Compensation & Benefits Administration Flashcards
7 cards from real CPC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Compensation & Benefits Administration flashcards as text
A company uses a broadbanding compensation structure instead of traditional salary grades. What is the main advantage of this approach?
Answer: It provides greater flexibility to recognize lateral career movement and skill growth
Broadbanding consolidates many narrow pay grades into fewer, wider bands, giving managers more flexibility to recognize employees for lateral moves and skill development.
Under ERISA, what is the maximum vesting period allowed for a cliff vesting schedule in a 401(k) employer match?
Answer: 3 years
ERISA requires that cliff vesting for employer 401(k) matching contributions occur no later than 3 years of service.
Which compensation component is specifically designed to retain key executives by paying out a large lump sum only if they remain employed through a specified date or event?
Answer: Retention bonus / stay bonus
A retention (stay) bonus is specifically structured to reward employees financially for remaining with the company through a defined period or critical event such as a merger.
A staffing firm's client asks about co-employment risks. Which benefit-related practice most commonly creates co-employer liability exposure?
Answer: Allowing contract workers to participate in the client's employee benefits plans
Allowing contract workers to participate in a client's benefits plans is a strong indicator of co-employment because it blurs the distinction between the staffing firm's employees and the client's employees.
What does a 'compa-ratio' of 0.85 indicate about an employee's pay?
Answer: The employee is paid 15% below the salary range midpoint
A compa-ratio below 1.0 means the employee's salary is below the midpoint; 0.85 means they are paid at 85% of the midpoint, or 15% below it.
Which federal law requires employers to offer continued health insurance coverage to employees and their dependents after qualifying events such as job loss?
Answer: COBRA
COBRA (Consolidated Omnibus Budget Reconciliation Act) requires group health plans to offer continuation coverage to employees and dependents who lose coverage due to qualifying events.
An employer offers a Flexible Spending Account (FSA) for dependent care. What is the primary tax advantage of this benefit?
Answer: Employee contributions reduce taxable income and are not subject to FICA taxes
Dependent care FSA contributions are made pre-tax, reducing both federal income tax and FICA (Social Security and Medicare) obligations for both employee and employer.