The Legal Environment of Business, 8e (Kubasek)
Chapter 19 The Employment Relationship
1) Which of the following is true of the Davis-Bacon Act?
A) It states that employees who receive a significant portion of their income from tips are
entitled a lower minimum wage from their employer.
B) It requires that a minimum wage of a specified amount be paid to all employees in industries
engaged in interstate commerce.
C) It covers all employers engaged in interstate commerce or the production of goods for
interstate commerce.
D) It requires that contractors and subcontractors working on government projects pay the
prevailing wage.
2) The Fair Labor Standards Act requires that employees who work more than 40 hours in a
week be paid no less than ________ for all the hours beyond the standard 40-hour workweek.
A) one and one-half times their regular wage
B) one and one-half times the minimum wage
C) twice their regular wage
D) twice the minimum wage
3) With regard to the Fair Labor Standards Act, which of the following workers should receive
overtime pay if they work more than 40 hours per week?
A) all executives and outside salespersons
B) all employees who are not executives, administrative employees, professional employees, or
outside salespersons
C) all outside salespersons who are underpaid, but are not administrative employees or
professional employees
D) all professional employees whose jobs are threatened
4) What is the minimum hourly wage stipulated by the Fair Labor Standards Act in 2009?
A) $15.25
B) $2.25
C) $7.25
D) $12.25
5) Which of the following is true of the Fair Labor Standards Act?
A) It requires that contractors and subcontractors working on government projects pay the
prevailing wage.
B) It requires that employees who work more than 40 hours in a week be paid twice their regular
wage for all the hours beyond the standard 40-hour workweek.
C) Employees who receive a significant portion of their income from tips are entitled to a wage
higher than the minimum wage from their employer.
D) It covers all employers engaged in interstate commerce or the production of goods for
interstate commerce.
6) Reeve is a mortgage loan officer of Boyd’s Bank, who closes deals in people’s homes. He has
no supervisory powers and works for more than 40 hours a week. However, his employer refuses
to pay him overtime. In the context of the Fair Labor Standards Act, Boyd’s Bank is exempted
from paying Reeve because he is a(n) ________.
A) executive
B) manager
C) outside salesperson
D) nonprofessional employee
7) The Fair Labor Standards Act is enforced by the ________ of the Department of Labor.
A) Office of Public Engagement
B) Wage and Hour Division
C) Bureau of International Labor Affairs
D) Bureau of Labor Statistics
8) Which of the following records must an employer maintain for a nonexempt employee to
ensure that he or she complies with the Fair Labor Standards Act?
A) employee’s Social Security number
B) names of employee’s parents
C) employee’s date of resignation from his or her previous job
D) wage earned by the employee at his or her previous job
9) Under the Fair Labor Standards Act, an employee must be at least ________ years old to work
in non-farm jobs declared hazardous by the Secretary of Labor.
A) 14
B) 18
C) 15
D) 16
10) The Davis–Bacon Act requires that contractors and subcontractors working on government
projects pay the prevailing wage.
11) When the work day starts and ends can lead to litigation under the Fair Labor Standards Act.
12) Shelley is a waitress at one of the outlets of Bean Foods, a multinational restaurant chain.
Her hourly salary is $3. She generally earns $10 as tip every month. In June, 2012, she received
$40 as tip. The next month, her employer reduced her hourly wage to $2. Is the employer’s action
legal in the context of the Fair Labor Standards Act (FLSA)? If not, how much should Bean
Foods pay Shelley?
13) List the records that an employer is expected to maintain for all employees not exempted
under the Fair Labor Standards Act (FLSA).
14) Compare and contrast the minimum wage requirements of the United States with those of
Ireland.
15) Which of the following is true about the Federal Unemployment Tax Act?
A) The federal government pays all unemployed workers the same amount.
B) State governments pay unemployed workers according to a federal schedule of benefits.
C) States access money from the federal government’s Unemployment Insurance Fund.
D) The federal government sets eligibility requirements for all unemployed workers.
16) Which of the following is the purpose of the Federal Unemployment Tax Act?
A) The Act creates a state system that provides unemployment compensation to qualified
employees who lose their jobs.
B) The Act creates a state system through which any employee who has lost his or her job can
receive compensation.
C) The Act creates a federal system to provide unemployment compensation to employees who
had resigned because they felt that they were underpaid.
D) The Act creates a federal system through which any employee who has lost his or her job can
receive compensation.
17) Most states require that an unemployed worker applying for unemployment compensation
should ________.
A) have quit voluntarily
B) have been fired because of poor performance on the job
C) not have committed any illegal act in his life
D) not have been fired for just cause
18) How does the state government raise money to pay unemployed people under the Federal
Unemployment Tax Act?
A) The employees pay a fraction of their wages to the state.
B) The employers pay taxes to the state.
C) All state residents pay taxes to the state government.
D) The federal government allocates a small portion of the national budget.
19) Under the Federal Unemployment Tax Act, employees pay taxes to the states.
20) Under the Federal Unemployment Tax Act, states require that employees quit their jobs
voluntarily to be eligible for compensation.
21) Describe the Federal Unemployment Tax Act.
22) Which of the following is a provision for healthy, but not disabled, employees who lose their
jobs under the Consolidated Omnibus Budget Reconciliation Act of 1985?
A) They continue to receive a minimum wage until they are able to find new employment.
B) They continue to receive medical, dental, and other benefits at no charge under the company’s
plan until they are able to find new employment.
C) They remain eligible to receive benefits under the company’s plan for up to 18 months by
paying premiums for the policy plus an administration fee.
D) They continue to receive medical, dental, and other benefits for up to 29 months by paying an
administration fee.
23) How many days do employees have to decide whether or not to maintain coverage of
medical, dental, or optical benefits under the Consolidated Omnibus Budget Reconciliation Act?
A) 30 days after the employee has found new employment
B) 60 days after the employee has found new employment
C) 30 days after their coverage would ordinarily terminate
D) 60 days after their coverage would ordinarily terminate
24) Mark, an accountant, was found guilty of embezzlement and was fired from his job. He had
been receiving medical, dental, and optical benefits from his employer. On his termination, his
employer refused to continue granting him these benefits. Which of the following courses of
action can Mark take under the Consolidated Omnibus Budget Reconciliation Act of 1985?
A) He can sue his employer for 10 percent of the annual cost of the group plan.
B) He can sue his employer for $500,000.
C) He can pay the premium for the policy to maintain his coverage.
D) He cannot legally claim the benefits or any amount of money.
25) What consequence does an employer who does not comply with the Consolidated Omnibus
Budget Reconciliation Act face?
A) The employer will go to jail for no more than 60 days and be required to pay 50 percent of the
annual cost of benefits.
B) The employer will go to jail for no more than 30 days and be required to pay 20 percent of the
annual cost of benefits.
C) The employer will be required to pay 10 percent of the annual cost of the group plan or
$500,000, whichever is less.
D) The employer will be required to pay 50 percent of the annual cost of the group plan or
$100,000, whichever is less.
26) The Federal Unemployment Tax Act ensures that employees who lose their jobs can
continue receiving medical, dental, or optical benefits for themselves and their dependents under
the employer’s policy.
27) Under the Consolidated Omnibus Budget Reconciliation Act, an employer is not obliged to
pay benefits to an employee if the employee was fired for gross misconduct.
28) Describe the Consolidated Omnibus Budget Reconciliation Act of 1985
29) Workers’ compensation laws are laws that provide financial compensation to ________.
A) covered employees of a covered employer or their dependents when they are fired from their
jobs
B) covered employees of a covered employer or their dependents when they are injured on the
job
C) independent contractors who are injured on the job
D) workers who are let go or fired, for a period of time usually ranging from 1 to 2 years
30) Which of the following statements is true about workers’ compensation laws?
A) They are handled entirely by one federal agency.
B) They are handled by multiple federal agencies without state involvement.
C) They are promulgated by both federal and state agencies.
D) They are handled purely by the states.
31) Brooke Industries, a famous chain of hotels, decides to set up a new hotel in Detroit. It
outsources the construction to Antonio, a local contractor. Antonio has to take a left turn across a
busy thoroughfare to enter the parking lot of the site. One day, on his way to work, Antonio has
an accident at the busy thoroughfare. Which of the following courses of action are open to
Antonio in the context of workers’ compensation laws?
A) He cannot claim compensation as he was technically not on the company premises.
B) He can claim compensation under the special-hazards exception.
C) He cannot claim compensation as he is an independent contractor.
D) He can claim compensation as he was on the way to the construction site.
32) Why is workers’ compensation said to be “no fault”?
A) Compensation recovery does not depend on showing that the injury was caused while on the
job.
B) Compensation recovery does not depend on showing that an employee could have managed to
avoid the injury.
C) Compensation recovery does not depend on showing that the injury was caused by an error of
the employer.
D) Compensation recovery does not depend on showing that the employee intentionally hurt
himself or herself to claim monetary benefit.
33) In order to claim benefits under workers’ compensation law, an injured worker must
demonstrate that the ________.
A) accident was not his or her fault
B) accident was the employer’s fault
C) injury occurred on the job
D) injury took place in a nonhazardous environment
34) Betty is required to leave the company premises in order to run an errand for her employer.
She has an accident on the way and is injured. In this scenario, which of the following statements
is true under workers’ compensation laws?
A) Betty’s workers’ compensation coverage ends the moment she leaves the premises.
B) Workers’ compensation would cover Betty for injuries sustained during the course of running
the errand.
C) Workers’ compensation would cover Betty during the errand, but only if the errand involved a
hazardous task.
D) Workers’ compensation would cover Betty only if the injuries did not result from her own
negligence.
35) An agency responsible for paying workers’ compensation claims verifies a claim if an
employer does not contest the claim through ________.
A) proceedings before an administrative law judge (ALJ)
B) an informal hearing before a regional office
C) an application to the federal claims verification center
D) a claims examiner
36) Which of the following events occurs if an employer contests the amount or validity of a
claim?
A) proceedings before an administrative law judge (ALJ)
B) an informal hearing before a regional office of the agency
C) investigation by a federal claims verification center
D) investigation by a claims examiner
37) Which of the following is a negative consequence of workers’ compensation laws?
A) They have resulted in heightened tensions between employers and employees because now an
employee may sue his or her employer for having suffered from an injury.
B) They have made employers less careful about employee safety than they would be if they had
to fear huge damage awards.
C) They have resulted in significantly higher costs for employers.
D) They have prevented workers from being able to get promotions by taking calculated risks.
38) The Fair Labor Standards Act provides financial compensation to employees or their
dependents when the covered employee of a covered employer is injured on the job.
39) Workers’ compensation is said to be “no fault” because recovery does not depend on showing
that the injury was caused by the negligence of the employee.
40) To recover workers’ compensation benefits, an injured party must demonstrate that she or he
is an employee as opposed to being an independent contractor.
41) An employee who lost a toe in an industrial accident, but is not disabled as a result, would
not be entitled to any compensation for the loss.
42) State the benefits that can be claimed under workers’ compensation. How are these
compensation claims filed?
43) The ________ Act is a law designed to guarantee that workers facing a medical catastrophe
or certain specified family responsibilities will be able to take needed time off from work
without pay but without losing medical benefits or their jobs.
A) Family and Medical Leave
B) Workers’ Compensation
C) Family Law
D) Davis–Bacon
44) Eligible employees under the Family and Medical Leave Act are allowed to take up to
________ of leave in any 12-month period.
A) 30 days
B) 60 days
C) 6 weeks
D) 12 weeks
45) Which of the following events would be covered under the Family and Medical Leave Act?
A) placement of a stepchild in the employee’s care
B) funeral of a close friend
C) adoption of a child
D) care of a seriously ill sibling
46) In order to exercise his or her rights under the Family and Medical Leave Act, an employee
whose medical leave is foreseeable must notify the employer ________.
A) as soon as practicable
B) at least 30 days prior to the beginning of the leave
C) within 10 days from when the need for the leave becomes known
D) within two business days from when the need for the leave becomes known
47) If a leave is unforeseeable, notice must be given as soon as practicable. How is “as soon as
practicable” defined under the Family and Medical Leave Act?
A) at least 30 days prior to the anticipated date on which the leave should begin
B) the exact day the need for leave becomes known
C) whatever date the employer considers practicable
D) within one or two business days from when the need for the leave becomes known
48) Upon termination of his or her leave, under the Family and Medical Leave Act (FMLA), an
employee must be ________.
A) asked to reapply for employment in the company he or she was working in
B) restored to any position in the company that is vacant
C) sent to a training course to be reemployed in the same capacity as he or she had been working
in, prior to the leave
D) restored to the same position or one that involves substantially similar skills, effort,
responsibility, and authority
49) Which of the following is a penalty imposed upon an employer if he or she fails to comply
with the Family and Medical Leave Act?
A) payment of the employee’s attorney fees and court costs
B) payment of an amount not greater than the employee’s wages for 4 weeks
C) imprisonment for a period not greater than 90 days
D) payment of an amount, not exceeding $100,000, mutually agreed upon by both parties
50) The Family and Medical Leave Act (FMLA) was designed to guarantee that workers facing
an unexpected medical catastrophe or the birth or adoption of a child would be able to take
needed time off from work.
16
51) To exercise the rights under the Family and Medical Leave Act, an employee whose need for
a leave is foreseeable must advise the employer of that need at least 60 days prior to the
anticipated date on which the leave should begin.
52) Under the Family and Medical Leave Act, although a leave itself can be unpaid, an employer
must continue health insurance benefits during the leave period.