Chapter 01 – Introducing Employee Benefits
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Chapter 01
Introducing Employee Benefits
True / False Questions
1. Cafeteria plans enable employees to choose from among a set of benefits and different levels of
these benefits. (Basic Design Considerations for Discretionary Benefits)
2. Cost-of-living adjustments (COLAs) are based on changes in prices as indexed by the consumer
price index. (Adjustments to Core Compensation)
3. The Fair Labor Standards Act first legitimized bargaining for employee benefits. (Origins of
Employee Benefits)
4. Flexible work schedules are considered part of accommodation and enhancement benefits
packages. (Defining Employee Benefits)
5. Health insurance is a legally required benefit for all private sector employers? (Health
Protection Programs)
6. The Federal Insurance Contributions Act (FICA) helps support the Old-Age, Survivor, and
Disability Insurance (OASDI). (Government Regulation of Employee Benefits)
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7. Employer-sponsored disability insurance is less encompassing than workers’ compensation.
(Disability Insurance)
8. Defined benefits plans, defined contribution plans and hybrid plans are types of health insurance
funding plans. (Income Protection Programs)
9. Strategic benefit plans emphasize short-term changes in how a company’s benefit plan
operates. (Basic Strategic Planning Concepts)
10. The top-down approach to strategic benefits planning is a reactive process that evaluates the
benefits program only after problems arise. (Approaches to Strategic Benefit Planning)
11. Incentive-pay rewards employees for completely attaining predetermined work
objectives. (Adjustments to Core Compensation)
12. Workers’ compensation insurance programs, run by the federal government, are designed to
cover employee expenses incurred in work-related accidents and injuries. (State Compulsory
Disability Laws (Workers’ Compensation))
13. Merit-pay rewards employees according to their job performance. (Adjustments to Core
Compensation)
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14. Total compensation represents both monetary and nonmonetary rewards. (Employee Benefits
in the Total Compensation Scheme)
15. Strategic decisions support the fulfillment of tactical decisions. (Basic Strategic Planning
Concepts)
16. Unemployment insurance is funded solely by the Federal Unemployment Tax Act
(FUTA). (Government Regulation of Employee Benefits)
17. Core compensation is another name for monetary rewards. (Employee Benefits in the Total
Compensation Scheme)
18. Nonmonetary compensation includes protection programs, paid time off and
services. (Employee Benefits in the Total Compensation Scheme)
19. Employees’ knowledge and skills are said to generate human capital for firms and are the basis
for incentive-pay. (Adjustments to Core Competition)
20. The Social Security Act was enacted due to the effects of WWII. (The Social Security Act of
1935)
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21. Union workers cannot negotiate paid time off benefits. (Paid Time-Off)
22. ERISA does not apply to public sector retirement plans. (Legal and Regulatory Influences on
Discretionary Benefits Practices)
23. Benefits are defined as compensation that includes wages and salary as well as other
services. (Defining Employee Benefits)
24. Benefits are a central strategy in attracting and retaining desired employees. (Basic Strategic
Planning Concepts)
25. Vacations are a type of accommodation benefit. (Paid Time-Off)
26. Protection programs provide health benefits. (Health Protection Programs)
27. Compensation levels are established based on employee age. (Adjustments to Core
Compensation)
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28. Workers’ compensation laws are state laws. (State Compulsory Disability Laws (Workers’
Compensation))
29. Life insurance programs protect employees’ families in the event of untimely illness. (Income
Protection Programs)
30. Employees are most likely to endorse benefits that fulfill their needs. (Basic Design
Considerations for Discretionary Benefits)
31. Incentive-pay is a permanent increase of compensation based on individual goal achievement.
(Adjustments to Core Compensation)
32. In financing discretionary benefits, employers always pay the total cost incurred. (Basic
Design Considerations for Discretionary Benefits)
33. Since the 1940s, companies have expanded their discretionary benefits as an alternative to
wage increase or as a motivational tool. (Origins of Employee Benefits)
34. The existence of labor union has limited the use of welfare practices by companies. (Origins of
Employee Benefits)
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Multiple Choice Questions
35. Which is the following is NOT the reason for companies to adopt various benefits plans?
(Defining and Exploring Employee Benefits)
36. What is another name for a pay-for-knowledge plan? (Adjustments to Core Compensation)
37. Discretionary benefits can be categorized into programs that (Discretionary Benefits)
38. Which is the following is NOT the element of discretionary benefits? (Discretionary Benefits)
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39. Which two are the possible approaches that can be used in strategic benefits
planning? (Approaches to Strategic Benefit Planning)
40. These two federal laws form the basis for legally required benefits. (Legally Required
Benefits)
41. Employer choice of discretionary benefits does not depend on: (Government Regulation of
Employee Benefits)
42. The Family and Medical Leave Act (FMLA) permits employees which of the following? (The
Family and Medical Leave Act of 1993)
43. Information for strategic benefits planning comes from these two environments. (Information
Used in Strategic Benefit Planning)
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44. In which social context were workers’ compensation laws enacted? (State Compulsory
Disability Laws (Workers’ Compensation))
45. What are the four main classes of health insurance programs that employers have to choose
from to offer its’ employees? (Health Protection Programs)
46. When the employee bears the entire costs of discretionary benefits it is referred to as which
type of financing? (Basic Design Considerations for Discretionary Benefits)
47. Which of the following are considered the five core compensation elements? (Adjustments to
Core Compensation)
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48. Which three are the three fundamental roles that characterize discretionary
benefits? (Discretionary Benefits)
49. Flexible benefits allow employees to do which of the following? (Basic Design Considerations
for Discretionary Benefits)
50. Companies can generally choose from which four programs for financing their discretionary
benefits plans. (Basic Design Considerations for Discretionary Benefits)
51. Commission payments are examples of which type of core compensation
package? (Adjustments to Core Compensation)
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52. Which of the following are the three main types of retirement programs that companies can
offer? (Income Protection Programs)
53. Which two make up the internal environmental factors? (Internal Environment)
54. The Social Security Act of 1935 set up which two programs? (The Social Security Act of
1935)
55. Which of the following factors are used for strategic benefits planning? (External
Environment)
56. Which of the following is not a fundamental employee goal? (Legal and Regulatory Influences
on Discretionary Benefits Practices)
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57. Which of the following is not an example of features of a benefit plan? (Basic Design
Considerations for Discretionary Benefits)
58. In 2011, what was the average total employer compensation costs for private industry
workers? (Employer Costs for Compensation and Benefits)
59. In 2011, about how many million persons were employed by private-sector companies? (Legal
and Regulatory Influences on Discretionary Benefits Practices)
60. Briefly describe the origins of employee benefits in the US. (Origins of Employee Benefits)
Main Points
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61. Briefly describe various legal and regulatory influences on discretionary benefits. (Legal and
Regulatory Influences on Discretionary Benefits Practices)
Main Points
62. Discuss the influence of external economic conditions on strategic benefits planning of
companies. (External Environment)
Main Points
63. Discuss the impact of recent demographic changes in labor markets (e.g., influx of female,
ethnic minority, or older workers) on the benefit strategy of companies. (Changing Demographics
of the Labor Force)
Main Points