PHR Total Rewards and Compensation 2

Question 1

Under the FLSA, what is the primary requirement for an employee to qualify for the executive exemption?

Accepted Answer

Earning a salary above the threshold and primarily managing the enterprise or a department

Answer

The executive exemption requires meeting the salary basis/level test plus a duties test centered on managing and directing the work of others.

Question 2

A pay structure with a single broad range covering many job levels is known as what?

Accepted Answer

Broadbanding

Answer

Broadbanding consolidates many grades into a few wide bands to allow flexibility in pay movement.

Question 3

Pay compression most commonly occurs when:

Accepted Answer

New hires are paid nearly as much as long-tenured employees

Answer

Compression arises when market rates push new-hire pay close to or above that of experienced incumbents.

Question 4

Which compensation philosophy aims to set pay at the market median?

Accepted Answer

Match (meet) the market

Answer

A match strategy targets the 50th percentile to stay competitive without overpaying.

Question 5

The difference between an employee's pay and the midpoint of their pay range, expressed as a ratio, is called the:

Accepted Answer

Compa-ratio

Answer

A compa-ratio of 1.0 means the employee is paid exactly at the range midpoint.

PHR Practice Test