HRCI Compensation and Benefits 1 — Questions and Answers
Question 1: What does the Fair Labor Standards Act (FLSA) establish regarding overtime pay?
- Non-exempt employees must receive 1.5× their regular rate for hours over 40 per workweek (Correct answer)
- All employees must be paid overtime for hours over 8 per day
- Exempt employees must receive overtime after 50 hours per week
- Overtime is voluntary and need not be compensated
Correct answer: Non-exempt employees must receive 1.5× their regular rate for hours over 40 per workweek
The FLSA requires covered employers to pay non-exempt employees at least 1.5 times their regular rate of pay for all hours worked beyond 40 in a single workweek.
Question 2: What is a 'salary band' (also called a pay grade or range)?
- A defined minimum and maximum compensation range for a job or job group (Correct answer)
- A fixed salary that cannot change
- A government-mandated pay scale for federal contractors
- A union-negotiated wage table
Correct answer: A defined minimum and maximum compensation range for a job or job group
A salary band establishes the minimum, midpoint, and maximum pay for a job level, providing flexibility while ensuring internal equity.
Question 3: What is the concept of 'total rewards' in compensation strategy?
- The combination of base pay, incentives, benefits, work-life programs, and development opportunities (Correct answer)
- Only the employee's gross wages before deductions
- The value of stock options granted annually
- A retirement plan contribution matching formula
Correct answer: The combination of base pay, incentives, benefits, work-life programs, and development opportunities
Total rewards encompasses everything of value the employer provides, including monetary compensation, health benefits, flexible work, recognition, and career development.
Question 4: Which law governs the administration of private-sector employee benefit plans including health and retirement?
- Employee Retirement Income Security Act (ERISA) (Correct answer)
- COBRA
- HIPAA
- ACA
Correct answer: Employee Retirement Income Security Act (ERISA)
ERISA sets minimum standards for most voluntarily established private-sector pension and welfare benefit plans, including fiduciary duties and plan reporting requirements.
Question 5: What is 'pay equity' analysis designed to identify?
- Unjustified pay disparities between employees in similar roles based on gender, race, or other protected characteristics (Correct answer)
- The difference between a company's highest and lowest salaries
- Whether the company's pay is competitive with market benchmarks
- The percentage of payroll spent on incentive compensation
Correct answer: Unjustified pay disparities between employees in similar roles based on gender, race, or other protected characteristics
Pay equity analysis statistically controls for legitimate factors (experience, performance, tenure) to detect unexplained pay gaps linked to protected characteristics.
Question 6: What is a 'defined contribution' retirement plan?
- A plan where the employer and/or employee contributes a set amount and investment risk is borne by the employee (Correct answer)
- A plan where the employer guarantees a fixed monthly benefit at retirement
- A plan funded entirely by the government
- A plan that only covers executive employees
Correct answer: A plan where the employer and/or employee contributes a set amount and investment risk is borne by the employee
In a defined contribution plan (e.g., 401(k)), the contribution amounts are specified but the eventual benefit depends on investment performance, shifting risk to the employee.
HRCI Compensation and Benefits 1
What does the Fair Labor Standards Act (FLSA) establish regarding overtime pay?