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Compensation and Total Rewards Flashcards

6 cards from real CBP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which federal law requires employers to pay employees at least $7.25 per hour as of 2024 (federal minimum wage)?

    Answer: Fair Labor Standards Act (FLSA)

    The Fair Labor Standards Act (FLSA) establishes the federal minimum wage, currently $7.25 per hour, though many states set higher minimums that employers must follow.

  2. What is a Restricted Stock Unit (RSU) in executive compensation?

    Answer: A promise to deliver company shares upon satisfaction of vesting conditions

    RSUs are a promise by the employer to grant shares of company stock (or cash equivalent) to an employee after specified vesting conditions (usually time or performance) are met.

  3. What does a 'total compensation statement' communicate to employees?

    Answer: The full monetary value of all compensation and benefits components provided by the employer

    Total compensation statements help employees understand the full value of their pay package by quantifying base pay, bonuses, benefits, retirement contributions, and other perquisites.

  4. Pay equity analysis helps employers identify and address what type of compensation problem?

    Answer: Unjustified pay disparities based on gender, race, or other protected characteristics

    Pay equity analysis uses statistical methods to identify unexplained pay gaps between employees of different genders, races, or other protected groups doing comparable work.

  5. Which type of pay increase is based on movement in the Consumer Price Index and is designed to maintain purchasing power?

    Answer: Cost-of-living adjustment (COLA)

    Cost-of-living adjustments (COLAs) are pay increases tied to inflation indices like the CPI to help employees maintain their real purchasing power as prices rise.

  6. What is 'pay compression' in compensation management?

    Answer: A situation where pay differences between levels or tenure groups are very small or non-existent

    Pay compression occurs when the pay differential between employees at different experience levels or job grades becomes very small, often because new hire salaries rise to meet market rates faster than incumbent pay increases.