A Framework for Human Resource Management, 7e (Dessler)
Chapter 7 Compensating Employees
1) ________ refers to all forms of pay or rewards going to employees and arising
from their employment.
A) Reimbursement
B) Employee compensation
C) Salary
D) Benefits
2) Direct financial payments include all of the following except:
A) wages.
B) insurance.
C) salaries.
D) incentives.
3) Which of the following is categorized as an indirect payment portion of
employee compensation?
A) wages
B) salaries
C) employer-paid insurance
D) bonuses
4) Which of the following factors affects the design of any pay plan?
A) legal
B) union
C) equity
D) All of the above.
5) Which compensation-related law contains minimum wage, maximum hours,
overtime pay, equal pay, and child labor provisions?
A) Davis-Bacon Act
B) Fair Wages Act
C) Civil Rights Act
D) Fair Labor Standards Act
6) Which of the following is addressed by the Fair Labor Standards Act?
A) minimum wage
B) maximum hours
C) child labor
D) All of the above.
7) The Fair Labor Standards Act covers workers employed in ________.
A) manufacturing
B) retailing
C) service industries
D) All of the above.
8) Which law makes it illegal to discriminate against any individual with respect
to compensation because of race, color, religion, sex, or national origin?
A) Fair Labor Standards Act
B) Civil Rights Act
C) Employer Retirement Income Security Act
D) Davis-Bacon Act
9) 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%
10) Jill works as a cashier at a grocery store. She earns $8 an hour (or $320 for a
40-hour week). Last week, she worked 44 hours. Given standard requirements
from the FLSA, what did she earn last week?
A) $320
B) $336
C) $344
D) $368
11) Jack worked 6 hours of overtime this week but has decided to take time off
instead of overtime pay. How many hours will Jack get off?
A) 3 hours
B) 6 hours
C) 9 hours
D) 12 hours
12) Which of the following occupations must adhere to overtime and minimum
pay provisions stated in the Fair Labor Standards Act?
A) paralegals
B) pharmacists
C) attorneys
D) department heads
13) All of the following occupations are exempt from the overtime provisions
stated in the Fair Labor Standards Act except:
A) physicians.
B) dentists.
C) management trainees.
D) teachers.
14) 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
15) Under which condition is it acceptable for employees of the opposite sex to
receive different pay for doing roughly equivalent work?
A) when the difference exists despite equal skills
B) when the difference exists despite similar responsibility
C) when the difference exists because of a merit system
D) it is never acceptable
16) Which of the following professions is considered “nonexempt” from
provisions of the Fair Labor Standards Act?
A) attorney
B) physician
C) management trainee
D) general manager
17) The ________ prohibits discriminating against employees who are 40 years of
age and older in all aspects of employment, including compensation.
A) Fair Labor Standards Act
B) Civil Rights Act
C) Equal Pay Act
D) Age Discrimination in Employment Act
18) 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
19) According to the Family and Medical Leave Act, eligible employees can take
unpaid, job-protected leave for the ________.
A) care of a child
B) birth of a child
C) care of a parent
D) All of the above.
20) Which of the following is true for employers who use independent
contractors?
A) Fair Labor Standards Act regulations do not apply
B) Social Security taxes are higher than for regular employees
C) State income taxes are charged at a higher rate
D) Social Security taxes are charged at a higher rate
21) The ________ allows a firm to borrow against employee stock held in trust.
A) Fair Labor Standards Act
B) Civil Rights Act
C) Employer Retirement Income Security Act
D) National Labor Relations Act
22) Historically, the main issue in collective bargaining is ________.
A) time off with pay
B) wage rates
C) income security
D) health care benefits
23) Unions negotiate all of the following pay-related issues except:
A) wage rates
B) income security
C) unpaid leave to care for an immediate family member
D) time off with pay
24) Which form of equity refers to how a job’s pay rate in one company compares
to the job’s pay rate in other companies?
A) external
B) internal
C) distributive
D) procedural
25) 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
26) Which form of equity refers to how fair a job’s pay rate is, when compared to
other jobs within the same company?
A) external
B) internal
C) distributive
D) individual
27) Jack is a sales manager and he recently learned that human resource managers
with similar responsibilities and spans of control earn more than he does. Jack is
concerned with the ________ form of equity.
A) external
B) internal
C) distributive
D) individual
28) External equity refers to ________.
A) how a job’s pay rate in one company compares 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 with what his or her coworkers
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
29) Internal equity refers to ________.
A) how a job’s pay rate in one company compares 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 with what his or her coworkers
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
30) ________ is a formal and systematic comparison of jobs to determine the
worth of one job relative to another.
A) Job analysis
B) Job evaluation
C) Benchmark analysis
D) Job ranking
31) Which of the following is not one of the compensable factors emphasized in
the Equal Pay Act?
A) skills
B) effort
C) accountability
D) responsibility
32) Factors that establish how the jobs compare to one another and set the pay for
each job are called ________ factors.
A) compensable
B) job evaluation
C) ranking
D) analysis
33) When using the job classification method of job evaluation, raters categorize
jobs into groups of similar jobs called ________.
A) classes
B) grades
C) sections
D) cohorts
34) When using the job classification method of job evaluation, raters categorize
jobs into groups of jobs that are similar in difficulty but not in context called
________.
A) classes
B) grades
C) sections
D) cohorts
35) The point method of job evaluation entails ________.
A) identifying several compensable factors, each having several degrees, and the
degree to which each of these factors is present in the job
B) ranking each job relative to all other jobs based on some overall factor
C) using raters to categorize jobs into groups
D) deciding which jobs have more of the chosen compensable factors
36) Which job evaluation method is a quantitative technique involving the
identification of several compensable factors and the degree to which each of
these factors is present in the job?
A) ranking method
B) point method
C) factor comparison
D) job classification method
37) A ________ is comprised of jobs of approximately equal difficulty or
importance as established by job evaluation.
A) pay group
B) benchmark
C) pay grade
D) class
38) The ________ shows the pay rates currently paid for jobs in each pay grade,
relative to the points or rankings assigned to each job or grade by the job
evaluation.
A) pay group
B) pay grade
C) class
D) wage curve
39) What is the purpose of the wage curve?
A) to show the relationship between the value of the job as determined by one of
the job evaluation methods and the current average pay rates for your grades
B) to equate jobs of approximately equal difficulty or importance as established
by job evaluation
C) to assign pay rates to pay grades
D) to choose benchmark jobs within each pay grade
40) Which of the following is typically included in compensation packages for a
company’s top executives?
A) short-term and long-term incentives
B) perks
C) executive benefits
D) All of the above.
41) Supplemental executive retirement plans and supplemental life insurance are
classified as ________ in executive compensation packages.
A) base pay
B) short-term incentives
C) long-term incentives
D) executive benefits
42) A company using competency-based pay compensates for all of the following
except an employee’s ________.
A) range of skills
B) job title
C) depth of knowledge
D) type of skills
43) ________ means collapsing salary grades and ranges into just a few wide
levels or bands, each of which contains a relatively wide range of jobs and salary
levels.
A) Comparable worth
B) Strategic compensation
C) Broadbanding
D) Job grading
44) According to the Sarbanes-Oxley Act of 2002, if a company must restate
financial statements due to material noncompliance with a financial reporting
requirement, the act requires that the CEO ________.
A) repay any bonuses received during the 12 months prior to the issuance of the
financial statements in question
B) make a public apology to stock holders
C) resign from the position of CEO
D) All of the above.
45) 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
46) ________ is any salary increase the firm awards to an individual employee
based on his or her individual performance.
A) Merit pay
B) Variable pay
C) Competency-based pay
D) Piecework
47) How does merit pay differ from a bonus?
A) Merit pay becomes part of an employee’s base pay, but a bonus does not.
B) A bonus becomes part of an employee’s base pay, but merit pay does not.
C) Merit pay is linked to individual performance, while a bonus is not.
D) A bonus is linked to individual performance, while merit pay is linked to
company performance
48) Which of the following is true of recognition programs?
A) They have a positive impact on performance.
B) They are expensive to administer.
C) They reduce extrinsic motivation.
D) Both A and B.
49) All of the following are advantages of team incentives except that:
A) team planning is reinforced.
B) worker’s pay may not be proportional to his or her efforts.
C) jealousy is reduced.
D) collaboration is encouraged.
50) What type of profit-sharing plan involves the awarded shares of stock as part
of the incentive plan?
A) cash plan
B) Lincoln incentive system
C) Jefferson incentive system
D) ESOP
51) Which profit-sharing plan provides tax advantages for the employer at fair
market value?
A) cash plan
B) Jefferson incentive system
C) deferred profit-sharing plan
D) ESOP
52) Companywide plans in which a corporation contributes shares of its own
stock or cash to be used to purchase company stock to a trust established to
purchase shares of the firm’s stock for employees are called ________.
A) cash plans
B) Jefferson incentive systems
C) deferred profit-sharing plans
D) employee stock ownership plans
53) Which plan uses a trust to hold stock in individual employee accounts and
distributes it to employees upon retirement?
A) cash plan
B) Jefferson incentive system
C) deferred profit-sharing plan
D) employee stock ownership plan
54) The Scanlon plan includes all of the following features except:
A) improving productivity.
B) an emphasis on individual achievement.
C) sharing.
D) financial gains.
55) Which incentive plan is based on a philosophy that managers and employees
must cooperate together?
A) cash plan
B) Scanlon plan
C) deferred profit-sharing plan
D) employee stock ownership plan
56) A(n) ________ plan is an incentive plan that engages many or all employees
in a common effort to achieve a company’s productivity objectives with any
resulting cost-savings gains shared among employees and the company.
A) Scanlon
B) Lincoln incentive
C) Gainsharing
D) ESOP
57) Gainsharing is an incentive plan that ________.
A) uses a trust to hold stock in individual employee accounts and distributes it to
employees upon retirement
B) engages many or all employees in a common effort to achieve a company’s
productivity objectives with any resulting cost-savings gains shared among
employees and the company
C) contributes company shares of its own stock or cash to be used to purchase
company stock to a trust established to purchase shares of the firm’s stock for
employees
D) involves the firm simply distributing a percentage of profits as profit shares to
employees at regular intervals
58) The indirect financial and nonfinancial payments employees receive for
continuing employment with the company are called ________.
A) reimbursement
B) employee compensation
C) salary
D) benefits
59) Nonfinancial payments like health and life insurance, pensions, time off with
pay, and child care facilities are examples of ________.
A) variable pay
B) competency-based incentives
C) benefits
D) salary
60) Approximately what percentage of employers offer some health insurance
coverage?
A) 25%
B) 40%
C) 60%
D) 99%
61) Which of the following benefits is required by federal or state law?
A) disability insurance
B) workers’ compensation
C) paid time off for vacations and holidays
D) pensions
62) Which regulation covers pension plans and requires employers to have written
plan documents that establish terms such as eligibility and participation?
A) Employee Retirement Income Security Act (ERISA)
B) Economic Growth and Tax Relief Conciliation Act
C) Newborn Mother’s Protection Act
D) Health Insurance Portability and Accountability Act
63) Which regulation ensures that an employer must grant an employee up to 12
weeks of leave in a twelve-month period for the birth or care of a newborn child,
placement of a child for adoption, to care for a spouse, child, or parent with a
serious health condition, or to care for the employee‘s own serious health
condition?
A) Family and Medical Leave Act
B) Economic Growth and Tax Relief Conciliation Act
C) Job Creation and Worker Assistance Act
D) Newborn Mother’s Protection Act
E) Health Insurance Portability and Accountability Act
64) The Family and Medical Leave Act ________.
A) provides guidelines regarding what rates of return employers should use in
computing their pension plan values
B) ensures that an employer must grant an employee up to 12 weeks of leave in a
twelve-month period for the birth or care of a newborn child, placement of a child
for adoption, to care for a spouse, child, or parent with a serious health condition,
or to care for the employee’s own serious health condition
C) prohibits an employer’s health plan from using incentives to encourage
employees to leave the hospital after childbirth after less than the legislatively-
determined minimum stay
D) sets minimum requirements for protecting individuals’ health-care data
accessibility and confidentiality
65) How many weeks may an employee take as unpaid leave under the Family
and Medical Leave Act?
A) two
B) four
C) six
D) twelve
66) Which of the following is false regarding the application of the Family and
Medical Leave Act?
A) Up to 12 weeks must be granted in a twelve-month period.
B) To be eligible, an employee must have worked for the employer for at least
twelve months.
C) No advance notice is necessary.
D) To be eligible, an employee must have worked for a minimum of 1250 hours
in the past twelve months.
67) Holidays, vacations, jury duty, funeral leave, military duty, personal days,
sick leave, sabbatical leave, and maternity leave are classified as ________
benefits.
A) supplemental pay
B) insurance
C) services
D) premium
