Title: Compensation and Benefits
Course: Question Banks

Q: The Fair Labor Standards Act (FLSA) was designed to eliminate labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency, and well being of workers. Which of the following was established as a result?
- minimum time off requirements (Incorrect. FLSA establishes minimum wages, overtime pay, recordkeeping standards, and youth employment standards for all American workers.)
- health benefit regulations (Incorrect. FLSA establishes minimum wages, overtime pay, recordkeeping standards, and youth employment standards for all American workers.)
- minimum time between shifts regulations (Incorrect. FLSA establishes minimum wages, overtime pay, recordkeeping standards, and youth employment standards for all American workers.)
- minimum wage laws (Correct. The minimum wage has a federal minimum, but many states and cities have wages that are higher. The employee will always earn the higher amount between the two.)
A: minimum wage laws

Q: Which of the following is true about minimum wage laws?
- An employee must earn <1.2% increase per year (Incorrect. Although the minimum wage often raises to reflect inflation, there is no current requirement for wage increases.)
- Federal minimum wage is often higher than state minimum wages (Incorrect. The federal minimum wage is the lowest anywhere in the country. Several states, cities, and counties may choose to have minimum wage requirements that are higher than the federal rate, due to the cost of living in that area.)
- Adults receive a higher minimum wage than minors. (Incorrect. Minimum wage laws do not differentiate between adults and minors. The minimum wage applies to everyone.)
- The employee will receive the highest pay between local and federal minimum wage (Correct. States, cities, and counties may set their own minimum wage requirements. The higher minimum wage always prevails.)
A: The employee will receive the highest pay between local and federal minimum wage

Q: Which of the following is NOT one of FLSA’s recordkeeping requirements?
- Employers must post an official poster outlining the provisions of the Act (Incorrect. An official poster outlining FLSA must be posted in the workplace.)
- Payroll and related records must be retained onsite or in a central records office for 3 years (Incorrect. Records related to payroll must be kept for a minimum of 3 years.)
- Supporting documentation, such as work and time schedules, must be retained for two years (Incorrect. Work and time schedules and records of adjustments to wages should be retained for two years.)
- Any records that have been inspected by Wage & Hour Division representatives can be disposed of (Correct. Recordkeeping requirements must still be maintained, even if they are already inspected.)
A: Any records that have been inspected by Wage & Hour Division representatives can be disposed of

Q: You are responsible for ensuring the Equal Pay Act of 1963 is being followed. Which of the following items would you look for in your company’s records?
- Men and women earn the same pay for the same job title. (Incorrect. Employees must be paid the same for the same tasks (not just their title), regardless of gender.)
- Those who worked longer hours did not get more than their counterparts. (Incorrect. The EPA does allow for pay differentiation based on non-gender based factors.)
- Employees who did less received less pay, regardless of gender. (Incorrect. Pay differentials can only be corrected with an increase and no employee’s pay may be reduced.)
- Men and women earn the same pay for the exact same work. (Correct. Employees must be paid the same for the same tasks, regardless of gender.)
A: Men and women earn the same pay for the exact same work.

Q: In a case against your company, an employee claims there was an Equal Pay Act violation. Before your company is required to provide proof, the employee must provide which of the following information?
- One employee did not have seniority over the other. (Incorrect. The employer would show this after the initial proof from the plaintiff.)
- The pay differential was not based on merit (Incorrect. The employer would show a pay differential was due to merit after the initial proof from the plaintiff.)
- The pay system was not based on quantity or quality of output (Incorrect. An employer would be allowed to show a pay differential based on output after the initial proof from the plaintiff.)
- Your company paid employees of opposite sexes different wages for substantially equal work. (Correct. Additionally, they must show that the jobs required the same skill, effort, responsibility and are performed in similar working conditions.)
A: Your company paid employees of opposite sexes different wages for substantially equal work.

Q: Which of the following is a violation of the Equal Pay Act?
- A company pays a male employee more because he is able to do a job in 5 hours that takes his female counterpart 6 hours (Incorrect. This is an example of a pay system based on the quality of output. It does not violate the EPA.)
- A company pays a female employee more than a male employee because she works the night shift and the male employee works the day shift. (Incorrect. There is a change in working conditions (day shift vs night shift), so a company is allowed to pay the employees differently.)
- A company pays a female employee less than a male employee at a different branch of the office for doing the same work. (Incorrect. A company can have a pay differential between employees at different branches—the pay differential may be due to differences in the cost of living, commute time, etc.)
- A company pays a male employee more than a female employee because the company believes the female employee will take more days off. (Correct. Unless the female employee took more days off, they cannot be paid differently for the same work.)
A: A company pays a male employee more than a female employee because the company believes the female employee will take more days off.

Q: What is the most discussed and divisive pay equity issue?
- the Equal Pay Act (Incorrect. This act was passed to ensure that men and women make the same amount for the exact same job.)
- the minority pay gap (Incorrect. Even though it is shown minority women make far less than their white male counterparts, it is not the most talked about and divisive issue regarding pay equity.)
- Equal Pay Day (Incorrect. Equal Pay Day was created to raise awareness for the gender pay gap.)
- the gender pay gap (Correct. 56 years after the passage of the Equal Pay Act, women still earn about 80% of what a male peer earns.)
A: the gender pay gap

Q: Which of the following is a correct statement regarding pay?
- The EPA eliminated the pay gap between genders. (Incorrect. The pay gap still exists, even though there are laws in place to protect equal pay between genders for doing the same work.)
- Women make less money than their male counterparts due to their work experience. (Incorrect. Women experience a pay gap straight out of college, where women with a similar GPA and working in the same field earns 93% of what their male peers earn.)
- Women are paid less because they choose lower-paying professions. (Incorrect. Women are more likely to choose lower-paying professions, such as education, but the pay gap is also evident in those fields.)
- Women are paid approximately 80% of what their male counterparts make. (Correct. Even though there are laws in place to protect equal pay between genders for doing the same work, women still earn about 80% of what their male counterparts make.)
A: Women are paid approximately 80% of what their male counterparts make.

Q: Which of the following would NOT be a consequence of unequal pay?
- disparities in bonuses (Incorrect. Unequal pay leads to disparities in bonuses since bonuses are often calculated off base pay. If one’s base pay is lower, their bonus will be lower as well.)
- lower 401(k) matching (Incorrect. Unequal pay leads to lower 401(k) matching since matching is often calculated off base pay. If one’s base pay is lower, their 401(k) matching will be lower as well.)
- reduced social security benefits (Incorrect. Unequal pay leads to disparities in bonuses since social security benefits are often calculated off base pay. If one’s base pay is lower, their social security benefits will be lower as well.)
- disparities in vacation time (Correct. Vacation time is often accrued by time worked, position held, or time at the company, not the amount one makes.)
A: disparities in vacation time

Q: You are in charge of briefing leadership at your company about best practices in closing the pay gap. Which of the following is NOT a statement you should make?
- We must create equal opportunities for high-paying positions. (Incorrect. According to Barbara Frankel, creating opportunities for high-paying positions is one way to level the pay gap.)
- We must evaluate areas of bias that may prohibit hiring and promotion. (Incorrect. Considering biases that may prohibit hiring and promotion will ensure the best employees are chosen for the job, regardless of some of the roadblocks they might have faced that would initially disqualify them due to bias.)
- We must factor in work accommodations that could slow pay progress, such as flexible work arrangements and time off for family leave. (Incorrect. By factoring in flexible work arrangements and time off for family leave, employers will be able to help close the pay gap by ensuring women don’t reach a set-back if they have to take time off for maternity leave or to care for children.)
- The pay gap is a myth, and we have done everything we can already to ensure there has been no pay discrimination. (Correct. Even when companies pay their employees equally, there is still a pay disparity in that women make 80% of what men make.)
A: The pay gap is a myth, and we have done everything we can already to ensure there has been no pay discrimination.

Q: How might conducting regular, objective pay audits help to close the pay gap?
- Regular, objective audits would allow a company to ensure they are not overpaying or underpaying employees (Incorrect. While an audit may uncover whether or not a company is overpaying their employees, this discovery would not help to close the pay gap.)
- Regular, objective audits would ensure companies are not losing money by paying out too many benefits (Incorrect. Determining that a company is overpaying benefits would not help to close the pay gap.)
- Regular, objective audits would enable companies to see who their top earning employees are (Incorrect. While this could be valuable information, audits regarding closing the pay gap should focus on similar employees’ pay and compensation.)
- Regular, objective audits would allow a company to see what female employees make in relation to their male counterparts (Correct. Closing the pay gap requires understanding of what females make in relation to their male counterparts with similar backgrounds and experience.)
A: Regular, objective audits would allow a company to see what female employees make in relation to their male counterparts

Q: Which of the following is not a best practice to close the pay gap?
- senior leadership commitment (Incorrect. Support from senior leadership to commit to taking steps toward creating a better workplace for women and minorities to thrive is one of the best practices to close the pay gap.)
- communicating results (Incorrect. Making transparency part of the culture is one best practice to close the pay gap.)
- collaborating and sharing learning (Incorrect. By collaborating and sharing learning, women and minorities can accelerate their learning, which aids in closing the pay gap.)
- promoting based on time employed (Correct. Promoting based on time employed does not help to close the pay gap, since many women must take time off work for maternity leave and to care for children.)
A: promoting based on time employed

Q: What does research show about the connection between compensation and motivation?
- Compensation is the biggest motivator for employees to seek employment elsewhere. (Incorrect. Motivation depends largely on the individual. All employees have different motivations. Some are motivated by compensation, others by recognition, and others by passion.)
- Employee motivation determines their compensation. (Incorrect. Compensation structures are outlined by employers. Unfortunately, many companies do not allow motivation to be the sole factor for compensation.)
- Motivated employees are more likely to be compensated for their efforts. (Incorrect. Compensation structures are outlined by employers. Unfortunately, many companies do not allow motivation to be the sole factor for compensation.)
- Money and career growth are the biggest motivators driving employees to seek other jobs. (Correct. Some research shows that money is the biggest motivator, while others show that career growth is the biggest motivator for an employee to seek other employment.)
A: Money and career growth are the biggest motivators driving employees to seek other jobs.

Q: What is the strongest motivator, next to compensation?
- recognition (Incorrect. Motivation varies strongly from individual to individual. Employees are all motivated by different reasons, based on their individual situations.)
- autonomy (Incorrect. Some employees are motivated by the idea of autonomy. However, motivation varies greatly among individuals according to their specific situation.)
- passion (Incorrect. Some individuals are motivated by the passion they have for their work. However, motivation varies greatly among individuals according to their specific situation.)
- It depends on the individual. (Correct. Individuals are all motivated differently based on their individual situations.)
A: It depends on the individual.

Q: An employee makes a large discovery, and his employer takes the credit for it. The employee is upset that he did not get credit for this ground-breaking discovery, and decides to seek employment elsewhere. What is the motivating factor for this employee to seek other employment?
- monetary compensation (Incorrect. This scenario describes the employee is upset that someone else took the credit for his work. He is looking for a position where he will be acknowledged for his contributions.)
- personal growth (Incorrect. This scenario describes the employee is upset that someone else took the credit for his work. He is looking for a position where he will be acknowledged for his contributions.)
- professional growth (Incorrect. This scenario describes the employee is upset that someone else took the credit for his work. He is looking for a position where he will be acknowledged for his contributions.)
- recognition (Correct. Every employee is motivated by their own driving factors. The lack of recognition for this employee is motivating him to seek employment elsewhere.)
A: recognition

Q: Which of the following is NOT a characteristic of intrinsic motivation?
- mastery (Incorrect. The desire to master something, creating an element of progress and increasing competence, is personal and comes from within.)
- relatedness (Incorrect. The desire for a sense of community with others who are engaged in the activity is an example of intrinsic motivation, since it comes from within.)
- purpose (Incorrect. Activities seen as meaningful to an individual are examples of intrinsic motivation.)
- money (Correct. Money is an example of an extrinsic motivator—it is something that happens outside of the individual.)
A: money

Q: Which of the following is an extrinsic reward?
- satisfaction of completing a project (Incorrect. Satisfaction is something developed from within, and would be an example of an intrinsic motivator.)
- feeling purpose towards your work (Incorrect. Purpose is something developed from within, and would be an example of an intrinsic motivator.)
- participating in a project because it’s fun (Incorrect. Feeling joy towards work is an example of an intrinsic motivator, since it comes from within.)
- receiving a raise (Correct. Monetary compensation is a motivator that comes from an external source.)
A: receiving a raise

Q: Which of the following statements is false, relating to intrinsic and extrinsic motivation?
- Intrinsic motivation occurs when you act without any obvious external rewards. (Incorrect. This is a true statement regarding intrinsic motivation. Intrinsic motivation comes from within, not due to an external driving force.)
- When a person is motivated extrinsically, their activity or behavior is a means to an end, rather than an end in itself. (Incorrect. This is true regarding extrinsic motivation. Extrinsically motivated people are driven by external motivators, and often do what it takes to reach an external reward.)
- Intrinsic motivation could come from one’s desire to improve the world they live in. (Incorrect. Being motivated by improvement, whether internal (self) improvement or improving the environment around you, is an example of intrinsic motivation.)
- Extrinsic rewards are personal. (Correct. Extrinsic rewards are tangible rewards that come from an external source, such as money.)
A: Extrinsic rewards are personal.

Q: Base salary or hourly wage, cash bonuses, and annual incentives are all types of:
- indirect compensation (Incorrect. Indirect compensation includes costs incurred for benefits.)
- intangible compensation (Incorrect. Intangible compensation includes non-financial rewards, such as mentoring and recognition.)
- general compensation (Incorrect. There are two primary types of monetary compensation—direct and indirect. There is also intangible compensation, which does not include any monetary compensation.)
- direct compensation (Correct. Direct compensation consists of monetary payments based on time worked or results achieved.)
A: direct compensation

Q: Which of the following is NOT an example of indirect compensation?
- retirement plan (Incorrect. Retirement plans are not money paid directly based on time worked or results achieved, so they are a form of indirect compensation.)
- health insurance (Incorrect. Health insurance is not money paid directly based on time worked or results achieved, so they are a form of indirect compensation.)
- company car (Incorrect. A company car is not money paid directly based on time worked or results achieved, so it is a form of indirect compensation.)
- year-end bonus (Correct. Year-end bonuses are a form of monetary compensation, which are considered direct compensation)
A: year-end bonus

Q: Which of the following is not a factor that affects compensation?
- legislation (Incorrect. Federal, state, and local legislation can set a minimum standard for compensation.)
- supply and demand for labor (Incorrect. If there are less workers than an industry demands, it can lead to higher salaries for those entering the industry. Conversely, if the market is saturated with workers, higher competition for a position might lead to lower pay.)
- industry ability to pay (Incorrect. There is a difference in what larger companies can afford to pay workers, compared to smaller companies. Usually, the larger companies can afford to compensate their employees more.)
- education expenses (Correct. Unfortunately, jobs don’t typically compensate employees for having higher educational expenses prior to employment.)
A: education expenses

Q: An electrical technician has been offered a position for 34% more than what he has been making at his current company. He asks the competitor why they are willing to pay him so much more, and they respond with “We’ve had an open position for the last 4 months, and haven’t been able to find anyone qualified to fill it.” Which factor explains this higher compensation?
- worker productivity (Incorrect. An increase of compensation due to worker productivity would be paying a worker more than their peers to complete a job because it takes them far less time.)
- labor unions (Incorrect. Labor unions can affect compensation by bargaining on an employee’s behalf. That does not seem to be happening in this scenario.)
- industry ability to pay (Incorrect. The scenario mentions that the position needs to be filled, not that they can pay more since they are a larger company.)
- supply and demand for labor (Correct. Since there is a demand for labor, the industry is willing to compensate qualified workers higher to fill critical positions.)
A: supply and demand for labor

Q: State, federal, and local laws mandate the minimum amount of compensation legally allowed in an area. This is due to the factor of:
- cost of living (Incorrect. Areas with a higher cost of living tend to compensate their employees more because state, federal, and local laws set in place to protect employees. However, cost of living is not directly related to state, federal, and local laws.)
- labor unions (Incorrect. Labor unions negotiate on behalf of the employees for higher compensation, but this is not due to state, federal, or local laws.)
- compensation policy (Incorrect. Compensation policy is determined by employers based on the going market rate for employment.)
- legislation (Correct. Minimum wage laws, set by state, federal, and local governments, are in place to determine the minimum allowable compensation for an area.)
A: legislation

Q: Which method of developing a pay structure includes using market data to set a salary range?
- job analysis (Incorrect. Conducting a job analysis involves identifying the essential tasks and responsibilities of a job.)
- job evaluation (Incorrect. Conducting a job evaluation determines the relevance and value of a job to an organization.)
- pay grades (Incorrect. Evaluating pay grades helps to establish salary ranges for job groups.)
- benchmarking (Correct. Benchmarking, or Market Pricing, involves setting a salary range based on market data, while considering job details and descriptions to aid in the selection of appropriate salary benchmarks.)
A: benchmarking

Q: You have been tasked with developing a new pay structure for your office. What is the first step you would suggest?
- conduct a job evaluation (Incorrect. Conducting a job evaluation would be a good second step, after you identify the essential tasks and responsibilities of the position you are developing a salary scale for.)
- consider market pricing (Incorrect. Market pricing comes after you have already determined the roles and responsibilities of the job. Other companies may have the same job title, but different roles and responsibilities, which makes it important to compare the tasks of the job to accurately research pricing.)
- determine pay grades (Incorrect. Pay grades are established after you have all the necessary research, including job analysis, job evaluation, and market pricing.)
- conduct a job analysis (Correct. The first step in developing a pay structure is identifying essential tasks and responsibilities of a job, including knowledge, skills, and abilities.)
A: conduct a job analysis

Q: You have already done extensive research related to the development of your company’s new pay structure. What is your final step in determining the new structure?
- complete market pricing (Incorrect. Market pricing is what you’d want to do before determining your structure. You do market pricing to determine what competitors pay for similar tasks.)
- conduct a job evaluation (Incorrect. Conducting a job evaluation is the second step in developing a pay structure.)
- conduct a job analysis (Incorrect. A job analysis is the first step to determine the necessary tasks and jobs your organization needs to run.)
- establish pay grades (Correct. You can use all of the research you’ve done regarding related competitor pricing to establish salary ranges for job groups.)
A: establish pay grades

Q: Which of the following is not a legally required benefit for all employers?
- social security (Incorrect. Social security is a legally mandated benefit, established in 1935 by the Social Security Act.)
- Medicare (Incorrect. Medicare is a legally mandated benefit, and supports those 65 and older with federal health insurance.)
- unemployment Insurance (Incorrect. Unemployment insurance is a legally mandated benefit, which provides cash benefits to eligible workers who are unemployed through no fault of their own.)
- health coverage (Correct. Health coverage is considered a discretionary benefit, and is not required by law, unless the organization is a “large employer”.)
A: health coverage

Q: [dropdown1] insurance is insurance that covers medical expenses and a portion of lost wages for employees who become injured or ill on the job.
- unemployment (Incorrect. Unemployment is monetary compensation benefits provided to eligible workers who are unemployed through no fault of their own.)
- Medicare (Incorrect. Medicare supports those 65 and older with federal health insurance.)
- social security (Incorrect. Social security is a social insurance program that provides retirement, disability, and survivors’ benefits to workers who pay into the system over their lifetime.)
- workers’ compensation (Correct. Workers’ compensation laws are set by each state. This insurance is paid by employers, and premiums are calculated based on the employee classification and rate associated with that classification.)
A: workers’ compensation

Q: What is NOT an example of the additional benefits employers offer to their employees that are not mandated by law?
- paid parental leave (Incorrect. This is an additional benefit. Companies, like Ikea, provide up to four months of paid parental leave for employees with at least one year of experience.)
- gender reassignment benefits (Incorrect. These are benefits not typically covered under medical insurance. Some companies, such as Goldman Sachs, offer this as a benefit.)
- pet health care (Incorrect. This is an additional benefit offered to employees at companies such as Scripps Health.)
- unemployment insurance (Correct. Unemployment insurance is a mandated benefit.)
A: unemployment insurance

Q: Which of the following statements is true regarding benefit trends?
- Voluntary benefits are becoming less personal. (Incorrect. Voluntary benefits are becoming more personal by using data driven approaches to tailor benefit information and guidance.)
- Emotional health will not be a covered benefit. (Incorrect. Emotional health benefits are expected to have increased access)
- Employees will have to make more challenging decisions when it comes to their benefits. (Incorrect. Benefits technology will simplify employees’ decision-making.)
- Employers are becoming increasingly family friendly. (Correct. Paid parental leave programs are becoming more prevalent among benefits provided by employers.)
A: Employers are becoming increasingly family friendly.

Q: Mucha identifies all of the following benefit trends, EXCEPT:
- Millennials are disrupting the benefits game. (Incorrect. Mucha identifies that millennials are disrupting the benefits game by requesting health savings accounts, student debt repayment, family benefits, and flexible schedules.)
- Innovation regarding healthcare costs. (Incorrect. Employers are becoming more innovative in order to reign in high healthcare costs by providing a range of wellness benefits and prevention programs.)
- Voluntary benefits are driving retention. (Incorrect. Mucha describes that voluntary benefits are increasing as much as 72% in order for organizations to retain their employees.)
- Promoting the “one size fits all” benefits package. (Correct. The “one size fits all” benefits package is obsolete, and companies are changing the way they address benefits with employees.)
A: Promoting the “one size fits all” benefits package.

Q: You are responsible for briefing your company’s leadership on what millennials want from their benefits packages. Which of the following would you avoid discussing?
- student loan repayment benefits (Incorrect. Millennials are exiting college and entering the workforce with large amounts of debt. Employers who offer loan repayment benefits are seen as more desirable.)
- health savings accounts (Incorrect. Millennials are asking for health savings accounts due to the high deductibles on employer-provided health care plans.)
- flexible schedules (Incorrect. Millennials are asking for flexible schedules - the ability to work when the timing is right for them, as long as they meet deadlines and benchmarks.)
- retirement benefits (Correct. While this is an important voluntary benefit, it is not at the forefront of what millennials want from their employers.)
A: retirement benefits