Chapter 13 Benefit Options, Chapter 17: Government and Legal Issues in Compensation, Chapter 18
24. (p. 592) Factors such as shift differential, temporary assignment, and training programs are examples of _____. A. working conditions B. "essential functions" C. factors other than sex D. bases of substantially equal
C
25. (p. 632-633) _____ are to broad bands as minimums, midpoints, and maximums are to pay ranges. A. Gray fields B. Band-guides C. Reference rates D. Gray ranges
C
68. The gender wage gap is moderate for recent college graduates and decreases as the cohort ages. True False
FALSE
69. Employees have greater choice of doctors in an HMO than in a PPO. True False
FALSE
HoldDesk Inc. has an annual labor cost of $3,000,000. It has a turnover rate of 10 percent and a planned average increase of 5 percent. The turnover effect is _____.
$15,000
1. (p. 574) The executive branch of the federal government _____. A. enforces laws through agencies and its other bodies B. passes laws C. interprets laws and considers their constitutionality D. changes existing laws or passes new ones
A
1. (p. 618) Which of the following is not a likely consequence of a highly decentralized pay system? A. Total labor costs would be reduced B. Pay rates would be very unsystematic C. Managers would use pay to motivate their own objectives D. Employees are likely to be treated unfairly
A
16. (p. 628) If San Diego has a CPI of 165 and Los Angeles has a CPI of 145, this means _____. A. prices have risen faster in San Diego since the base year than they have in LA B. it essentially costs more to live in San Diego than in LA C. it costs less to live in LA than in San Diego D. pay in San Diego is, on average, 20 percent higher than in LA
A
18. (p. 585) Compensatory time off would _____. A. give employers and employees the option of trading overtime pay for time off B. provide employees overtime pay after 8 hours for a 10-hour workday C. allow an employer flexibility in the use of "on-call" employees D. enable employers to monitor the employment practices of subcontractors
A
20. (p. 631) Which form(s) of compensation is/are most likely to be involved in unethical practices? A. Executive stock options B. Employee medical benefits C. Employee base pay D. Worker pensions and retirement income
A
37. (p. 465) Dental insurance is provided by _____ percent of all employers with above 500 employees. A. 30 B. 90 C. 70 D. 85
B
37. (p. 601-602) The key factors explaining the gender pay gap are differences in _____. A. qualifications and work/occupation B. work/occupation and work-related behaviors C. union membership and discrimination D. discrimination and firm/industry
B
5. (p. 447-448) Which of the following benefits is a federally administered program? A. Workers' compensation B. Social Security C. Unemployment insurance D. Occupational Safety and Health Act
B
_____ is defined by the Department of Labor as the experience, training, education, and ability as measured by the performance requirements of a particular job. A. Effort B.Skill Correct C. Responsibility D. Working condition
B
17. (p. 452) _____ was designed to reduce an employer's ability to deny coverage to an employee based upon a preexisting condition. A. COBRA B. OSHA C. HIPPA D. FMLA
C
33. (p. 637) Research shows that employees tend to _____ the actual pay of those in jobs above them and _____ the pay of those below them. A. underestimate; underestimate B. overestimate; overestimate C. access; overestimate D. overestimate; underestimate
C
9. (p. 625) The percentage increase that is planned for an organizational unit or company is called _____. A. a top-down budget B. a bottoms-up budget C. a planned pay-level rise D. the current year's rise
C
75. (p. 627-628) What is the consumer price index (CPI)? Explain with an example.
CPI is the consumer product index measures the change of prices over time. Changes in CPI indicate whether prices have increased more or less rapidly in a place since the base period. (e.g. CPI of 110 in Salt Lake CIty and 120 in Des Moines, IA means that prices have risen faster in Des Moines than in SLC sincethe base year when both companies started with bases of 100.
_____ allows employees who have resigned or have been laid off through no fault of their own to continue receiving health coverage under their employer's plan at a cost borne by the employee. A. Health Maintenance Act (1973) B. FLSA (1938) C. The tax reform of 1982 D. COBRA (1984)
D
Pay ranges for top-level management positions are smaller than the pay ranges for entry-level managerial positions. True False
False
78. (p. 633) Briefly summarize compa-ratios.
Range midpoints reflect the pay policy line of the employer in relationship to external competition. To assess how managers actually pay employees in relation to the midpoint, an index called a compa-ratio is often calculated: Compa-ratio = average rate actual paid/range midpoint. A compa-ratio of less than 1 means that, on average, employees in a range are paid below the midpoint. That is, managers are paying less than the intended policy. There may be several valid reasons for such a situation. The majority of employees may be new or recent hires; they may be poor performers; or promotion may be so rapid that few employees stay in the job long enough to get into the high end of the range. A compa-ratio greater than 1 means that, on average, the rates exceed the intended policy. The reasons for this are the reverse of those mentioned above: a majority of workers with high seniority, high performance, low turnover, few new hires, or low promotion rates. Compa-ratios may be calculated for individual employees, for each range, for organization units, or for functions.
74. (p. 448) What is the central challenge of social security payments? How are they tackled
The money to pay social security benefits comes from contributions made by employees, their employers, and self-employed people during working years. As contributions are paid in each year, they are immediately used to pay for the benefits to current beneficiaries. This is a major problem with social security. While the number of retired workers continues to rise, no corresponding increase in the number of contributors to social security has offset the costs. To maintain solvency, there has been a dramatic increase in both the maximum earnings base and the rate at which that base is taxed.
Which of the following is NOT a likely consequence of a highly decentralized pay system?
Financial malfeasance is completely eliminated.
What are red circle rates?
If employees are paid above the range maximum, these rates are called red circle rates. Most employers "freeze" red circle rates until the ranges are shifted upward by market update adjustments so that the rate is back within the range again. If red circle rates become common throughout an organization, then the design of the ranges and the evaluation of the jobs should be reexamined.
78. (p. 453) Compare defined benefit plans and defined contribution plans.
In a defined benefit plan, an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. Defined contribution plans require specific contributions by an employer, but the final benefit that will be received by employees is unknown; it depends on the investment success of those charged with administering the pension fund.
71. (p. 574) What are the three branches of the federal government In the United States? What are their functions?
In the United States, there are three branches of federal government and each plays a role in the legal and regulatory framework in which employers work toward compliance objectives. The legislative branch (Congress) passes laws (or statutes). The executive branch, headed by the President, enforces laws through agencies and its other bodies, and the judicial branch interprets laws and considers their constitutionality. Over time, the legislative branch may change existing laws or pass new ones. The way that the judicial branch interprets laws can also change.
4/4 Points awarded 4 of 4 Points awarded SCORED Item21 4/4 Points awarded 4 of 4 Points awarded SCORED Which of the following statements about anchoring/framing is true?
It states that initial data strongly affect decisions/beliefs.
65. In Gunther v. County of Washington, the Supreme Court ruled that a wage discrimination suit could be brought under Title VII where the jobs were dissimilar. True False
TRUE
66. Vesting is the amount of time an employee must work for an employer to be entitled to their employer's contributions to a pension. True False
TRUE
66. Women's median annual earnings compared to men's has changed from about 60 percent to 78 percent from 1980 to 2007. True False
TRUE
67. A key reason to communicate pay information is that the goodwill engendered by the act of being open about pay may also affect perceptions of pay equity. True False
TRUE
68. The Pension Benefit Guarantee Corporation protects vested benefits of people in terminated pension plans. True False
TRUE
69. A higher proportion of women are employed by small versus large firms. True False
TRUE
69. If a pay system is not based upon work-related or business-related logic, it is best to not conduct a formal compensation communication program. True False
TRUE
70. Requiring a second opinion prior to surgery is an example of a method to reduce employee demand for health care. True False
TRUE
77. (p. 452) What is the purpose of the HIPAA?
The 1996 Health Insurance Portability and Accountability Act (HIPAA) is designed to (1) lessen an employer's ability to deny coverage for a preexisting condition and (2) prohibit discrimination on the basis of health-related status
73. (p. 578) What is the Fair Labor Standards Act of 1938? What are its major provisions?
The Fair Labor Standards Act of 1938 (FLSA) covers all employees (with some exceptions) of companies engaged in interstate commerce or in the production of goods for interstate commerce. In spite of its age, this law remains a cornerstone of pay regulation in the United States. The FLSA's major provisions are: 1. Minimum wage 2. Hours of work 3. Child labor An additional provision requires that records be kept of employees, their hours worked, and their pay.
72. (p. 576) What does the Securities Exchange Act of 1934 do? The Securities Exchange Act Of 1934 Created the Securities and Exchange Commission (SEC). Currently, the SEC requires companies that have more than $10 million in assets and whose securities are publicly traded and held by more than 500 owners to periodically report information, which is available to the public. This includes disclosure of compensation received by the CEO, CFO, and three other highest paid executives.
The Securities Exchange Act Of 1934 Created the Securities and Exchange Commission (SEC). Currently, the SEC requires companies that have more than $10 million in assets and whose securities are publicly traded and held by more than 500 owners to periodically report information, which is available to the public. This includes disclosure of compensation received by the CEO, CFO, and three other highest paid executives.
If red circle rates become common throughout an organization, then the design of the ranges and the evaluation of the jobs should be reexamined.
True
In cases where the content of an organization's jobs does not sufficiently match that of the jobs in the salary survey, an effort can be made to quantify the difference via benchmark conversion.
True
Less than 10 percent of compensation professionals strongly agree that employees know their own pay range and the one above them.
True
Turnover and organizational revenues are examples of survey data collected to gather competitive intelligence. True False
True
81. (p. 456) Explain vesting and portability.
Vesting refers to the length of time an employee must work for an employer before he or she is entitled to employer payments made into the pension plan. Portability refers to the issue of transferring pension benefits of employees moving to new organizations.
The percentage increase in average pay that is expected for an organizational unit or company is called _____.
a planned pay-level rise
What are the major disadvantages of a flexible benefits package?
The major disadvantages of a flexible benefits package are: Employees make bad choices and find themselves not covered for predictable emergencies. Administrative burdens and expenses increase. Adverse selection: Employees pick only benefits they will use; the subsequent high benefit utilization increases its cost. Subject to nondiscrimination requirements in Section 125 of the Internal Revenue Code
If Philadelphia has a CPI of 165 and Houston has a CPI of 145, and if both cities started with bases of 100, it means that _____.
prices have risen faster in Philadelphia since the base year than in Houston
32. (p. 598) To determine pay discrimination on jobs of dissimilar content requires a standard that allows jobs of dissimilar content to be declared comparable and 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
A
35. (p. 638) In a _____ approach in a compensation communication program, the focus is on explaining practices and how pay is determined. A. communication B. marketing C. management D. mixed
A
1. (p. 444) A comparison of employee benefits for private and state and local government sector reveals that: A. private sector pays out better benefits in the long run. B. both wages and benefits are higher in the state and local governments. C. private sector paid out better wages than state and local governments. D. state and government sector paid out better wages but benefits were relatively lesser.
B
10. (p. 578-579) Which of the following is not true regarding minimum wage? A. Nearly three-fourths of those earning minimum wage or less are in service occupations. B. The percent of women and men earning minimum wage is approximately equal. C. Minimum wages are more common in retailing than other industries. D. The minimum wage directly affects only a small number of people.
B
11. (p. 450) All of the following are benefits under Social Security except: A. lump-sum death payments. B. medical expenses for work-related injuries. C. benefits for dependents of retired workers. D. benefits for surviving family members of deceased workers.
B
15. (p. 584) The _____ Act requires workers be given a number of breaks during the workday. A. Portal-to-Portal B. Occupational Safety and Health C. Fair Labor Standards D. Equal Pay
B
16. (p. 452) Which of the following acts has caused HR and information technology staff considerable difficulty regarding compliance and privacy? A. COBRA B. HIPPA C. FMLA D. ERISA
B
17. (p. 629) Which method of budgeting relies heavily on employee pay histories? A. Unit-level budgeting B. Bottom-up C. Control to planned level rise D. Top-down
B
19. (p. 453) The majority of defined benefit plans calculate average earnings over the last _____ years of service for a prospective retiree. A. 2 to 4 B. 3 to 5 C. 6 to 8 D. 7 to 9
B
2. (p. 619) Which of the following is not a tradeoff that would be considered in setting a compensation budget? A. Seniority versus performance contingent pay B. To pay overtime for exempt versus nonexempt C. Short-term versus long-term incentives D. Cash compensation versus benefits
B
21. (p. 453-454) Advantages of defined contribution plans versus defined benefit plans include all of the following except: A. vesting is usually faster. B. pre-retirement contributions are smaller. C. pension costs are more predictable. D. employee mobility is facilitated.
B
23. (p. 592) Experience, training, education, and ability as measured by the performance requirements of a particular job are the Department of Labor's definition of _____. A. effort B. skill C. responsibility D. working conditions
B
28. (p. 633) Which of following is a legitimate reason why a compa-ratio may be less than 1? A. A majority of workers with high performance B. The majority of employees may be new or recent hires C. Low promotion rates D. Turnover is low
B
29. (p. 459-460) A type of general health care plan in which health services are provided for a fixed fee at a specific site is: A. a PPO. B. an HMO. C. a POS. D. the traditional health care.
B
32. (p. 636) _____ is a system that allows employees to make health care choices, allocate savings to 401Ks or other savings vehicles, access vacation schedules and other activities. A. Manager self-service B. Employee self-service C. Cafeteria plans D. A communication portal
B
33. (p. 462) All of the following are examples of methods to motivate employees to change their demand for health care except: A. using intranet allowing employees access to medical information. B. promotion of preventive health plans. C. co-pays. D. setting maximum benefit levels.
B
33. (p. 599) Under Title VII, pay differences between dissimilar jobs will not be prohibited if the differences are based upon all of the following except _____. A. content of the work B. traditional pay patterns C. value to the organization's objectives D. the ability to attract employees in the external market
B
A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called _____ plan. A. a select choice B. a no-deductible C. a flexible benefit D. a flat dollar benefit
C
Which of the following is often used to set pay ranges? A. Median B. Weighted mean C. Quartiles and percentiles D. Standard deviation
C
80. (p. 455) What is a cash-balance plan?
Cash balance plans are defined benefit plans that look like a defined contribution plan. Employees have a hypothetical account (like a 401[k]) into which is deposited what is typically a percentage of annual compensation. The dollar amount grows both from contributions by the employer and from some predetermined interest rate
35. (p. 599) Regarding gender pay gaps, which of the following is true? A. The gap is largest for Asians B. The gap between black and white women is more than between black and white men C. Asian women earn less than white women D. Overall, the gender gap has decreased
D
39. (p. 606) Which of the following is not one of the steps in establishing a comparable-worth pay plan? A. Adopt a single, "gender neutral" point job evaluation plan for all jobs within a unit. B. All jobs with equal job evaluation points should be paid the same. C. Identify the percentages of male and female employees in each job group. D. Base the wage-to-job evaluation point ratio on wages paid for female-dominated jobs.
D
40. (p. 468) Contingent workers receive _____ benefits than regular workers; contingent workers' benefits cost employers _____ than regular workers. A. more, less B. fewer, more C. more, more D. fewer, less
D
36. (p. 464) The most prevalent practice these days, in place of short-term sick leave is: A. paid time off. B. short-term disability. C. accumulated medical leaves. D. incentives for non-usage of sick leave.
A
36. (p. 601) Which of the following factors has not been suggested as an explanation of the earnings gap between the sexes and among minorities? A. Personality and cultural differences B. Industry and firm differences C. Union differences D. Work-related behavior differences
A
36. (p. 640) Which of the following statements about anchoring/framing is true? A. Initial data strongly affect decisions/beliefs. B. Reluctance to accept evidence that contradicts existing beliefs. C. Following fashions in programs/techniques. D. People "discover" patterns in random events.
A
21. (p. 632) Which of the following objectives of the pay model is most appropriate for judging ethical behavior of compensation specialists? A. Ensure legal compliance B. Strive to achieve efficiency and fairness C. Seek fairness for all stakeholders D. Strive to achieve efficiency and legal compliance
B
22. (p. 590) A group of female employees have sued your company claiming their job is substantially equal to a job performed by men. Which of the following is your company's best defense? A. The job classifications are different B. Some factor other than sex C. Men occasionally perform two additional small tasks D. Most women were hired through a different source than men
B
27. (p. 594) The ADEA _____. A. prohibits discrimination on the basis of sex, race, or color B. was amended in 1990 to include the Older Workers Benefit Protection Act C. typically focuses on differences in pay, promotions, pay raises, and performance reviews D. prohibits discrimination on the basis of national origin in any employment condition
B
37. (p. 641) A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is _____. A. centralized authority B. decentralized responsibility C. the best approach to design D. rarely done in today's organizations
B
5. (p. 576) The _____ Act extends the prevailing-wage concept to manufacturers or suppliers of goods for government contracts. A. Sarbanes-Oxley B. Walsh-Healey C. Fair Labor Standards D. Davis-Bacon
B
7. (p. 446-447) _____ relieve an employer's liability when a preemployment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone. A. Collateral funds B. Second-injury funds C. Insolvency fund D. Preemployment fund
B
34. (p. 599) Under Title VII _____. A. pay discrimination is limited only to equal jobs B. discrimination may be proved by indirect evidence of an employer's intent C. intentional discrimination is prohibited whether or not the employees in question hold the same or different jobs D. pay discrimination cannot occur in setting different rates for different jobs
C
23. (p. 453-454) _____ plans are more favorable to long-term than to short-term employees. A. 401 K B. Cash balance C. Profit sharing D. Traditional defined benefit
D
26. (p. 593) Which of the following is not a guideline for interpreting the Equal Pay Act? A. Determination of substantially equal is based upon the content of actual work performed B. Men and women may be paid differently if there are seniority differences C. Men and women may be paid differently if there are performance differences D. Men and women may be paid differently if customers prefer one sex over the other
D
27. (p. 458) An employee who changes jobs four or more times during their career will likely experience a pension approximately _____ as that of an employee whose working career is spent with one employer. A. twice as large B. the same size C. one fourth the size D. half the size
D
3. (p. 446) _____ has been described as a major cost of doing business. A. Social Security B. Unemployment insurance C. FMLA D. Workers' compensation
D
30. (p. 634) Approximately _____ of 600 surveyed companies calculate the cost and value added of their pay programs. A. three-fourths B. one-fourth C. one-half D. one-third
D
31. (p. 461) _____ represent a variation on health-care delivery in which there is a direct contractual relationship between and among employers, health-care providers, and third-party payers. A. PSOs B. HMOs C. Traditional coverage plans D. PPOs
D
35. (p. 463)) Which of the following is not an example of a method to control health care costs by changing the structure of health care delivery systems? A. HMO B. No health care plan offered C. POS D. In-house medical teams
D
39. (p. 643) A major potential advantage of outsourcing is _____. A. stockholder returns B. improved employee satisfaction C. fewer problems with legislative compliance D. increased cost savings (OR) cost savings
D
40. (p. 643) Replacing merit grids with _____ eliminates the link between the pay increase and the employees' salary position in the range and performance rating. A. banding B. skill- or competency-based plans C. job evaluation D. bonuses
D
5. (p. 622) The _____ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees. A. ADA B. FMLA C. FLSA D. ADEA
D
50. Because relatively few people are paid minimum wage, raising the minimum wage does not affect pay structures. True False
FALSE
50. The CPI measures the cost of living. True False
FALSE
51. "Living wages" are generally four to five times the federal minimum wage. True False
FALSE
52. A CPI of 180 in Boston and 220 in Chicago means that it is more expensive to live in Chicago than in Boston. True False
FALSE
52. Medicare is not part of social security. True False
FALSE
54. Jim was a full-time student for four years, but could not find a job after graduating. Jim is likely eligible to collect unemployment insurance. True False
FALSE
58. The two generic types of pension plans are contributory plans and noncontributory plans. True False
FALSE
70. The best evidence of true pay discrimination are statistical studies that account for gender differences in pay using legitimate factors. True False
FALSE
43. Workers' compensation covers the costs of both medical expenses and rehabilitation for work-related injuries. True False
TRUE
44. If a company pays above the market for only one of five jobs, total compensation for these jobs may be above competitors. True False
TRUE
53. Tying changes in pensions, social security payments, and labor agreements to changes in the CPI is called indexing. True False
TRUE
57. In practice, the "going rate" for construction labor is the union rate. True False
TRUE
57. To be eligible for FMLA, an employee has to have worked for an employer at least 1,250 hours in the previous year. True False
TRUE
58. Policy lines and skill-based pay plans are examples of inherent controls on managers' compensation decisions. True False
TRUE
58. Prevailing wages protect foreign workers working as registered nurses. True False
TRUE
60. If an organization has a number of red circle pay rates, this suggests problems with pay ranges and/or job evaluations. True False
TRUE
60. Most employers prefer defined contribution pension plans to defined benefit plans. OR Employees prefer defined contribution (DC) plans over defined benefit plans because DC plans tend to vest faster. True False
TRUE
60. The Schultz v. Wheaton Glass case ruled that for jobs to receive equal pay, they do not have to be identical but substantially equal. True False
TRUE
62. A qualified deferred compensation plan offers tax advantages to employers. True False
TRUE
62. Broad bands provide managers greater discretion in pay for their subordinates than in grades and ranges. True False
TRUE
62. Of the four affirmative defenses for unequal pay for equal work, "a factor other than sex" has prompted the most court cases. True False
TRUE
63. Pay differences for equal work may be justified for demonstrably business-related reasons. True False
TRUE
63. The compa-ratio is the average actual pay divided by the midpoint of the pay grade. True False
TRUE
46. Rather than define employment as hours of work, number of employees is often used. True False
FALSE
Explain the eligibility for unemployment insurance. OR What are the eligibility requirements for unemployment insurance?
All workers except a few agricultural and domestic workers are currently covered by unemployment insurance (UI) laws. The eligibility requirements to receive benefits are: • You must meet the State requirements for wages earned or time worked during an established (one year) period of time referred to as a "base period." • You must be determined to be unemployed through no fault of your own [determined under state law], and meet other eligibility requirements of State law.
10. (p. 625) _____ is the budgetary approach that begins with an estimate from top management of the pay increase budget for the entire organization. A. Bottom-up budgeting B. Top-down budgeting C. Managerial plan D. Executive estimate budgeting
B
_____, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay. Multiple Choice
Communication portals
79. (p. 636) What are some of the software packages that help in making information useful?
Compensation software transforms data into useful information and guides decision making. Many software packages that serve a variety of purposes are available. Some of them support employee self-service, by which employees can access their personal information, make choices about which health care coverage they prefer, allocate savings between growth or value investment funds, access vacation schedules, or check out a list of child or elder care service providers. Manager self-service helps managers pay their employees appropriately. Communication portals, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay. Other software processes transactions. It standardizes forms, performs some analysis, and creates reports at the click of the mouse. The advantage is that all employees at all locations are on the same system.
) How can a proactive compensation manager influence the nature of regulations?
Compliance with laws and regulations can be a constraint and/or an opportunity for a compensation manager. The regulatory environment certainly constrains the decisions that can be made. Once laws are passed and regulations published, employers must comply. But a proactive compensation manager can influence the nature of regulations and their interpretation. Astute professionals must be aware of legislative and judicial currents to protect both employers' and employees' interests and to ensure that compensation practices conform to judicial interpretation. A compensation manager can best undertake these efforts in the following ways. First, join professional associations to stay informed on emerging issues and to act in concert to inform and influence public and legislative opinion. Second, constantly review compensation practices and their results. The fair treatment of all employees is the goal of a good pay system, and that is the same goal of legislation. When interpretations of what is fair treatment differ, informed public discussion is required. Such discussion cannot occur without the input of informed managers.
Which of the following is the basic question to ask to improve quality and ensure that value is added by each technique and at each stage in the compensation system? Multiple Choice
Does each specific activity directly contribute to our objectives?
_____, a software package, allows workers to make health-care choices, allocate savings to 401(k)s or other savings vehicles, and access vacation schedules.
Employee self-service
What are the four basic steps in establishing a comparable-worth plan?
Establishing a comparable-worth plan typically involves the following four basic steps: 1. Adopt a single "gender neutral" point job evaluation plan for all jobs within a unit. If employees are unionized, separate plans have been prepared for each bargaining unit and take precedence over previous agreements. The key to a comparable-worth system is a single job evaluation plan for jobs with dissimilar content. 2. All jobs with equal job evaluation results should be paid the same. Although each factor in the job evaluation may not be equal, if the total points are equal, the wage rates must also be equal. 3. Identify the percentages of male and female employees in each job group. A job group is defined as a group of positions with similar duties and responsibilities that require similar qualifications, are filled by similar recruiting procedures, and are paid under the same pay schedule. Typically, a female-dominated job group is defined as having 60 percent or more female incumbents; a male-dominated job group has 70 percent or more male incumbents. 4. The wage-to-job evaluation point ratio should be based on the wages paid for male-dominated jobs since they are presumed to be the best estimate of nondiscriminatory wages.
41. As benefit costs have skyrocketed, especially health care, the popularity of employee benefits have declined. True False
FALSE
42. If a man's wife died while driving a truck for her employer, and if she was responsible for the accident, the husband is not eligible to receive compensation for the loss. True False
FALSE
43. In calculating labor costs, employment level includes only core employees not contingent workers. True False
FALSE
What are the potential problems associated with headcount reductions?
Several potential problems can occur with headcount reductions. First, regulatory requirements make it difficult to make targeted cuts. Second, workforce reductions, especially if not handled well, can harm employee relations. Third, organizations that make greater (involuntary) workforce reductions also experience greater voluntary turnover. Fourth, RIFs, while reducing costs over time, are very costly in tangible terms up front due to increases in unemployment insurance tax rates, disruption of work processes and serving customers, and administrative costs of handling exits. Fifth, some companies have learned to run so "lean", and have controlled hiring so successfully, that there may be little room to cut headcount. Finally, where cuts can be made, if the cuts are too deep, an organization will be poorly positioned to generate revenue if business picks up again.
55. A government-defined prevailing wage is the minimum wage that must be paid for work done on covered government projects or purchases. True False
TRUE
55. An area that presents an ethical dilemma for compensation managers is the manipulation of measures on which variable pay is based. True False
TRUE
55. Employers who have frequent layoffs pay higher unemployment rates than those with few layoffs. True False
TRUE
56. The component of compensation most likely subject to unethical practices are employee profit-sharing payouts and executive stock valuations. True False
TRUE
What are the sources of earnings gaps?
Some of the more important sources, of earnings gaps include the following: • Work/occupation differences • Work-related behavior • Labor market conditions • Firm/industry differences • Union differences • Discrimination Considerable research has examined the factors which are the central sources of the wage differences between men and women and the racial/ethnic groups. The issue, especially any proposed remedies, continues to generate research and debate. The primary sources contributing to the gender gap differ from the primary sources for the race/ethnic gaps. It appears that differences in the work/occupation and differences in work-related behaviors are central to understanding the remaining gender wage gaps. In contrast, differences in qualifications, especially educational levels and work-related experience as well as differences in occupations, are important sources of the gaps for both blacks and Hispanics compared to white men.
41. In a total decentralized pay system, employees are likely to be treated unequally and unfairly. True False
TRUE
41. Legislation does not always achieve what it intends nor achieves what it achieves. True False
TRUE
43. Government employment is growing faster than the population. True False
TRUE
79. (p. 453-454) What are the three types of defined contribution plans?
There are three popular forms of defined contribution plans. A 401(k) plan is a savings plan in which employees are allowed to defer income up to a $12,000 maximum. The second type of plan is an employee stock ownership plan (ESOP). In a basic ESOP a company makes a tax-deductible contribution of stock shares or cash to a trust. The trust then allocates company stock to participating employee accounts. Finally, profit sharing can be considered a defined contribution pension plan if the distribution of profits is delayed until retirement.
74. (p. 582) What are the tests that must be met to qualify for the executive employee exemption?
To qualify for the executive employee exemption, all of the following tests must be met: • The employee must be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week; • The employee's primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; • The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and • The employee must have the authority to hire or fire other employees, or the employee's suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
_____ is the budgetary approach that begins with an estimate from the highest ranking executives of the pay increase budget for an entire organization.
Top-down budgeting
72. (p. 625) What is the top-down method of budgeting?
Top-down budgeting begins with an estimate from top management of the pay increase budget for the entire organization. Once the total budget is determined, it is then allocated to each manager, who plans how to distribute it among subordinates. There are many approaches to top-down budgeting. A typical one, planned pay-level rise, is simply the percentage increase in average pay for the unit that is planned to occur. Several factors influence the decision on how much to increase the average pay level for the next period: how much the average level was increased this period, ability to pay, competitive market pressures, turnover effects, and cost of living.
A compa-ratio is the average actual pay divided by the midpoint of the pay grade. True False
True
A key reason to communicate pay information is that the goodwill engendered by the act of being open about pay may affect perceptions of pay equity.
True
Benefits can be an effective tool to attract and retain employees when the benefits address the needs of a target group. True False
True
Generally, organizations have increased their use of variable pay relative to traditional base pay increases.
True
A compa-ratio less than 1 means that, on average, _____.
employees in a range are paid below the midpoint
10. (p. 448) The rising costs of Social Security have been covered by: A. increases in the maximum earnings base and the tax rate at which it is taxed. B. reduction in Social Security benefits by providing market-driven options. C. progressive reduction in the coverage. D. welfare grants and annual supplements from Congress.
A
12. (p. 626) The denominator for calculating the current year's rise is _____. A. average pay at beginning of year B. average pay at end of year C. average number of employees during the year D. average employment level
A
13. (p. 582) All of the following are criteria used in determining exempt status for executives regarding overtime pay provisions except _____. A. engage in semi-routine activities B. primarily undertake management duties C. supervise two or more employees D. authority to hire or fire other employees
A
14. (p. 452-452) All of the following are ways to control unemployment taxes except: A. dismiss employees "for just cause" rather than by layoffs. B. implement good human resource planning. C. step up enforcement of sanctions against fraudulent claims. D. monitor claimant behavior after termination.
A
24. (p. 632) A _____ rate is when an employee is paid more than the maximum of their pay grade. A. red circle B. yellow circle C. blue circle D. green triangle
A
76. (p. 629-630) What are the steps involved in the bottom-up budgeting process?
Bottom-up budgeting begins with managers' pay increase recommendations for the upcoming plan year. 1. Instruct managers in compensation policies and techniques. 2. Distribute forecasting instructions and worksheets. 3. Provide consultation to managers. 4. Check data and compile reports. 5. Analyze forecasts. 6. Review and revise forecasts and budgets with management. 7. Conduct feedback with management. 8. Monitor budgeted versus actual increases.
11. (p. 580) A study of the effects of the living wage law in Los Angeles found all but the following _____. A. employees covered by the law received a pay increase of 20 percent B. one percent of covered jobs were lost C. a higher proportion of new hires were female D. turnover and absenteeism declined
C
12. (p. 450) For an employee to gain lifetime coverage under Social Security, they must have worked for_____ quarters during which they were covered by the Act. A. 20 B. 30 C. 40 D. 50
C
13. (p. 626) Sometimes referred to as "churn" or "slippage," the _____ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage. A. productivity effect B. conflict effect C. turnover effect D. morale effect
C
18. (p. 629) Which of the following approaches to pay budgeting requires the most training of managers? A. Top-down B. Forward cycle budgeting C. Bottom-up approach D. Unit-level budgeting
C
Compare and contrast disparate treatment and disparate impact.
Court cases have established two theories of discrimination behavior under Title VII: (1) disparate treatment and (2) disparate impact. Disparate Treatment: Disparate or unequal treatment applies different standards to different employees: For example, asking women but not men if they plan to have children. In Japan, for example, women college students continue to report that recruiters ask them different questions than are asked of male college students. The mere fact of unequal treatment may be taken as evidence of the employer's intention to discriminate under U.S. law. Disparate Impact: Practices that have a differential effect on members of protected groups are illegal, unless the differences are work-related. Under disparate impact, whether or not the employer intended to discriminate is irrelevant. A personnel decision can, on its face, seem neutral, but if its results are unequal, the employer must demonstrate that the decision is work-related. The two standards of discrimination—disparate treatment versus disparate impact—remain difficult to apply to pay issues, since pay differences are legal for dissimilar work. It is still not clear what constitutes pay discrimination in dissimilar jobs in the United States.
11. (p. 626) If financially troubled employers have not been able to maintain competitive market positions, the conventional response has been to _____. A. increase the rate of reduction in average pay by controlling adjustments in base pay B. decrease employees' copays and deductibles for benefits C. increase base wages but not variable pay D. reduce employment
D
12. (p. 582) Which of the following occupational groups are not likely to be categorized as exempt? A. Administrative B. Professional C. Executive D. Clerical
D
13. (p. 450) Unemployment insurance is usually financed by: A. joint contributions by employee and employer. B. employer, employee, and state contributions. C. federal, state, and employee contributions. D. employer taxes paid to both federal and state funds.
D
15. (p. 452) 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 he wants to continue that coverage after being laid off. According to C.O.B.R.A. how long can Larry continue his coverage through Steve's Company? A. 36 months B. 24 months C. 18 months D. 0 months
D
15. (p. 627) Which of the following is a measure of prices of goods and services in the product and service markets? A. Producer price surveys B. Product market competitor wage surveys C. Labor market competitor wage surveys D. Consumer price index
D
66. Employees in companies with open pay systems express higher satisfaction with their pay system but not their pay than employees in more secret pay systems. True False
FALSE
51. Changes in the CPI only indicate whether prices have increased more or less rapidly in an area since the base period. True False
TRUE
52. A "living wage" provides for a minimum wage tailored to living costs in a city or geographic area. True False
TRUE
20. (p. 453) In a _____ plan an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company. A. defined benefit B. noncontributory benefit C. 401 (k) D. shared-benefit
A
4. (p. 446) Jennifer is hurt at work while driving a forklift. Her employer claims that she was driving too fast and therefore she is responsible for her own injury and is not eligible for workers' compensation. What will be the outcome of the employer's challenge to her worker's compensation claim? A. She will likely receive workers' compensation benefits. B. She will get nothing. C. Jennifer and her employer will share the blame and split the costs. D. The employer has the final word in determining Jennifer's eligibility.
A
14. (p. 627) Changes in wages in labor markets are measured _____. A. by the producer price index B. by the consumer price index C. through pay surveys D. by examining the personal expenditures of each employee
C
16. (p. 584) 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 Act C. The Portal-to-Portal Act D. The Health Care Workers Protection Act
C
19. (p. 586) Which of the following regarding child labor is not true? A. Persons under 18 cannot work in hazardous occupations such as logging and mining B. Persons under 16 cannot work in jobs involving interstate commerce unless working for a parent or guardian C. The ILO finds that on a global basis child labor is increasing D. The highest rates of child labor are in sub-Saharan Africa
C
2. (p. 445) Which of the following is not a benefit that is required by statutory law? A. Workers' compensation B. Social Security C. Pension and retirement benefits D. Unemployment compensation
C
22. (p. 453-454) Which of the following is not a defined contribution plan? A. 401 K B. ESOP C. Cash-back D. Profit sharing
C
22. (p. 632) All of the following are examples of inherent controls except _____. A. range minimums and maximums B. broad bands C. budgets D. performance evaluation
C
17. (p. 585) Employers were more likely to offer bonuses, gain-sharing, and stock options after the passage of the _____. A. FLSA B. Davis-Bacon Act C. Sarbanes-Oxley Act D. Worker Economic Opportunity Act
D
18. (p. 452) Today, _____ percent of the workforce is covered under the pension plan coverage by their employers. A. sixty-four B. fifty-eight C. fifty-six D. forty-three
D
19. (p. 631) The Web page for the compensation society is _____. A. Society for Human Resource Management B. American Compensation Association C. International Compensation and Benefits Society D. WorldatWork
D
20. (p. 588) Prevailing wage laws _____. A. set pay for work done to produce goods and services contracted by the state government B. are the maximum wages that must be paid for work done on covered government projects or purchases C. require that contractors determine the "flat rate" for construction labor in an area D. was passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression
D
23. (p. 632) Range minimums and maximums reflect the _____. A. market value of the output produced B. market value of the employee's skills and abilities C. market fluctuations in wage rates D. value to the organization of the output of a job
D
26. (p. 633) The compa-ratio reflects the _____. A. rate paid for satisfactory performance B. relationship of actual salaries to the midpoint of the going rates in the market C. relationship of the midpoint of each range to actual salaries D. relationship of actual salaries in each range to the midpoint of the range
D
31. (p. 598) Regarding pay differences for different jobs, _____. A. there is considerable acceptance of comparable worth B. the courts favor reliance on use of unbiased job analysis results C. court decisions have been inconclusive D. courts continue to uphold use of market data to justify differences
D
47. Workers' compensation is covered federal laws. True False
FALSE
73. (p. 626) What is the turnover effect? Explain how it is calculated with an example.
Sometimes referred to as "churn" or "slippage," the turnover effect recognizes the fact that when people leave (through layoffs, quitting, retiring), they typically are replaced by employees who earn a lower wage. Turnover effect can be calculated as annual turnover multiplied by the planned average increase. For example, assume that an organization whose labor costs equal $1 million a year has a turnover rate of 15 percent and a planned average increase of 6 percent. The turnover effect is .15 x .06 = 0.9%, or $9,000 (.009 x $1,000,000). So instead of budgeting an additional $60,000 to fund a 6 percent increase, only $51,000 is needed. The turnover effect will also reduce benefit costs linked to base pay, such as pensions.
45. Many employers achieve flexibility and control employment costs by utilizing contingent workers rather than expanding and contracting the core workforce. True False
TRUE
45. Of the many benefit claims, temporary total disability is the most frequent. True False
TRUE
45. The Mental Health Act of 1997 requires coverage of mental illness as any other medical condition. True False
TRUE
47. If federal and state minimum wage laws cover the same job, workers should be paid at or above the higher rate. True False
TRUE
49. Minimum wage jobs are very rare in the software, chemical, oil, and pharmaceutical industries. True False
TRUE
75. (p. 589-591) Distinguish between access discrimination and valuation discrimination.
The law recognizes two types of discrimination: access discrimination and valuation discrimination. The charges of discrimination and reverse discrimination that most often make the news involve access discrimination: the denial of particular jobs, promotions, or training opportunities to qualified women or minorities. A second legally recognized interpretation of discrimination is valuation discrimination, which looks at the pay women and minorities receive for the jobs they perform. This is the more salient definition for our purposes. The Equal Pay Act makes it clear that it is discriminatory to pay women less than males when they are performing equal work. This definition of pay discrimination hinges on the standard of equal pay for equal work. Many believe that this definition of valuation discrimination does not go far enough. They believe that valuation discrimination can also occur when men and women hold entirely different
80. (p. 643) Why is outsourcing a viable alternative for organizations?
What are the major potential advantages and disadvantages of outsourcing? Value chain analysis and Six Sigma are processes used to improve quality and ensure that value is added by each technique and at each stage in a process. For the compensation system, the basic question to ask is, "Does each specific activity directly contribute to our objectives?" If some added value is not apparent, then the question is, "How should it be redesigned? Or should it be dropped?" Of those activities that do add value, the next question is, "Who should do it?" "Should the activity be done in-house, or can others do it more effectively? That is, should it be outsourced?" Outsourcing is a viable alternative as organizations struggle with activities that do not directly contribute to objectives. These are often referred to as transactional activities, which are not unique to the organization and might be done cheaper (and perhaps also better) by an outside provider. Cost savings are the major potential advantage of outsourcing. All those compensation pros can be laid off and/or retrained and re-assigned to other work. Sometimes, the quality of the service provided may increase also. A firm that does nothing but administer retirement benefits may be able to do a better job than a firm whose primary business is something else. Major potential disadvantages include less responsiveness to unique employee-manager problems, less control over decisions that are often critical to all employees, and information leaks to rivals and competitors. In addition, as with any contract, while an agreement may be signed stating that an outsourcing firm will provide a certain set of services and at a certain level, either side may subsequently find that their vision of the agreement and their experience of what is actually delivered may end up being different.
14. (p. 582) To qualify for the administrative employee exemption, which of the following tests must be met? A. The employee must be compensated on a salary or fee basis at a rate not less than $455 per week. B. The employee's primary duty must be managing the enterprise. 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.
A
21. (p. 589) Denial of jobs, promotions, or training opportunities to qualified women or minorities are examples of _____ discrimination. A. access B. valuation C. disparate treatment D. preferential treatment
A
24. (p. 456) An employer experiencing high turnover and seeking to reduce pension cost is likely to prefer: A. full vesting after three years. B. full vesting after six years. C. full vesting after seven years. D. to offer portability rights.
A
25. (p. 592-593) _____ is not a "factor other than sex" in the Equal Pay Act. A. An employee's previous pay rate B. Shift differential C. Seniority D. Business necessity
A
27. (p. 633) A compa-ratio greater than 1 typically means that _____ A. the intended policy line has been violated B. employees are overpaid C. most employees are new entrants D. turnover is high
A
28. (p. 458) Roughly _____ of all employees have access to paid life insurance. A. three-fourths B. half C. one-third D. a quarter
A
31. (p. 636) _____, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay. A. Communication portals B. Manager self-services C. Cafeteria plans D. Content delivery networks
A
32. (p. 461) _____ is a hybrid health plan combining features of HMO and _____. A. Point-of-service, preferred provider organization B. POS, Blue-Cross C. Managed care, POS D. Consolidated health, PPO
A
7. (p. 622) _____ is a common effect of layoffs. A. Lower financial gains than expected B. Unfavorable short-term stock prices C. Higher morale among remaining employees D. Productivity gains
A
8. (p. 576) All of the following except _____ are provisions of the 1938 Fair Labor Standards Act. A. prohibition of hazardous work B. the minimum wage C. prohibition of child labor D. hours of work
A
9. (p. 577) The Worker Economic Opportunity Act _____. A. exempts stock options from the calculation of overtime B. stiffens requirements for reporting executive pay C. is unpopular with employers since it raises total wage costs D. extends SEC pay disclosure requirements to highly paid executives
A
A common first step in interpreting survey data is to _____. A. check for the accuracy of job matches B. seek out non-responders C. check for anomalies D. remove the top- and bottom-paying companies
A
The first issue in setting up a benefits package is: A. finding out who should be protected or benefited. B. figuring out how much choice should employees have among benefits. C. determining how benefits should be financed. D. choosing legally defensible benefits.
A
74. (p. 627-628) Distinguish the concepts of the cost of living, changes in prices in the product and service markets, and changes in wages in labor markets.
Although there is little research to support cost of living increases, employees undoubtedly compare their pay increases to changes in their living costs. Unions consistently argue that increasing living costs justify increasing pay. It is important to distinguish among three related concepts: the cost of living, changes in prices in the product and service markets, and changes in wages in labor markets. Changes in wages in labor markets are measured through pay surveys. These changes are incorporated into the system through market adjustments in the budget and updates of the policy line and range structure. Price changes for goods and services in the product and service markets are measured by several government indexes, one of which is the consumer price index. The third concept, the cost of living, refers to the expenditure patterns of individuals for goods and services. The cost of living is more difficult to measure because employees' expenditures depend on many things: marital status, number of dependents and ages, personal preferences, location, and so on. Different employees experience different costs of living, and the only accurate way to measure them is to examine the personal expenditures of each employee. The three concepts are interrelated. Wages in the labor market are part of the cost of producing goods and services, and changes in wages create pressures on prices. Similarly, changes in the prices of goods and services create the need for increased wages in order to maintain the same lifestyle.
2. (p. 574) Which of the following is the least likely response companies would make to legislation? A. Lobbying B. Token compliance C. Auditing their practices D. Defending company practices in court
B
25. (p. 456) An employer seeking to use pensions to reduce turnover is likely to prefer: A. fully vested after three years. B. vesting 20 percent after 2 years and 20 each year thereafter. C. fully vested after two years. D. vesting schedules are unlikely to affect turnover.
B
8. (p. 623) Contingent workers include all of the following except _____. A. part-time regular workers B. workers on rotating shifts C. overtime workers D. small independent vendors
B
Which are the benefits required by statutory law?
Benefits that are required by statutory law are workers' compensation, social security, and unemployment compensation
26. (p. 457) The first question to ask in determining how much retirement income an employer should provide is: A. Should Social Security payments be considered? B. How should seniority be factored into the payout formula? C. What level of retirement compensation should be provided? D. Should other, non-Social Security income sources be considered?
C
28. (p. 595) In _____ type cases, the focus is on the discriminatory consequences rather than the intent to discriminate? A. Disparate treatment B. Access discrimination C. Disparate impact D. Valuation discrimination
C
29. (p. 595) _____ prohibits discrimination on the basis of race, color, religion, sex, or national origin. A. Executive Order 11458 B. The FMLA C. Executive Order 11246 D. The Rehabilitation Act
C
29. (p. 634) All of the following statements about commercial compensation software are true except _____. A. can analyze almost every aspect of compensation information B. can simulate alternate wage proposals and compare their potential effects C. can easily compare past estimates to future estimates D. can help evaluate salary survey data and simulate the cost impact of gain-sharing options
C
3. (p. 575) The government has interests in compensation decisions related to all but _____. A. the fairness of pay procedures B. safety nets for the unemployed and disadvantaged C. earnings compared to foreign workers D. overtime and child labor
C
3. (p. 619) All of the following are major factors used to manage total labor costs except _____. A. average employment level B. average cash compensation C. number of overtime hours D. average benefits costs
C
30. (p. 460) The general health care plan that uses a direct contractual relationship between employers, health-care providers and third-party payers is: A. the traditional coverage plan. B. an HMO. C. a PPO. D. a POS.
C
30. (p. 596-597) A(n) _____ is "a grouping of employees who perform similar work, and occupy positions with similar responsibility levels and involving similar skills and qualifications." A. NOV B. FCSS C. SSEG D. OWBPA
C
34. (p. 462) An account set up to cover part of a high health care deductible is a: A. POS. B. flexible spending account. C. PCA. D. PPO.
C
34. (p. 637) All of the following are recommended steps in the compensation communication cycle by WorldatWork except _____. A. defining the objectives of the communication program B. a communication program that will convey the information needed to accomplish the original objectives C. collecting information from executives, managers, and employees D. operate an informal communication network
C
38. (p. 603-604) Which of the following statements regarding wage differences in industries and firms is not true? A. Men's wages are 54 percent higher in large firms than small B. Women's wages are 37 percent higher in large firms than small C. Female employment is more heavily concentrated in large than small firms D. The pay premium for switching jobs accrues to white males, but not women and minorities
C
38. (p. 643) For the compensation system, the basic question to ask is _____ A. "Who should do the activity?" B. "How should the technique be redesigned?" C. "Does each specific activity directly contribute to our objectives?" D. "Should the activity be done in-house, or can others do it more effectively?"
C
39. (p. 467) _____ percent of employers offer health benefits to domestic partners. A. 42 B. 31 C. 18 D. 8
C
6. (p. 446) Experts attribute the decline in dollar cost of workers' compensation cost after 2005 to: A. increased variable component. B. devaluation of the dollar. C. employer safety programs. D. relaxed federal regulations.
C
6. (p. 576) The Davis-Bacon Act _____. A. states that income from most stock plans need not be included in calculating overtime pay B. increases border 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 prevailing-wage concept to manufacturers or suppliers of goods for government contracts
C
9. (p. 436) Approximately _____ percent of social security benefits go to retirees and their dependants. A. 20 B. 40 C. 50 D. 70
D
38. (p. 467) The major reasons motivating U.S. corporations to provide domestic partner benefits include all of the following except: A. Fairness to all employees regardless of their sexual orientation or marital status B. Market competition C. Diversity in today's tight labor market D. Federal legislation mandating these provisions
D
4. (p. 575) Which of the following is not true of the government's effect on the economy? Government _____. A. indirectly affects labor demand via government purchases B. affects labor supply via legislation C. affects demand for labor via interest rates D. immigration policy affects labor demand
D
4. (p. 621) A major advantage of a _____ is that it reduces benefits costs, something that the other options ordinarily do not achieve. A. reduction in hours B. furlough C. pay cut D. reduction in force
D
40. (p. 607) _____ has produced more comparable-worth pay increases than any other approach. A. Integrative bargaining B. Win-win bargaining C. Interest-based bargaining D. Collective bargaining
D
6. (p. 622) All of the following are potential problems with headcount reductions except _____. A. regulatory requirements make it difficult to make targeted cuts B. workforce reductions, especially if not handled well, can harm employee relations C. organizations that make greater involuntary workforce reductions also experience greater voluntary turnover D. RIFs are very costly in tangible terms up front due to increases in employment insurance tax rates
D
7. (p. 576) Under the _____ Act, executives cannot retain bonuses or profits from selling company stock if they mislead the public regarding their company's financial condition. A. Worker Economic Opportunity B. Davis-Bacon C. Walsh-Healey D. Sarbanes-Oxley
D
8. (p. 447) Which of the following types of workers are generally not covered by workers' compensation? A. State government employees B. Coal miners C. Railroad employees D. Farm workers
D
42. Under the contract pay system, each worker was paid according to a uniform contract for each company. True False
FALSE
42. While government affects the supply of labor through legislation, it has little effect on the demand for labor. True False
FALSE
44. The overall effect of immigration is an increase in wages for low skilled workers. True False
FALSE
44. Work-related injuries are covered by workers' compensation but not industrial diseases such as black lung and asbestosis. True False
FALSE
46. All employees are covered by the Fair Labor Standards Act of 1938 and its amendments. True False
FALSE
46. Workers' compensation disability payments are tied directly to the nature of the loss and not factors such as the employee's earnings or number of dependents. True False
FALSE
47. Executive estimation is the budgetary approach that begins with an estimate from top management of the pay increase budget for the entire organization. True False
FALSE
48. In 48 states, employers are not allowed to self-insure their workers' compensation program but must participate in the state's program. True False
FALSE
48. The phenomenon of turnover effect means that organizations must budget additional money for next year's budget to cover effects of turnover. True False
FALSE
48. The purpose of minimum wage legislation is to maximize the number of employed people. True False
FALSE
49. The majority of those receiving social security benefits are disabled workers and their dependents and survivors of deceased beneficiaries. True False
FALSE
54. Managing compensation ethically is comparatively easy since much of compensation is guided by many laws and regulations. True False
FALSE
54. Sam is computer system troubleshooter. His company requires him to wear a beeper when he is not at the office during weekends, but not evenings. Sam is eligible to receive pay for his "on-call" time. True False
FALSE
56. An eligible unemployed person may collect unemployment insurance benefits for 36 weeks in most states. True False
FALSE
56. The purpose of prevailing wage laws is to assure that government projects do not waste tax dollars. True False
FALSE
57. Job analysis and gain-sharing are not examples of inherent controls on managers' compensation decisions. True False
FALSE
59. An individual employee cannot earn more pay than the maximum of the pay grade of their current job. True False
FALSE
59. Companies are turning away from 401K type pension plans because they require putting money in "up front" rather than when workers retire. True False
FALSE
59. The two types of discrimination recognized in law are valuation discrimination and disparate treatment. True False
FALSE
61. A 401K is an example of a defined benefit plan. True False
FALSE
61. Employees should never be paid below the minimum of their pay range. True False
FALSE
61. In cases of equal pay, the formal job description is more important than the actual work performed. True False
FALSE
63. Employees are required to make contributions to cash balance plans. True False
FALSE
64. Disparate treatment occurs when a seemingly neutral employment practice disproportionately excludes a protected group from employment opportunities. True False
FALSE
65. Manager self-service answers questions, explains compensation policy, and explains how systems affect their pay. True False
FALSE
65. The Employee Retirement Security Act states that employers must offer a retirement plan to their employees if they work at least 1250 hours per year. True False
FALSE
67. Under the Economic Growth and Tax Reconciliation Act of 2001, employers have three vesting schedule options. True False
FALSE
67. Women of all ethnic groups are less likely than men to seek part-time and flexible work arrangements. True False
FALSE
68. The final step in the compensation communication cycle is conducting the communication sessions. True False
FALSE
49. The "churn", "slippage" or turnover effects assume that employees who leave earn, on average, less than employees likely to replace them. True False
TRUE
50. The basic purpose of social security is to provide basic financial security for Americans and their families. True False
TRUE
51. A major problem with social security is a rising number of retirees without a corresponding increase in contributors. True False
TRUE
53. Substance abuse is not an allowed disability under social security. True False
TRUE
53. The objective of the overtime provision of FLSA is to share available work by making it more costly for employers to schedule overtime for current employees than to hire additional workers. True False
TRUE
64. An IRA is retirement savings plan that is not managed by an employer. True False
TRUE
64. Generally, management prefers a higher proportion of variable pay versus base wages and salary. True False
TRUE
70. The most important components of a pay communication program are the business- and work-related rationales on which the system is based. True False
TRUE
71. Employers have recently begun reducing the number of paid holidays. True False
TRUE
452) Explain the coverage of the FMLA.
The 1993 Family and Medical Leave Act applies to all employers having 50 or more employees and entitles all eligible employees to receive unpaid leave up to 12 weeks per year for specified family or medical reasons. To be eligible, an employee must have worked at least 1,250 hours for the employer in the previous year.
76. (p. 592) (p. 592) What are the definitions of skill, effort, responsibility, working conditions according to the Department of Labor? What are the conditions that must be met for an employer to support a claim of unequal work?
The Department of Labor provides these definitions of the four factors. 1. Skill: Experience, training, education, and ability as measured by the performance requirements of a particular job. 2. Effort: Mental or physical—the degree of effort (not type of effort) actually expended in the performance of a job. 3. Responsibility: The degree of accountability required in the performance of a job. 4. Working conditions: The physical surroundings and hazards of a job, including dimensions such as inside versus outside work, heat, cold, and poor ventilation. Guidelines to clarify these definitions have evolved through court decisions. For an employer to support a claim of unequal work, the following conditions must be met: 1. The effort/skill/responsibility must be substantially greater in one of the jobs compared. 2. The tasks involving the extra effort/skill/responsibility must consume a significant amount of time for all employees whose additional wages are in question. 3. The extra effort/skill/responsibility must have a value commensurate with the questioned pay differential (as determined by the employer's own evaluation). Time of day (e.g., working a night shift) does not constitute dissimilar working conditions. However, if a differential for working at night is paid, it must be separated from the base wage for the job.
73. (p. 446) What are the areas covered as part of the no-fault insurance under workers' compensation? As a form of no-fault insurance, workers' compensation covers injuries and diseases that arise out of, and while in the course of, employment. Benefits are given for the following:
• Permanent total disability and temporary total disability • Permanent partial disability—loss of use of a body member • Survivor benefits for fatal injuries • Medical expenses • Rehabilitation
