Chapter 8: Employee Benefits
1. Which of the following workers can claim benefits under the unemployment insurance
system?
a. John was fired from his job because he was involved in a financial scam.
b. Mary lost her job because the employer shut down the plant in which she was working.
c. Ted was fired from his job because of his improper behavior with his co-workers.
d. Samantha resigned from her job because she found it boring.
2. The Social Security system provides supplemental income to ________.
a. those who have never worked because of disabilities
b. those employees who earn less than $100 per week
c. unskilled laborers
d. retired workers
3. Which of the following types of benefits is designed to protect employees and their families
against permanent loss of income and high medical bills because of accidental injury or
illness on the job?
a. pension
b. employee stock ownership plan
c. worker’s compensation
d. unemployment insurance
4. A worker’s compensation program comes into play when ________.
a. an employee requires treatment for alcohol or drug abuse
b. employees lose their jobs when a plant shuts down
c. an employee retires from a job paying an hourly wage
d. an employee is injured or ill on the job
5. The worker’s compensation benefit is designed to ________.
a. provide supplemental income to retired workers
b. share company profits with the workers on a monthly basis
c. provide assistance to employees injured on the job
d. provide relocation compensation to newly hired workers
6. What is a pension?
a. compensation given to a worker who has been injured on the job
b. a payment given to employees in the form of company shares
c. a performance-based incentive given to workers on a monthly basis
d. a guaranteed monthly payment to a former employee during retirement
7. Which of the following benefits provided by an employer is most likely to motivate senior
employees to remain with the organization in order to increase their retirement income?
a. severance pay
b. pension plans
c. health insurance
d. worker’s compensation
8. Which of the following statements is TRUE of a defined benefit plan?
a. In a defined benefit plan, the employer makes a specified dollar contribution to an account in
a managed fund.
b. In a defined benefit plan, the amount of money contributed by an employer is twice the
amount of money contributed by an employee.
c. Under a defined benefit plan, the amount of retirement benefit is fixed and the employee
knows the amount.
d. Under a defined benefit plan, an employer distributes company shares to the employees
instead of the retirement benefits.
9. Under a(n) ________, the employer makes a specified dollar payment to an account in a
managed fund, and the retirement benefit depends on the investment gains or losses by the
fund.
a. tax-deferred 401(k) plan
b. defined benefit plan
c. employee stock ownership plan
d. defined contribution plan
10. A(n) ________ plan is a type of defined-benefit pension plan under which an employer
credits a participant’s account with a set percentage of his or her yearly compensation plus
interest. The investment performance of the fund does not affect the final benefits to be
received by the participant upon retirement.
a. employee stock ownership
b. cash balance
c. tax-deferred 401(k)
d. fixed contribution
11. Which of the following statements is TRUE of cash balance plans?
a. The benefit grows slowly and provides an unpredictable benefit.
b. The employer contributes a fixed percentage of workers’ income to a hypothetical account
and guarantees it will grow at a fixed rate.
c. The use of cash balance plans increases the employer’s pension liability and employers
therefore avoid these plans.
d. Under this plan, an employer provides health insurance to all the family members of the
workers.
12. The Employee Retirement Income Security Act (ERISA) is also known as the ________ Act.
a. Walsh-Healey
b. Davis-Bacon
c. Retirement Equity
d. Pension Reform
13. As per the Employee Retirement Income Security Act (ERISA), employers are required to
count toward vesting all service from age ________ and to count toward earned benefits all
earnings from age ________.
a. 18; 21
b. 21; 24
c. 24; 25
d. 25; 27
14. The Pension Benefit Guarantee Corporation (PBGC) was established within the Department
of Labor to ________.
a. provide guaranteed pensions to union members during a union strike
b. conduct employee wellness programs in those companies that have labor unions
c. encourage voluntary employee pension continuance when changing employment
d. provide monetary compensation to a worker who has been injured on the job
15. The conveying of employees’ nonforfeitable rights to share in a pension fund is termed
________.
a. conditioning
b. vesting
c. arbitrating
d. qualifying
16. A qualified plan generally refers to a plan that meets standards set by the ________.
a. Office of the Comptroller of the Currency
b. Bureau of International Labor Affairs
c. Office of Banking and Securities
d. Internal Revenue Service
17. Generally, in the case of vesting, nonforfeitable rights accrue based on the ________.
a. performance of the employee
b. employee’s number of years of service
c. amount of basic salary of the employee
d. age of the employee
18. Employers seek to qualify their pension plans under the IRS provisions because ________.
a. once a pension plan is qualified, the employees begin to pay taxes for the amount of money
invested in the pension plan by them as well as the employer
b. once a pension plan is qualified, the Pension Benefit Guarantee Corporation begins
contributing to the pension plan in place of the employer
c. by qualifying the pension plan, an employer can deduct pension contributions made to the
qualified plan as business expenses for tax purposes
d. by qualifying the pension plan, an employer can prevent union members from receiving the
benefits of the pension plan
19. In a contributory plan, ________.
a. the employer pays a portion of the funding and the Pension Benefit Guarantee Corporation
pays the other portion
b. the employee pays a portion of the funding and the Pension Benefit Guarantee Corporation
pays the other portion
c. the Pension Benefit Guarantee Corporation pays a portion of the funding and the Bureau of
the Public Debt pays the other portion
d. the employer pays a portion of the funding and the employee pays the other portion
20. A wage employment guarantee refers to a contract negotiation that assures employees
________.
a. a fixed amount of monthly payment during a union strike or a management lockout
b. a minimum amount of work or compensation during a specified amount of time
c. a fixed amount of monthly payment after their retirement
d. monitory assistance in the event of an accidental injury on the job
21. Under which of the following conditions does an employee become eligible for supplemental
unemployment benefits?
a. After having worked for eight months in a company, Patrick lost his job due to his poor work
performance.
b. John was fired from his job because he was involved in a financial fraud in his company.
c. Sally is a union member and is actively participating in a strike.
d. After having worked for three years in a company, Samantha lost her job because the
employer decided to shut down the plant.
22. Which of the following employee benefits involves an employer contributing a fixed amount
of tax-deferred money into an account for the employee to use for medical expenses?
a. supplemental unemployment benefits
b. wellness programs
c. health reimbursement arrangement
d. shift differentials
23. Which of the following statements is TRUE of a Health Savings Account (HSA)?
a. Both employees and employers make contributions to an HSA.
b. An employee can use the money saved in an HSA only in the event of an accident on the job.
c. The contributions made to an HSA are taxable.
d. An HSA cannot be transferred from one employer to the other.
24. A ________ Association is an organization for members who have an employment-related
common bond, or coverage under one or more collective bargaining agreements, or
membership in a labor union, to pay life, sick, accident, and similar benefits.
a. Negotiated Benefits Distribution
b. Voluntary Employees Beneficiary
c. Central Benefits
d. Rapid Employee Assistance
25. Employee assistance programs are designed to provide ________.
a. monetary assistance to those employees who have been injured on the job
b. guaranteed monthly payments to retired employees
c. income to those employees who have been permanently terminated from the job through no
fault of their own
d. assistance to employees in resolving personal problems, such as stress
26. Which of the following laws provides for the continuation of medical and dental insurance
for employees, spouses, and dependents in the event of termination of employment, death of
the employee, divorce, legal separation, or reduction of hours, which results in the loss of
group health plan eligibility?
a. Regulatory Flexibility Act
b. Economic Recovery Tax Act
c. Balanced Budget and Emergency Deficit Control Act
d. Consolidated Omnibus Budget Reconciliation Act
27. Which of the following vacation plans provides an increase in the number of weeks of
vacation according to length of service?
a. graduated plan
b. uniform plan
c. ratio-to-work plan
d. funded plan
28. The graduated plan ________.
a. provides all workers with the same length of vacation
b. relates the length of vacation to the number of hours or days the employee works during a
given time period
c. provides an increase in the number of weeks of vacation according to length of service
d. requires employers to contribute to a vacation fund from which employees may draw
vacation pay during periods when no work is available
29. The ________ vacation plan provides an increase in the number of weeks of vacation
according to length of service.
a. uniform
b. ratio-to-work
c. funded
d. graduated
30. Which of the following vacation plans provides all workers with the same length of vacation?
a. graduated plan
b. ratio-to-work plan
c. uniform plan
d. funded plan
31. The ________ plan relates the length of vacation to the number of hours or days the
employee works during a given time period, usually the year preceding the allocation of
vacation.
a. funded
b. ratio-to-work
c. graduated
d. uniform
32. The uniform vacation plan ________.
a. requires employers to contribute to a vacation fund from which employees may draw
vacation pay during periods when no work is available
b. provides an increase in the number of weeks of vacation according to length of service
c. relates the length of vacation to the number of hours or days the employee works during a
given time period
d. provides all workers with the same length of vacation
33. The payment of overtime on overtime, which can occur if the same hours of work qualify for
both daily and weekly overtime payment is known as ________.
a. shift differential
b. floating holiday
c. pyramiding
d. reporting pay
34. Which of the following terms refers to wages that exceed the standard or regular pay rate and
are given to employees for work performed under undesirable circumstances, such as
overtime hours, weekend work, holiday work, or dangerous and hazardous circumstances?
a. severance pay
b. worker’s compensation
c. guaranteed wages
d. premium pay
35. Call-in pay is ________.
a. the minimum payment guaranteed to employees who report for work even if work is not
available
b. a supplemental payment given to employees asked to report to work before they were
scheduled
c. the payment of overtime on top of another overtime rate that occurs if the same hours of work
qualify for both daily and weekly overtime payment
d. the payment given to the workers for working under undesirable circumstances, such as
weekend work
True/False
36. To receive benefits, an unemployment insurance claimant must have worked for a certain
period of time and must register with the state bureau of employment.
37. A worker who has been discharged from work because of his or her misconduct can claim
unemployment insurance benefits.
38. To become eligible for retirement benefits in the Social Security system, individuals born
after 1928 must contribute for 60 quarters (15 full years).
39. Under a defined contribution plan, the amount of retirement benefit that would be received by
an employee is fixed and the employee knows the amount.
40. A defined contribution plan is more common in labor contracts than a defined benefit plan.
41. The tax-deferred 401(k) plan is designed to provide worker’s compensation.
42. Unlike a defined benefit plan, the cash balance plan is maintained on an individual account
basis, much like a defined contribution plan.
43. Cash balance plans are usually more attractive to employees than the other traditional pension
plans and typically increase their retirement benefits by 20 percent to 40 percent in
comparison with their former plan.
44. Employee stock ownership plans can complement, but not substitute, retirement benefit
plans.
45. In a contributory pension plan, the employer pays all the administrative and funding costs.
46. ERISA allows a pension plan to suspend pension payments of a retired member who reenters
the job market.
47. Wage employment guarantee refers to a contract negotiation that assures employees a fixed
amount of monthly payment after their retirement.
48. Health insurance benefits are rarely included in any collective bargaining agreements.
49. The preferred provider organizations included in health insurance benefits provide specific
services at a discount in exchange for a guaranteed number of patients.
50. The health maintenance organizations included in health insurance benefits provide specific
services at a discount in exchange for a monthly charge per family.
51. A Health Reimbursement account is a tax-exempt trust administered by a bank, insurance
company, or other IRS-approved organization.
52. A Health Savings Account cannot be transferred from one employer to another.
53. The employer contributions to a Voluntary Employees Beneficiary Association are taxable.
54. If the benefits obtained from a Voluntary Employees Beneficiary Association are transferred
to a family member then the family member has to pay the appropriate amount of income tax
for the benefits.
55. Management is required to provide continued health care coverage to striking employees and
their families at the employees’ expense.
56. A graduated vacation plan provides an increase in the number of weeks of vacation according
to length of service.
57. The uniform vacation plan relates the length of vacation to the number of hours or days the
employee works during a given time period.
58. The funded plan requires employers to contribute to a vacation fund from which employees
may draw vacation pay during periods when no work is available.
59. The uniform vacation plan is most often found in the transportation industry.
60. The ratio-to-work plan is most often found in manufacturing firms.
61. The guaranteed monthly income provided to a retired employee is known as the premium
pay.
62. The pyramiding of overtime pay is prohibited in most contracts.
63. Call-in pay is the minimum payment guaranteed to employees who report for work even if
work is not available.
64. A supplemental payment given to employees called back to work before they were scheduled
is usually termed reporting pay.
65. According to the National Labor Relations Board (NLRB), child care is not a mandatory
subject for collective bargaining.