PHR Total Rewards and Compensation Questions and Answers

Question 1

A non-exempt, hourly employee works 45 hours in a single workweek at a base rate of $20 per hour. During that week, they also earn a $100 non-discretionary performance bonus. According to the Fair Labor Standards Act (FLSA), what is the employee's approximate total compensation for that week?

Accepted Answer

$1,055.55

Answer

The FLSA requires that non-discretionary bonuses be included when calculating the 'regular rate of pay' for overtime purposes. The calculation is: 1. Total straight-time pay = (45 hours × $20/hr) + $100 bonus = $1,000. 2. Regular rate of pay = $1,000 ÷ 45 hours = $22.22/hr. 3. Overtime premium = 5 hours × ($22.22/hr × 0.5) = $55.55. 4. Total compensation = $1,000 (straight-time) + $55.55 (overtime premium) = $1,055.55.

Question 2

A compensation analyst is reviewing employee pay data and calculates a compa-ratio for each individual. What is the primary purpose of this metric?

Accepted Answer

To compare an employee's salary to the midpoint of their assigned salary range.

Answer

A compa-ratio is a standard compensation metric calculated by dividing an employee's actual salary by the salary range midpoint. A ratio of 100% (or 1.0) indicates the employee is paid at the midpoint. It is a key tool for analyzing how an individual's pay relates to the established pay structure and managing internal equity.

Question 3

An organization is designing its total rewards package. Which of the following is considered a discretionary benefit and is NOT legally mandated for most private employers in the United States?

Accepted Answer

Paid Time Off (PTO) for vacations and holidays.

Answer

While widely offered, Paid Time Off (PTO) is a discretionary benefit, meaning employers are not required by federal law to provide it. In contrast, Social Security/Medicare contributions (FICA), workers' compensation insurance, and FMLA leave (for eligible employers) are all legally mandated benefits.

Question 4

A growing company wants to establish a formal salary structure by determining the internal value of each job. The HR manager plans to use a system that assesses jobs based on specific compensable factors like skill, responsibility, and effort. Which job evaluation method is MOST appropriate?

Accepted Answer

Point-factor method

Answer

The point-factor method is a quantitative job evaluation technique that determines a job's internal worth by assigning points to various compensable factors (e.g., skill, effort, responsibility, working conditions). This systematic approach aligns perfectly with the company's goal of assessing jobs based on specific, defined factors.

Question 5

Which of the following BEST describes a key difference between a gainsharing plan and a profit-sharing plan?

Accepted Answer

Gainsharing payouts are based on operational improvements in a group or department, while profit-sharing payouts are based on overall company profitability.

Answer

The primary distinction lies in the performance metrics used. Gainsharing rewards teams or groups for specific, measurable improvements in operational areas they can control, such as productivity or cost savings. Profit-sharing, conversely, is tied to the broader financial success of the entire organization (i.e., its profits).

PHR Practice Test

PHR Practice Test

PHR Total Rewards and Compensation Questions and Answers