increases or decreases as profits increase or decrease. Discretionary profit sharing is usually decided by the board of directors on an annual basis. A constant percentage profit sharing plan is usually established at a rate of 20 to 25 and an allocation formula determines how the fund is divided among the individual participants
What is the normal overtime multiple of the hourly rate?
1.5
Background: Charlie works as a server at a local restaurant on the late-night shift. Recently, activity during these hours has slowed and Charlie has not been making as much in tips as usual. One recent week, Charlie only made $100 in tips. Question: How much additional wages would Charlie's employer be responsible for paying based on a 40-hour work week using FLSA tip requirements?
190
What is an example of a competency-based person-based pay system?
A machine operator cross-trained on a variety of production equipment
What information would a payroll software system normally not provide?
Benefits enrollment
Cost of living adjustment
COLAS are usually measured against the CPI, which is the measure pf the price of goods and services in each area over a period of time. COLAs are argued on the basis that they simply reflect the increased cost of living. Nonunion employers typically resist the pressure to provide COLAs
Background: Variable compensation, also known as incentive pay, plays a strategic role in increasing organizational effectiveness. Most programs are individual, group, organization-wide, or some combination thereof. Question: Which type of program provides a one-time bonus amount based on performance?
Cash award program
Which type of payment change is a pay increase given to all employees based on market pressure, usually measured against the consumer price index and negotiated in a unionized environment?
Cost of living adjustment (COLA)
Executive compensation packages have several elements in addition to base salary. Which element of executive compensation provides the most substantial payout to executives?
Deferred compensation and long-term incentives plans (LTIPS)
Background: A company provides profit sharing to it employees each year if company profits are over $1 million. One year, the company has a profit of $10 million, and the board of directors decides that each employee will receive a profit-sharing payment of 1 month's salary, payable at the end of the year. Question: Which type of profit-sharing incentive is being authorized in this example?
Discretionary
Which statement about tip credits is not true?
Employees can pool the tip credit amount
Employees' tips make up the tip credit amount
Employers are only required to pay tipped employees $2.13, provided their tips can make up the remainder to at least minimum wage
Employees can pool the tip credit
Employers can require employees to contribute all or a portion of their tips is a tip pool, but this is different from the tip credit. A tip pool is split among other employees who serve customers and regularly receive tips, but is considered invalid under FLSA if pooled with employees who don't customarily receive tips
Tip credits can be taken against wages
Employers can take tip credit against tipped employees' hourly wages. The maximum tip credit of $5.12 per hour subtracted from the $7.25 minimum wage means that many servers are only paid $2.13 per hour by their employers.
What type of differential pay is paid to account for variations in the cost of living between locations?
Geographic-based differential pay
Personnel conflicts
Improperly structures wage incentive systems can create work disruptions and lead to conflicts
Design cost
In the wage incentive systems involve extra cost to establish and operate properly
Which example is not considered direct compensation?
Insurance
What is a characteristic of an incentive wage system?
It provides minimum guaranteed wages for time and speed to complete work
Background: Differential pay is additional compensation for factors that make work more difficult or unpleasant. It's an essential part of making compensation fair. Question: Which type of differential pay is a labor cost differential for working in an undesirable area?
Location-based differential pay
Which element of an executive compensation package is typically a deferred compensation plan or stock-based plan?
Long-tem incentive
Which types of payroll deductions are considered voluntary?
Medical, Dental
Non-cash award program
Non-cash awards are offered to recognize performance, special contributions, and length of service. Examples include gifts, awards, trips, and prizes
Equal Pay Act
Or EPA, prohibits employers from paying members of one sex less than members of the opposite sex for equal work.
Uniformed Services Employment and Reemployment Rights Act
Or USERRA, entitles service members to return to the same civilian employer with the seniority, status, and rate of pay they would have obtained if continuously employed.
What is not a payroll domain responsibility?
Performance reviews
Which element of the executive compensation package provides special privileges such as a private jet and travel reimbursements?
Perquities or perks
Background: The are four main types of base pay: single or flat-rate systems, performance-based systems, seniority-based systems, and person-based systems. Question: Which type of base pay system is broken down into knowledge-based, skill-based, and competency-based systems?
Person-based systems
Background: Payroll mistakes can be costly, so payroll requires an accurate and efficient process. Knowing how to calculate pay is essential for running an accurate and legal payroll. Question: Which elements of the payroll calculation are applied twice?
Pre-tax deductions, Taxable benefits
Which type of incentive program includes discretionary, constant percentage, allocation formula, and ascending or descending scale formula plans?
Profit sharing plans
Age Discrimination in Employment Act
Prohibits discriminating against employees 40 years of age and older in hiring, promotions, training benefits, compensation, discipline, and terminations
Which statement best describes the green circle pay variation rate?
Rates are below the minimum range
The Congressional Accountability Act
Requires US Congress and its associated agencies to follow many of the same employment and workplace safety laws
There are many types of compensation programs that may be used to attract and retain employees. Which types of compensation are considered direct compensation?
Salary, Bonuses and incentives
Which type of incentive program distributes savings to employees?
Scanlon Plans
Which type of increase to base pay is most common in a unionized setting?
Seniority pay increase
Which type of base pay method provides employees with the same rate of pay, regardless of performance or seniority?
Single or flat-rate system
Which type of sales incentive program is used when there are high-volume sales involved?
Straight commission
There are several federal laws and regulations related to foundational compensation activities. Which law prevents employers from withholding an employee's pay in exchange for employment?
The Copeland Anti-kickback Act
Which act prevents an employer from withholding an employee's pay in exchange for employment and regulates which deductions they are allowed to take out of an employee's paycheck?
The Copeland Anti-kickback Act
Which law provides minimum standards related to minimum wage, overtime pay eligibility, and child labor for full-time and part-time employees of employers with at least $500,00 in gross sales?
The Fair Labor Standards Act
Which act applies to employers with 15 or more employees and says each paycheck containing discriminatory compensation is a separate violation?
The Lilly Ledbetter Fair Pay Act
Which post-1995 act establishes that each paycheck that contains discriminatory compensation is a separate violation, regardless of when the discrimination began?
The Lilly Ledbetter Fair Pay Act
Which act was enacted as a reaction to several major corporate accounting scandals at companies such as Enron and WorldCom?
The Sarbanes-Oxley Act
Which pre-1995 act entitles service members to return to the same civilian employer with he seniority, status, and rate of pay they would have obtained if they were continuously employed?
The Uniformed Services Employment and Reemployment Rights Act
There is a limit on the allowable tip credit
The maximum allowable tip credit an employer can take is $5.12 per hour
Worker Motivation
The potential to earn more money for being highly productive can be a motivating factor, and is not a drawback
Perquisites or perks
These are various benefits given to executives, including the use of a private jet, travel reimbursements, and other rewards. Most of them will have no cash value, but will be a taxable benefit
Deferred compensation and long-term incentives plans (LTIPS)
This is the largest payout for executives. It encompasses deferred compensation plans and LTIPs, which are tied to performance and have tax advantages
Exit packages
This is the second largest windfall, given to executives when they leave the company for a variety of reasons, excluding gross misconduct. An exit package may include a golden parachute or golden handshake, which is a severance the executive will receive if terminated or the company changes leadership
Executive bonuses
This is the sum of all standard cash compensation the executive receives for the year and can range from 20 to 200%. While this may seem significant, it is rather small in comparison to the larger payouts.
A bakery has three daily shifts. Anyone working the 12 a.m. to 7 a.m. shift receives $2 more per hour than the 7 a.m. to 4 p.m. shift. What is this type of differential pay called?
Time-based differential pay
Background: Every day, a factory produces 100,000 light bulbs of different sizes. An employee at the factory gets paid the same no matter how many light bulbs they produce each day. Question: Which wage payment method does this describe?
Time-rate system
Standardizing methods
Wage incentive methods involve additional labor costs to operate properly, which is a drawback
Wage payment methods include piece-rate incentive systems, time rate systems, and incentive wage systems. What is a characteristic of the piece-rate incentive system?
Wages are based on quantity and quality of work
Green circle rate
When changes are made to an existing pay structure, pay for some employees may fall outside the pay range. A green circle rate is one that falls below the minimum of the pay range
What is not a drawback of the wage incentive method?
Worker motivation
Stock plans
allow employees to own shares in a corporation at discounted prices
Bonus plans
are a method of recognizing and rewarding hard work.They're given to employees along with their fixed based pay and dependent on the variables set out by the business
Seniority pay increase
are common in unionized settings, but they're based solely on length of service. Nonunion setting usually combine seniority with performance
Organizational incentives
are financial awards given to employees, often implemented to inspire and motivate employees
The Fair Labor Standards Act
establishes minimum standards for full-time and part-time employees, including standards related to minimum wage, overtime pay eligibility, and child labor
The Walsh-Healy Act
establishes minimum wage, maximum hours, and safety and health standards for the manufacturing or furnishing of materials, supplies, articles, or equipment. It also prohibits the use of child labor under age 16 or imprisoned convicts, with some exceptions
The Lilly Ledbetter Fair Pay Act
establishes that each paycheck that contains discriminatory compensation is a separate violation, regardless of when the discrimination began. it also restricts the time period for filing complaints of employment discrimination discrimination concerning compensation
The Sarbanes-Oxley Act
increases regulatory visibility and accountability of companies and their finances and protects employees who report and testify against their employer's fraudulent acts.
Salary plus commission
is a sales incentive program used when an organization needs to reward behavior that supports strategy. Sales commissions help to motivate sales team.
Straight salary program
is a sales incentive program when more time is spent on service than sales to establish or build a relationship. It is one of four common types of sales incentive programs; the others are salary plus commission, salary draw, and straight commission
Wage compression
is when new employees are hired at a rate of pay greater than what's earned by current employees for similar skills, education, and experience
Cash award program
provide extra cash compensation based on performance. They are one-time bonus amounts and don't increase the employee's regular pay
The IRS Intermediate Sanctions
provide guidelines for determining reasonable compensation for executives of nonprofit organizations
The Small Business Job Protection Act
provides tax relief for small business and increase the federal minimum wage rate
Red circle rate
refers to an employee whose pay falls above the pay range maximum. It may occur in the event of a demotion or transfer, or in some other unusual circumstance
The Dodd-Frank Wall Street Reform and Consumer Protection Act
requires a company's CEO to report their pay compared to average employee compensation
The Davis-Bacon Act
requires an employer to pay the prevailing wages and fringe benefits of the locality where the work is performed, and to pay overtime at 1.5 times the local rate
Gainsharing
rewards employees and managers on improved productivity. Plans include Scanlon Plans, Rucker Share of Production Plans, and Improshare Plans.
The Copeland Anti-kickback Act
which applies to federal government contractors and subcontractors, prevents employers from withholding employees' pay in exchange for employment. It also regulates deductions an employer can take from an employee's paycheck and requires employers to file weekly compliance reports
