Compensation & Benefits Fundamentals Rules Flashcards

A 'red-circled' employee in compensation terminology refers to someone whose pay is:

Answer: Above the maximum of their pay range

Red-circled employees are paid above the maximum of their current pay range, often addressed by freezing increases until the range catches up.

Which factor most directly distinguishes 'base pay' from 'total cash compensation'?

Answer: Total cash compensation adds variable pay (bonuses/incentives) to base pay

Total cash compensation equals base pay plus any variable cash payments such as bonuses, commissions, and incentives earned during the period.

Which law sets federal minimum wage requirements and regulates child labor and overtime in the United States?

Answer: Fair Labor Standards Act (FLSA)

The FLSA establishes the federal minimum wage, overtime pay standards for non-exempt employees, and restrictions on child labor.

In a gain-sharing plan, employee bonuses are typically tied to:

Answer: Measurable improvements in operational productivity or cost savings

Gainsharing plans reward employees when their collective efforts achieve measurable improvements in productivity, quality, or cost reduction versus a baseline.

What is the purpose of 'vesting schedules' in employer-sponsored retirement and equity plans?

Answer: To specify when employer contributions or equity awards become the employee's permanent property

Vesting schedules define the timeline over which employer contributions or stock grants become fully owned by the employee, encouraging retention.

Which approach to internal pay equity uses systematic comparison of jobs based on skill, effort, responsibility, and working conditions?

Answer: Point-factor method

The point-factor method assigns points to compensable factors like skill, effort, responsibility, and working conditions to produce an objective internal job value score.

Under the Affordable Care Act (ACA), large employers (50+ full-time equivalents) that do not offer affordable minimum essential health coverage may face which consequence?

Answer: An employer shared responsibility payment (penalty) to the IRS

The ACA's employer mandate imposes an employer shared responsibility payment on applicable large employers that fail to offer affordable, minimum-value health coverage and have at least one full-time employee who receives a premium tax credit.