SHRM Total Rewards & Compensation 2 — Questions and Answers
Question 1: Which pay structure element defines the minimum and maximum salary for a given job grade?
- Pay grade midpoint
- Pay range (Correct answer)
- Compa-ratio
- Merit matrix
Correct answer: Pay range
A pay range establishes the minimum, midpoint, and maximum compensation levels for a specific job grade.
Question 2: An employee's salary is $52,000 and the midpoint of their pay grade is $65,000. What is their compa-ratio?
- 0.60
- 0.80 (Correct answer)
- 1.25
- 1.00
Correct answer: 0.80
Compa-ratio = actual salary / midpoint, so $52,000 / $65,000 = 0.80 (80%).
Question 3: Which of the following best describes a broadbanding pay structure?
- Many narrow pay grades with small ranges
- Few wide pay grades consolidating multiple traditional grades (Correct answer)
- Pay tied exclusively to seniority
- Separate pay scales for each business unit
Correct answer: Few wide pay grades consolidating multiple traditional grades
Broadbanding collapses many narrow pay grades into fewer, wider bands to allow more flexibility in pay decisions.
Question 4: Under the Fair Labor Standards Act, which type of employee must receive overtime pay for hours worked over 40 in a workweek?
- Exempt salaried employees
- Non-exempt employees (Correct answer)
- Independent contractors
- Part-time salaried managers
Correct answer: Non-exempt employees
Non-exempt employees are entitled to overtime pay at 1.5 times their regular rate for hours over 40 per workweek under FLSA.
Question 5: A company awards bonuses based on individual performance ratings at year-end. This is an example of which incentive type?
- Profit sharing
- Merit bonus (Correct answer)
- Gain sharing
- Spot bonus
Correct answer: Merit bonus
A merit bonus is a lump-sum payment tied to an individual's performance evaluation, separate from base pay increases.
Question 6: Which federal law requires employers to provide eligible employees with up to 12 weeks of unpaid leave and continuation of health benefits?
- ERISA
- COBRA
- FMLA (Correct answer)
- ADA
Correct answer: FMLA
The Family and Medical Leave Act (FMLA) provides eligible employees up to 12 weeks of unpaid, job-protected leave with health benefit continuation.
Question 7: What does the term 'total rewards' encompass beyond base pay and bonuses?
- Only cash compensation and equity
- Compensation, benefits, work-life balance, development, and recognition (Correct answer)
- Base salary and retirement plans only
- Market surveys and job evaluations only
Correct answer: Compensation, benefits, work-life balance, development, and recognition
Total rewards is a holistic framework that includes compensation, benefits, well-being, career development, and recognition programs.
SHRM Total Rewards & Compensation 2
Which pay structure element defines the minimum and maximum salary for a given job grade?