Compensation and Benefits Flashcards

What is a 'short-term incentive' (STI) plan?

Answer: A bonus program tied to achieving performance goals within a year or less

STI plans, such as annual bonuses, reward employees for meeting or exceeding performance targets within the current fiscal year.

What is 'broadbanding' in pay structure design?

Answer: Collapsing many narrow pay grades into fewer, wider salary bands

Broadbanding consolidates multiple traditional pay grades into a smaller number of wide bands, providing more flexibility in pay decisions and career movement.

Which benefit is typically excluded from the FLSA's regular rate calculation for overtime purposes?

Answer: Gifts and payments for occasional periods when no work is performed

The FLSA excludes gifts and payments for periods when no work is performed (e.g., vacation pay, holiday pay) from the regular rate used to compute overtime.

What is an 'Employee Stock Purchase Plan (ESPP)'?

Answer: A program allowing employees to purchase company stock at a discounted price

An ESPP lets employees buy company stock at a discount (typically 5–15%) through payroll deductions, aligning employee and shareholder interests.

Under the Equal Pay Act, when can employers pay different wages for equal work?

Answer: When differences are based on seniority, merit, quantity/quality of production, or a factor other than sex

The EPA allows pay differentials for equal work if based on a seniority system, merit system, production-based system, or any factor other than sex.

What does 'pay transparency' mean in modern compensation practice?

Answer: Openly communicating pay ranges, structures, or individual salaries to employees and/or applicants

Pay transparency involves proactively sharing compensation information — ranging from salary bands to individual pay — to build trust and address equity concerns.