Fundamentals of HR Management, 8e (Noe)
Chapter 14 Providing Employee Benefits
1) Tax laws generally make benefits unfavorable to employees.
2) The addition of creative benefits packages for employees provides employers a competitive
edge in acquiring and retaining talented employees in their organization.
3) All U.S. employees, including federal, state, and local government employees, are covered
under the Old Age, Survivors, Disability, and Health Insurance (OASDHI) program.
4) Social security benefits increase if a worker earns wages above the exempt amount.
5) Under the workers’ compensation laws, employees are eligible to receive their regular
paychecks in the event of a disability.
6) The Family and Medical Leave Act of 1993 requires organizations with 50 or more employees
within a 75-mile radius to provide as much as 12 weeks of unpaid leave to qualifying employees.
7) Benefits provided to domestic partners of employees have the same tax advantages as benefits
provided to their spouses.
8) Employers in the United States are legally required to provide 30 days of paid vacation to both
new and existing employees every year.
9) For an average employee, the most common type of insurance offered as benefits is the
pension program.
10) Health maintenance organizations charge patients half the fee for each visit and service.
11) Employees are most likely to benefit from a flexible spending account if they have
predictable health care expenses, such as insurance premiums.
12) A defined-contribution plan guarantees a specified or fixed level of retirement income.
13) According to Employee Retirement Income Security Act (ERISA), employees whose
contributions are vested meet the requirements to receive a pension at retirement age.
14) Employees who are parents always need child care and family leave.
15) The use of wellness programs and consumer-directed health plans in an organization reflects
its objective of controlling the cost of health care benefits.
16) Cafeteria-style plans increase benefits costs for employers.
17) According to the Americans with Disabilities Act (ADA), employers are required to take
care not to discriminate against workers over age 40 in providing pay or benefits.
18) According to the Financial Accounting Standards Board, employers fund retirement benefits
on a pay-as-you-go basis.
19) Employees and job applicants often have a poor idea of what benefits they have and what the
market value of their benefits is.
20) To increase the likelihood of employees understanding messages about benefits, employers
must limit communications.
21) Which benefits provided by the employer is required by law in the United States?
A) paid vacation
B) personal leave
C) flextime
D) Social Security contributions
E) retirement savings plan
22) Chandler is the owner of a restaurant called KC Kitchen. He decides to increase employee
motivation by introducing benefit packages. However, Alivia, the manager, suggests that
employees will be more motivated if Chandler increases their actual wages. Which statement, if
true, strengthens Alivia’s argument?
A) Chandler’s competitor, Henry, gives many benefits to his employees.
B) The state has introduced mandatory requirements for employee benefits.
C) Benefit packages are more difficult to understand by employees than pay structures.
D) Most of the employees at KC Kitchen belong to the age group that looks forward to pensions.
E) Employees do not prefer cash compensation due to higher tax rates.
23) Fred, the vice president of Gallway Co., plans to introduce a retirement plan for all
employees. Ron, the operations director, disagrees because the proposed plan would increase the
company’s costs. Which statement, if true, strengthens Fred’s argument?
A) Some benefits have become so common that today’s employees expect them.
B) Benefits packages are more complex than pay structures.
C) The employees at Gallway Co. are young adults who prefer cash compensation to benefits.
D) Benefits packages do not affect the competitive nature of the labor market.
E) The federal government does not have mandatory requirements for specific retirement plans.
24) On average, out of every dollar spent by a company on employee compensation, more than
________ cents goes to employee benefits.
A) 75
B) 30
C) 50
D) 15
E) 20
25) As Monty Corp., a shoe manufacturer, grows more profitable, it wants to become more
competitive as an employer in the labor market. Juliet, the human resource manager, urges the
company to develop a more attractive package of benefits, rather than simply raising salaries.
Which statement best supports Juliet’s argument?
A) Employees do not pay income taxes on most benefits they receive.
B) Benefits are harder for employees to understand than pay structures.
C) Employees could get a better deal if they bought their own insurance policies.
D) Higher cash compensation gives employees more purchasing power.
E) Different employees look for different types of benefits.
26) What is an advantage of providing benefits instead of cash compensation?
A) It is simpler to pay compensation in benefits than in cash.
B) Benefits give greater control to employees over cash compensation.
C) All companies that provide benefits become eligible for tax breaks by state and federal
agencies.
D) Younger employees place more importance on benefits than cash compensation.
E) Employers can assemble creative benefits packages that give them a competitive advantage.
27) Toby is an engineer at a paint manufacturing company. However, a chemical spill at the
factory caused an accident that left him permanently disabled. Which program is specifically
designed to help employees like Toby?
A) unqualified retirement plan
B) vested-benefit plan
C) Social Security
D) defined-benefit plan
E) work-sharing plan
28) What is characteristic of benefits required by the Social Security Act?
A) Workers receive no benefits until they reach the full retirement age.
B) Workers are compensated according to their past earnings and retirement age.
C) Workers receive increased benefits when they earn more than the exempt amount.
D) The cost of the program is borne entirely by the employers, who pay a payroll tax.
E) The program benefits persons who are financially dependent on current workers.
29) Chad finds that he meets the eligibility requirements for Social Security. He elects to receive
retirement benefits at 62. Which statement is true?
A) He will receive full retirement benefits.
B) He will receive retirement benefits only according to his earnings history.
C) He will not be eligible for worker’s compensation.
D) He will receive benefits at a permanently reduced level.
E) His exempt amount limits will be lifted.
30) Two management students, Gunther and Jake, discuss the pros and cons of employee
benefits. Gunther states that unemployment insurance is more advantageous to employees than it
is to employers, while Jake argues that employers receive more rewards from it. Which statement
weakens Jake’s argument?
A) Unemployment insurance provides employers a competitive advantage in the talent market.
B) The amount of an employer’s unemployment insurance tax depends on the number of
employees.
C) Federal and state taxes paid by employers fund most of unemployment insurance.
D) Unemployment insurance does not provide assistance to unemployed workers looking for
new jobs.
E) Unemployment insurance does not include payments to offset lost income during voluntary
unemployment.
31) What is a true of unemployment insurance?
A) It provides payments to offset lost income during voluntary unemployment.
B) Most funding for unemployment insurance is provided by employees.
C) Unfavorable experience ratings of employers lead to higher premiums.
D) Costs for unemployment insurance are standard across the country.
E) It is a voluntary program based on number of employers in a specific state.
32) In which situation do workers become eligible for unemployment benefits?
A) when they have worked only for a few days
B) when they are out of work because they are sick
C) when they are discharged because of willful misconduct
D) when they are actively seeking work
E) when they are out of work because of a labor dispute
33) What is a similarity between unemployment insurance benefits and workers’ compensation
benefits?
A) Both of the programs are funded by the federal taxes on employees.
B) Both of the programs’ costs depend on the organization’s experience ratings.
C) Both of the programs have the same funding costs across the states.
D) Both of the programs replace the same percentage of an individual’s previous earnings.
E) Both of the programs provide the same amount of compensation to the employees.
34) Eleanor, who is pregnant, works for an organization with more than 100 employees. She
lives 20 miles away from work. By federal law, she is entitled to ________ of unpaid leave after
her child is born.
A) 12 days
B) 56 days
C) 12 weeks
D) 30 weeks
E) 11 months
35) Under the Family and Medical Leave Act, which criteria makes employees eligible to take
unpaid family leave?
A) They should be working for an organization with 50 or more employees within a 75-mile
radius.
B) They should be working at least 15 hours per week.
C) They should have worked for the employer for more than 5 years.
D) They should belong to the top 10 percent of highest paid executives.
E) They should be working for an organization with at least 100 employees.
36) Which act requires companies with more 50 full-time employees to provide health insurance
or face a penalty?
A) Social Security Act.
B) Employee Retirement Income Security Act.
C) Family and Medical Leave Act.
D) Patient Protection and Affordable Care Act.
E) Consolidated Omnibus Budget Reconciliation Act.
37) Yang, the HR manager at a start-up company, helped the founder plan a benefits package
that includes paid vacations, holidays, and sick leave. Now an employee approaches Yang to say
she has been called up for jury duty and needs to be away next week. What should Yang do?
A) He should direct the employee to use the Family and Medical Leave Act.
B) He should forbid the employee from taking time off for jury duty.
C) He should ask the employee to use her sick leave for jury duty.
D) He should ask the employee to use her vacation time for jury duty.
E) He should establish, and then apply, policies for other situations requiring time off.
38) In the United States, what is the legal requirement for giving employees paid vacation?
A) Paid vacation must take place on specified days in addition to holidays.
B) Employers must give the amount of paid vacation that makes economic sense.
C) Employers must give employees 10 paid vacation days each year.
D) New employees must receive 25 or 30 days off.
E) Employers decide on paid time off; there is no minimum.
39) Sick leave programs
A) must be provided by all employers according to the law.
B) are based solely on the age of employees.
C) pay employees for days not worked due to illness.
D) are mandatory forms of unpaid leave.
E) are forms of floating holidays.
40) In the U.S., the amount of sick leave given to employees is often based on
A) length of service.
B) position within the company.
C) age.
D) educational background.
E) prior job experience.
41) Phono Inc. has a benefits package that includes paid vacations and sick leave. The human
resource manager proposes shifting this time into a bank of paid time off. What would be an
advantage of this change?
A) Vacation and sick leave do not make economic sense.
B) Most companies offer this arrangement.
C) The company won’t have to set a schedule for holidays.
D) The company won’t have to pay for the time the employees take off.
E) Employees have more flexibility and privacy for their personal matters.
42) Tiffany, the engineering manager at Cardinal Tech, takes an eight-week unpaid leave to go
on a tour to promote a book she wrote. She does so in accordance with Cardinal Tech’s policy for
leaves without pay. In what sense could this unpaid leave be an employee benefit for Tiffany?
A) Her leave is based on length of service, so it accumulates over time.
B) Her time off is an example of personal days.
C) The Family and Medical Leave Act requires the employer to grant unpaid time off.
D) She uses her paid time off for the leave.
E) She retains her seniority and benefits during the leave.
43) Rose, a new employee, learns her company provides a group insurance plan that she can
enroll in. Her friend, Gary, suggests that Rose would save money if she chooses to purchase an
individual insurance plan over the company’s group insurance plan. Which statement weakens
Gary’s argument?
A) Individual plans are typically offered only to senior executives.
B) Rates for group insurance are typically lower than those of individual policies.
C) Rose will not be eligible for other benefits if she does not enroll in a group insurance plan.
D) Employees get more for their money when they receive insurance as a group benefit.
E) Rose will get more take-home pay if she opts for a group insurance plan.
44) Jerry loses his job during a layoff at his company. He’s worried about not having access to
his health insurance benefits anymore. However, his company is required to offer him the same
health insurance coverage for up to 36 months following the layoff. Which federal law applies in
this scenario?
A) Social Security Act
B) Employee Retirement Income Security Act
C) Family and Medical Leave Act
D) Consolidated Omnibus Budget Reconciliation Act
E) Affordable Care Act
45) Courtney’s employer provides her with an insurance plan that requires her to obtain approval
before being admitted to the hospital for surgical procedures. Which variation of health coverage
does this illustrate?
A) managed care
B) health maintenance organization
C) employee wellness
D) flexible spending account
E) consumer-driven health plan
46) Meghan, who recently moved to a new city, evaluates several insurance options from her
new employer. Owing to her recent medical issues, she wants to choose her health care
providers, even if seeing them costs more than seeing the providers in a specific insurance
network. Which health care plan is Meghan most likely to find suitable for her needs?
A) a managed care plan
B) a health maintenance organization
C) a preferred provider organization
D) an employee wellness program
E) a flexible spending account