Human Resources Compensation & Benefits 2 — Questions and Answers
Question 1: What is the purpose of a salary survey in compensation management?
- To audit payroll taxes
- To gather market data on competitive pay rates for benchmarking job positions (Correct answer)
- To calculate employee raises
- To determine executive bonuses
Correct answer: To gather market data on competitive pay rates for benchmarking job positions
Salary surveys collect pay data from multiple employers to help organizations benchmark their compensation against the market.
Question 2: Under ERISA (Employee Retirement Income Security Act), what are plan fiduciaries required to do?
- Guarantee investment returns
- Act in the best interest of plan participants and beneficiaries (Correct answer)
- Provide unlimited investment options
- Eliminate plan fees
Correct answer: Act in the best interest of plan participants and beneficiaries
ERISA requires plan fiduciaries to act solely in the interest of participants and beneficiaries when managing retirement and benefit plans.
Question 3: What is a 'defined contribution' retirement plan?
- A plan where the employer guarantees a specific monthly retirement income
- A plan where employer and/or employee contribute fixed amounts and the retirement benefit depends on investment performance (Correct answer)
- A government-mandated pension plan
- A plan with no employee contribution
Correct answer: A plan where employer and/or employee contribute fixed amounts and the retirement benefit depends on investment performance
In a defined contribution plan (like a 401(k)), contributions are fixed but the ultimate benefit depends on investment returns.
Question 4: What is 'pay equity' analysis?
- Ensuring all employees receive the same salary
- Evaluating whether employees receive equal pay for equal work regardless of protected characteristics (Correct answer)
- Setting executive pay ratios
- Calculating overtime wages
Correct answer: Evaluating whether employees receive equal pay for equal work regardless of protected characteristics
Pay equity analysis identifies and corrects unjustified pay disparities between employees in similar roles based on gender, race, or other protected characteristics.
Question 5: What does 'vesting' mean in the context of employer retirement contributions?
- The process of enrolling in a retirement plan
- The period over which employees earn ownership of employer-contributed retirement funds (Correct answer)
- The investment selection process
- The retirement plan withdrawal process
Correct answer: The period over which employees earn ownership of employer-contributed retirement funds
Vesting schedules determine when employees gain full ownership of employer contributions to their retirement account.
Question 6: Under the ACA, what employer mandate applies to companies with 50+ full-time equivalent employees?
- Provide a minimum wage above federal standards
- Offer affordable minimum essential health coverage or face potential penalties (Correct answer)
- Match 401(k) contributions at 6%
- Provide paid parental leave
Correct answer: Offer affordable minimum essential health coverage or face potential penalties
The ACA's employer shared responsibility provision requires applicable large employers to offer affordable health coverage or pay an employer shared responsibility payment.
Human Resources Compensation & Benefits 2
What is the purpose of a salary survey in compensation management?