TREX Compensation & Benefits Fundamentals Rules 2 — Questions and Answers
Question 1: Which pay structure element defines the minimum and maximum pay an organization will pay for a job?
- Pay grade
- Pay range (Correct answer)
- Midpoint differential
- Compa-ratio
Correct answer: Pay range
A pay range establishes the minimum, midpoint, and maximum pay the organization will offer for jobs assigned to a given grade.
Question 2: An employee's base salary is $55,000 and the midpoint of their pay range is $50,000. What is their compa-ratio?
- 0.91
- 1.10 (Correct answer)
- 1.05
- 0.95
Correct answer: 1.10
Compa-ratio = actual pay ÷ midpoint; $55,000 ÷ $50,000 = 1.10.
Question 3: Which legal act requires employers to pay men and women equally for substantially equal work performed under similar conditions?
- Title VII of the Civil Rights Act
- The Equal Pay Act of 1963 (Correct answer)
- The Fair Labor Standards Act
- The Age Discrimination in Employment Act
Correct answer: The Equal Pay Act of 1963
The Equal Pay Act of 1963 prohibits wage differentials based on sex for equal work in the same establishment.
Question 4: What is 'broadbanding' in compensation design?
- Offering wide-band health insurance plans
- Collapsing many pay grades into fewer, wider bands (Correct answer)
- Broadcasting pay information to employees
- Setting pay based on geographic bands
Correct answer: Collapsing many pay grades into fewer, wider bands
Broadbanding consolidates numerous narrow pay grades into fewer, wider pay bands to allow greater flexibility in pay decisions.
Question 5: A 'defined contribution' retirement plan differs from a 'defined benefit' plan primarily because:
- It guarantees a specific monthly benefit at retirement
- The employer bears all investment risk
- The employee's retirement income depends on account balance and investment returns (Correct answer)
- It is only available to government employees
Correct answer: The employee's retirement income depends on account balance and investment returns
In a defined contribution plan, the retirement benefit is not guaranteed; it depends on contributions made and investment performance.
Question 6: Which of the following is an example of a non-monetary total rewards component?
- Base salary
- Annual bonus
- Career development opportunities (Correct answer)
- Stock options
Correct answer: Career development opportunities
Non-monetary rewards include intangible elements such as career development, recognition, and work-life balance programs.
Question 7: Under the FLSA, which category of employees is NOT required to receive overtime pay?
- Non-exempt hourly workers
- Part-time employees
- Exempt salaried employees meeting salary and duties tests (Correct answer)
- Temporary workers paid hourly
Correct answer: Exempt salaried employees meeting salary and duties tests
Exempt employees who meet both the salary basis test and the applicable duties test are not entitled to FLSA overtime pay.
TREX Compensation & Benefits Fundamentals Rules 2
Which pay structure element defines the minimum and maximum pay an organization will pay for a job?