Chapter 6 (Compensation and Benefits)

Question 1

What is total rewards?

Answer 1

A package that includes all forms of rewards, which are generally categorized into to components: monetary and non-monetary compensation

Question 2

What is included in monetary rewards?

Answer 2

All forms of cash compensation, 401(k) matching, medical care premiums, pension plans, PTO, stock options, incentive plants, and employee stock ownership programs

Question 3

What is an intrinsic rewards?

Answer 3

One that encourages individual employee self esteem, such as satisfaction from challenging and exciting assignments.

Question 4

What is an extrinsic reward?

Answer 4

One is which esteem is achieved from others, such as working with a talented team of peers.

Question 5

What is included in non-monetary rewards?

Answer 5

Relationships with supervisors, recognition of accomplishments, development and career opportunities, teamwork, work-life balance benefits such as telecommuting, on-site childcare and flex time

Question 6

What is direct compensation?

Answer 6

Payments made to employees that are associated with wages and salaries (includes base pay, variable compensation, and pay for performance)

Question 7

What is indirect compensation?

Answer 7

Consists of any employee payments not associated with wages and salaries (includes fringe benefits such as vacation, sick, and holiday pay; insurance premiums paid on behalf of employees; leaves of absence; 401 (K); government-mandated benefits such as Social Security or FMLA)

Question 8

What is procedural justice?

Answer 8

how fair the internal process and procedures are in determining pay scales are perceived to be

Question 9

What is distributive justice?

Answer 9

Relates to how closely pay reflects actual performance

Question 10

What is pay openness?

Answer 10

Refers to the degree of secrecy that exists around pay issues (it’s illegal to prohibit employees from disclosing their pay rates)

Question 11

What is performance-based philosophy?

Answer 11

Organizations that use compensation to shape a key component of the corporate culture, employee behavior,, by rewarding performance or behavior

Question 12

What is line of sight?

Answer 12

Occurs when employees know that their performance, good or bad, impacts their pay

Question 13

What is entitlement philosophy?

Answer 13

Rewards seniority or employee longevity

Question 14

What is compensation strategy?

Answer 14

Used to determine how the resources available for rewards programs can be used to best advantage in attracting, motivating and retaining employees.

Question 15

What is fiduciary responsibility?

Answer 15

Requires confidence and trust and is one of the highest standards of care imposed on the individual acting on behalf of another individual or entity.

Question 16

How can fiduciary responsibility be breached?

Answer 16

Acting in your own self-interest; Conflicting duties, profiting from your HR role

Question 17

What external factors must an organization be aware of when developing programs and administering compensation?

Answer 17

Economics, the labor market, competition in the product market, and other pressures such as those related to tax and accounting requirements and government legislation and regulations.

Question 18

What is a labor market?

Answer 18

Made up of any sources from which an organization recruits new employees

Question 19

What is the Davis-Bacon Act of 1931?

Answer 19

First Federal legislation to regulate minimum wages; required construction contractors and their subcontractors (with federal contracts of $2000 or more) pay at least the prevailing wage for the local area

Question 20

What is the Walsh-Healy Public Contracts Act of 1936?

Answer 20

Requires government contractors with contracts exceeding $10,000 to pay their employees the prevailing wage for their local area as established by the Secretary of Labor

Question 21

What is the Service Contract Act (SCA) of 1965?

Answer 21

Requires any federal service contractor with a contract exceeding $2,500 to pay it’s employees the prevailing wage and fringe benefits for the geographic area in which it operates, provide safe and sanitary working conditions, and notify employees of the minimum allowable wage for each job classification. The SCA expands the requirements of the Davis-Bacon and Walsh-Healey Acts to contractors providing services to the federal govenment

Question 22

The FLSA (of 1938) established requirements in what five areas?

Answer 22

1. It introduced a minimum wage for all covered employees
2. It identified circumstance in which OT payments are required and set the OT rate at 1 1/2 times the regular hourly wage.
3. It identified the criteria for determining what jobs are exempt from FLSA requirements
4. It placed limitations on working conditions for children to protect them from exploitation
5. It identified the information employers must keep about employees and related payroll transactions

Question 23

What is the current federal minimum wage?

Answer 23

$8.75

Question 24

The FLSA defines types of compensable time to include:

Answer 24

Waiting time, On-call time, rest and meal periods, Lectures, meetings and training programs, travel time

Question 25

What is the FLSA definition of engaged to wait?

Answer 25

Time spent by nonexempt employees waiting for work (they have been asked to wait for an assignment)

Question 26

What is the FLSA definition of waiting to be engaged?

Answer 26

Time that is spent by an employee who is waiting for work to start

Question 27

The DOL defines the following permissible deductions from exempt employees that don’t affect exemption status:

Answer 27

• Absence for one or more full days for personal reasons other than sickness or disability
• Absence for one or more full days because of sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice
• To offset amounts employees receive for jury or witness fees or military pay
• For good-faith penalties imposed for safety rule infractions of major significance
• Good faith, unpaid disciplinary suspensions of one or more full days for infractions of workplace conduct rules
• During the initial or terminal weeks of employment
• Unpaid leave under FMLA

Question 28

The DOL looks at the following to determine whether employees have an actual practice of improper deductions from exempt pay

Answer 28

• The number of improper deductions compared to the number of employee infractions warranting deductions
• The time period during which the improper deductions were made
• The number of employees affected
• The geographic location of the affected employees and managers responsible for the deductions

Question 29

The DOL provides a safe-harbor provision for payroll errors that could affect exemption if all of the following are met:

Answer 29

• Clearly communicated policy prohibiting improper deductions that includes a complaint mechanism for employees to use
• The employer reimburses employees for improper deductions
• The employer makes a good faith commitment to comply in the future