aPHR Compensation and Benefits 3 — Questions and Answers
Question 1: Which pay structure consolidates many narrow pay grades into a few wide salary bands?
- Step-rate system
- Broadbanding (Correct answer)
- Pay grade compression
- Red-circle rates
Correct answer: Broadbanding
Broadbanding consolidates many pay grades into fewer, wider bands, giving managers more flexibility in pay decisions.
Question 2: A newly promoted employee's salary falls above the maximum of the new pay grade. What is this situation called?
- Green-circle rate
- Red-circle rate (Correct answer)
- Pay compression
- Range penetration
Correct answer: Red-circle rate
A red-circle rate occurs when an employee's pay exceeds the maximum of their pay grade, often resulting from a promotion or grade restructuring.
Question 3: Which Social Security tax is split equally between the employer and employee at 6.2% each on covered wages?
- Medicare tax
- FUTA tax
- OASDI tax (Correct answer)
- SUTA tax
Correct answer: OASDI tax
The Old-Age, Survivors, and Disability Insurance (OASDI) tax funds Social Security benefits and is split 6.2% each between employer and employee.
Question 4: What type of benefit plan allows employees to choose from a menu of benefits up to a set dollar amount?
- Defined benefit plan
- Cafeteria plan (Correct answer)
- Self-insured plan
- Profit-sharing plan
Correct answer: Cafeteria plan
A cafeteria plan (Section 125 plan) lets employees select benefits from various options, similar to choosing items from a cafeteria menu.
Question 5: An organization surveys what competitors pay for similar roles to ensure its salaries remain competitive. What is this process called?
- Job evaluation
- Salary benchmarking (Correct answer)
- Pay compression analysis
- Pay equity audit
Correct answer: Salary benchmarking
Salary benchmarking (market pricing) compares an organization's pay rates to external market data for similar jobs.
Question 6: Which method of job evaluation ranks all jobs from highest to lowest based on overall value without using predetermined factors?
- Point factor method
- Classification method
- Whole job ranking (Correct answer)
- Factor comparison
Correct answer: Whole job ranking
Whole job ranking is the simplest job evaluation method, ranking jobs holistically from most to least valuable without analyzing specific factors.
Question 7: Which regulation requires most private employers to fund pension benefits and sets minimum vesting standards?
- COBRA
- HIPAA
- ERISA (Correct answer)
- ACA
Correct answer: ERISA
ERISA (Employee Retirement Income Security Act) sets minimum standards for pension plans in private industry, including funding and vesting requirements.
aPHR Compensation and Benefits 3
Which pay structure consolidates many narrow pay grades into a few wide salary bands?