aPHR Compensation and Benefits 5 — Questions and Answers
Question 1: Which pay philosophy positions an organization's compensation at the 75th percentile of the market?
- Lead strategy (Correct answer)
- Lag strategy
- Match strategy
- Hybrid strategy
Correct answer: Lead strategy
A lead strategy sets pay above the market median to attract top talent, while a lag strategy pays below market and a match strategy aligns with the median.
Question 2: What is the term for the range between the minimum and maximum of a pay grade?
- Pay spread (Correct answer)
- Compa-ratio
- Range penetration
- Pay band
Correct answer: Pay spread
The pay spread (or range spread) is the percentage difference between the minimum and maximum of a pay grade, typically ranging from 50% to 150%.
Question 3: An employee's salary is $55,000, and the midpoint of their pay grade is $50,000. What is the compa-ratio?
- 0.91
- 1.10 (Correct answer)
- 1.05
- 0.95
Correct answer: 1.10
Compa-ratio = employee salary ÷ pay grade midpoint; $55,000 ÷ $50,000 = 1.10, meaning the employee is paid 10% above midpoint.
Question 4: Which law established the first federal minimum wage and mandated overtime pay at 1.5 times the regular rate?
- Davis-Bacon Act
- Fair Labor Standards Act (FLSA) (Correct answer)
- Walsh-Healey Act
- Service Contract Act
Correct answer: Fair Labor Standards Act (FLSA)
The FLSA of 1938 established the federal minimum wage, overtime pay standards, recordkeeping, and child labor laws.
Question 5: Under COBRA, how long may a qualified beneficiary typically continue group health coverage after a qualifying event such as termination of employment?
- 6 months
- 12 months
- 18 months (Correct answer)
- 36 months
Correct answer: 18 months
COBRA generally allows qualified beneficiaries to continue group health coverage for up to 18 months after a qualifying event like job loss.
Question 6: Which gain-sharing plan rewards employees based on improvements in labor cost ratios compared to historical baselines?
- Scanlon Plan (Correct answer)
- ESOP
- Profit-sharing
- Phantom equity
Correct answer: Scanlon Plan
The Scanlon Plan is a gain-sharing program that compares labor costs to sales value of production, sharing savings with employees when the ratio improves.
Question 7: Which situation would most likely trigger an employer's obligation to provide COBRA continuation coverage?
- An employee voluntarily reduces hours below the benefit eligibility threshold (Correct answer)
- The employer switches health insurance carriers
- An employee receives a promotion
- The employer adds dental coverage to the plan
Correct answer: An employee voluntarily reduces hours below the benefit eligibility threshold
A reduction in hours that causes an employee to lose health coverage eligibility is a qualifying event that triggers COBRA continuation rights.
aPHR Compensation and Benefits 5
Which pay philosophy positions an organization's compensation at the 75th percentile of the market?