Fundamentals of Human Resource Management, 4e (Dessler)
Chapter 10 Developing Compensation Plans
1) ________ refers to all forms of pay or rewards going to employees and arising from their
employment.
A) Employee reimbursement
B) Employee compensation
C) Salary
D) Benefits
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
2) Direct financial payments include all of the following EXCEPT ________.
A) commissions
B) insurance
C) salaries
D) incentives
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
1
3) Which of the following terms refers to pay in the form of financial benefits, such as
insurance?
A) merit raises
B) out-of-pocket expenses
C) indirect financial payments
D) direct financial payments
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
4) Which compensation-related law contains provisions for minimum wage, maximum hours,
overtime pay, equal pay, and child labor?
A) Davis-Bacon Act
B) Fair Wages Act
C) Civil Rights Act
D) Fair Labor Standards Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
5) All of the following issues are addressed by the Fair Labor Standards Act EXCEPT ________.
A) termination
B) overtime pay
C) record-keeping
D) minimum wage
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
2
6) Which law makes it illegal to discriminate against any individual with respect to
compensation because of race, color, religion, sex, or national origin?
A) Employer Retirement Income Security Act
B) Title VII of the Civil Rights Act
C) Fair Labor Standards Act
D) Davis-Bacon Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
7) According to the Fair Labor Standards Act, if a worker covered by the act works more than 40
hours, he or she will receive overtime pay at a rate of ________ of normal pay for any hours
worked over 40 in a workweek.
A) 50%
B) 100%
C) 125%
D) 150%
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
8) Jill works as a cashier at a grocery store. She earns $10 an hour (or $400 for a 40-hour week).
Last week, she worked 46 hours. What is the minimum amount that Jill earned last week?
A) $430
B) $460
C) $490
D) $520
AACSB: Analytical Thinking
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Application
3
9) Jorge worked 6 hours of overtime this week but has decided to take time off instead of
overtime pay. How many hours will Jorge receive in time off from work?
A) 3 hours
B) 6 hours
C) 9 hours
D) 12 hours
AACSB: Analytical Thinking
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Application
10) Which of the following is true for employers who use independent contractors?
A) Payroll taxes are paid by the employer.
B) Federal income taxes are charged at a reduced rate.
C) Social Security taxes are higher than for regular employees.
D) Fair Labor Standards Act overtime requirements do not apply.
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
11) The ________ states that employees of one sex may not be paid wages at a rate lower than
that paid to employees of the opposite sex for doing roughly equivalent work.
A) American Disabilities Act
B) Civil Rights Act
C) Employer Retirement Income Security Act
D) Equal Pay Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
4
12) According to the Family and Medical Leave Act, eligible employees can take up to ________
weeks of unpaid, job-protected leave for the birth of a child or for the care of a child, spouse, or
parent.
A) two
B) four
C) six
D) twelve
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
13) The ________ gave employees the right to organize, bargain collectively, and engage in
concerted activities for the purpose of collective bargaining.
A) Fair Labor Standards Act
B) Civil Rights Act
C) Employer Retirement Income Security Act
D) National Labor Relations Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
14) Which of the following has historically been the primary issue in collective bargaining?
A) safety
B) wage rates
C) income security
D) health care benefits
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
5
15) Unions typically negotiate all of the following issues EXCEPT ________.
A) wage rates
B) income security
C) time off with pay
D) unpaid medical leave
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
16) Which of the following terms refers to a compensation plan that advances a firm’s strategic
goals?
A) workers’ compensation package
B) aligned reward strategy
C) performance pay plan
D) strategic management
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
6
17) Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the
past few years, the company’s market share has dropped significantly, and employee turnover has
increased. Upper management is considering the implementation of a new compensation policy
in its efforts to turn the company around. Historically, the company has paid all employees
similarly with some variation for seniority but no distinction between high and low performers.
All of the following questions are relevant to Homelife’s decision to develop an aligned reward
strategy EXCEPT ________.
A) What compensation programs should Homelife use to reinforce necessary employee
behaviors?
B) How well does Homelife’s current compensation program match the company’s strategic
aims?
C) What were the results of the most recent Homelife customer review ratings?
D) What compensation programs should Homelife use to reinforce desired employee behaviors?
AACSB: Analytical Thinking
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Critical Thinking
18) Jason is an information systems technician in a town in North Carolina with a population of
100,000. He earns $35,000/year. He recently found out that a nearby town with a similar
population pays people in the same position $40,000/year. Jason is concerned with the ________
form of equity.
A) distributive
B) procedural
C) internal
D) external
AACSB: Application of knowledge
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Application
7
19) External equity refers to ________.
A) how a job’s pay rate in one company compares to the job’s pay rate in other companies
B) how fair the job’s pay rate is when compared to other jobs within the same company
C) the fairness of an individual’s pay as compared to what his or her co-workers are earning for
the same or very similar jobs within the company, based on each individual’s performance
D) the perceived fairness of the processes and procedures used to make decisions regarding the
allocation of pay
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
20) Internal equity refers to ________.
A) how a job’s pay rate in one company compares to the job’s pay rate in other companies
B) how fair the job’s pay rate is when compared to other jobs within the same company
C) the fairness of an individual’s pay as compared to what his or her co-workers are earning for
the same or very similar jobs within the company, based on each individual’s performance
D) the perceived fairness of the processes and procedures used to make decisions regarding the
allocation of pay
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
21) What type of pay plan is being used when workers are paid a sum for each unit they
produce?
A) base pay
B) competency-based pay
C) job-based pay
D) piecework
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
8
22) Which 1931 law allows the secretary of labor to set wage rates for laborers employed by
contractors working for the federal government?
A) Title VII
B) Davis-Bacon Act
C) Fair Labor Standards Act
D) Walsh-Healey Public Contract Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
23) Which law requires time-and-a-half pay for any hours worked over 40 hours per week
involving government contracts amounting to $10,000 or more?
A) Title VII
B) Davis-Bacon Act
C) Fair Labor Standards Act
D) Walsh-Healey Public Contract Act
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
9
24) Which of the following professions is most likely categorized as nonexempt?
A) general manager
B) pharmacist
C) paralegal
D) teacher
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
25) Which term refers to a compensation plan that includes traditional pay, job design, career
development, and recognition?
A) point method
B) total rewards
C) competency-based pay
D) talent-management salaries
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Concept
26) Which of the following employees would most likely be categorized as nonexempt?
A) Anna, a registered nurse who earns $59,000/year
B) Bob, a teacher who earns $56,000/year
C) Carol, a bookkeeper who earns $23,000/year
D) Dave, a taxi driver who earns $20,000/year
AACSB: Application of knowledge
Chapter: 10
LO: 10.1: List the basic factors determining pay rates.
Skill: Application
10