CPHR Total Rewards and Compensation 3 — Questions and Answers
Question 1: Which of the following describes a non-qualified deferred compensation (NQDC) plan?
- A plan subject to ERISA vesting and funding rules
- An arrangement where executives defer income to a future date without ERISA protections (Correct answer)
- A government-sponsored retirement savings account
- A plan available to all employees regardless of income
Correct answer: An arrangement where executives defer income to a future date without ERISA protections
NQDC plans allow executives to defer compensation to a later period but are unsecured promises to pay and do not carry the same ERISA protections as qualified plans.
Question 2: A company implements a gain-sharing program where employees receive bonuses tied to measurable reductions in production costs. Which specific gain-sharing plan is this most consistent with?
- Rucker Plan
- Scanlon Plan
- Improshare Plan (Correct answer)
- Profit-sharing plan
Correct answer: Improshare Plan
Improshare (Improved Productivity through Sharing) bases payouts on measurable improvements in labor productivity and production efficiency.
Question 3: When benchmarking jobs to market data, which factor is MOST critical to ensuring valid salary comparisons?
- Matching job titles exactly
- Matching geographic location only
- Matching job content and scope, not just job title (Correct answer)
- Using only government wage surveys
Correct answer: Matching job content and scope, not just job title
Accurate market pricing requires matching the actual duties, responsibilities, and scope of a job—not just the title—to comparable positions in survey data.
Question 4: Which tax-advantaged account allows employees to save for retirement and also permits penalty-free withdrawals for qualified medical expenses after age 65?
- Flexible Spending Account (FSA)
- Health Reimbursement Arrangement (HRA)
- Health Savings Account (HSA) (Correct answer)
- Dependent Care FSA
Correct answer: Health Savings Account (HSA)
An HSA accumulates tax-free and funds roll over indefinitely; after age 65, withdrawals for any purpose are penalty-free (though non-medical ones are taxable).
Question 5: An organization's pay equity audit reveals that women in comparable roles earn 8% less than men after controlling for experience and tenure. The BEST next step is to:
- Lower men's salaries to close the gap
- Conduct a regression analysis to identify root causes before adjusting pay (Correct answer)
- Immediately raise all women's salaries by 8%
- Attribute the gap to performance differences and take no action
Correct answer: Conduct a regression analysis to identify root causes before adjusting pay
A thorough regression analysis helps isolate legitimate pay drivers from discriminatory factors before remediation decisions are made.
Question 6: Which method of job evaluation ranks positions by comparing whole jobs to each other rather than analyzing compensable factors?
- Point-factor method
- Job classification method
- Whole-job ranking method (Correct answer)
- Factor comparison method
Correct answer: Whole-job ranking method
The whole-job ranking method orders jobs from highest to lowest based on overall perceived value without decomposing them into specific compensable factors.
Question 7: A retroactive pay increase given to employees whose wages were below a newly established minimum pay range is called:
- A cost-of-living adjustment (COLA)
- A green-circle rate correction (Correct answer)
- A red-circle rate freeze
- A merit pay increase
Correct answer: A green-circle rate correction
Green-circle rates occur when an employee's pay falls below the minimum of their pay range, and corrective increases are made to bring pay in line.
CPHR Total Rewards and Compensation 3
Which of the following describes a non-qualified deferred compensation (NQDC) plan?