Total Rewards and Compensation Flashcards
7 cards from real CPHR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Total Rewards and Compensation flashcards as text
Which of the following best describes a defined benefit (DB) pension plan?
Answer: The employer promises a specific monthly benefit at retirement based on a formula using years of service and salary
In a DB plan, the employer guarantees a retirement benefit calculated by a formula (e.g., final salary × years of service × a multiplier), bearing the investment risk.
Executive perquisites (perks) such as company cars, club memberships, and financial planning assistance are PRIMARILY designed to:
Answer: Attract and retain senior leaders while providing status-oriented benefits
Executive perks serve as additional compensation to attract and retain top leadership talent, often signaling status and providing lifestyle conveniences.
Under the Equal Pay Act of 1963, pay differences between men and women performing substantially equal work are permissible when based on:
Answer: A seniority system, merit system, quantity/quality of production, or any factor other than sex
The Equal Pay Act permits pay differences only when they result from a bona fide seniority system, merit system, incentive system tied to output, or a factor other than sex.
A company wants to reward employees for achieving specific short-term business targets during a fiscal year. Which plan structure is MOST appropriate?
Answer: Annual incentive plan (AIP) / bonus plan
An annual incentive plan links bonuses to the achievement of predefined performance metrics over a one-year cycle.
Which concept in total rewards theory holds that employees evaluate their pay fairness by comparing their input-to-outcome ratio with that of a relevant peer?
Answer: Equity theory
Equity theory (Adams) posits that employees assess pay fairness by comparing their own input/outcome ratio to a referent other's ratio.
When an employer provides group-term life insurance coverage above $50,000 to an employee, the cost of excess coverage is treated as:
Answer: Imputed income subject to FICA and income tax
IRS rules require the value of employer-paid group-term life insurance exceeding $50,000 to be included in the employee's taxable wages as imputed income.
A pay structure that sets the same fixed wage for all employees performing a given job, regardless of performance or seniority, is called:
Answer: Flat-rate (single-rate) pay
A flat-rate or single-rate structure assigns one wage to a job classification, commonly used in unionized environments or highly standardized roles.