PHR Compensation and Benefits 2 — Questions and Answers
Question 1: Under the FLSA, which test is NOT one of the criteria for an employee to qualify for the executive exemption?
- The longevity test (Correct answer)
- The salary basis test
- The salary level test
- The duties test
Correct answer: The longevity test
The executive exemption requires the salary basis, salary level, and duties tests; there is no longevity test.
Question 2: A compensation structure with overlapping pay grades that are very wide and few in number is best described as:
- Broadbanding (Correct answer)
- Red-circling
- Pay compression
- Step structure
Correct answer: Broadbanding
Broadbanding consolidates many narrow grades into a few wide bands to allow flexibility.
Question 3: When a long-tenured employee's pay is close to or higher than a newly hired employee's pay for similar work, this is called:
- Pay compression (Correct answer)
- Wage drift
- Green-circling
- Pay leadership
Correct answer: Pay compression
Pay compression occurs when little difference exists between the pay of new and experienced employees.
Question 4: Which federal law requires employers to provide continuation of group health coverage after qualifying events such as termination?
- COBRA (Correct answer)
- ERISA
- HIPAA
- FMLA
Correct answer: COBRA
COBRA allows employees and dependents to continue group health coverage temporarily after qualifying events.
Question 5: An employee earning $1,000/week works 50 hours under a fluctuating workweek agreement. The overtime is calculated using which multiplier on the regular rate?
- 0.5 (Correct answer)
- 1.5
- 2.0
- 1.0
Correct answer: 0.5
Under the fluctuating workweek method, overtime is paid at half-time (0.5) because straight time already covers all hours.
Question 6: Which type of benefit is legally required (mandatory) for most U.S. employers?
- Social Security contributions (Correct answer)
- Dental insurance
- Paid vacation
- Tuition reimbursement
Correct answer: Social Security contributions
Social Security (and Medicare) contributions are legally mandated, unlike the discretionary benefits listed.
Question 7: A compensation philosophy of 'leading the market' means an employer:
- Pays above the market median (Correct answer)
- Pays at the market median
- Pays below the market median
- Ignores market data entirely
Correct answer: Pays above the market median
A lead strategy sets pay above the market median to attract and retain top talent.
PHR Compensation and Benefits 2
Under the FLSA, which test is NOT one of the criteria for an employee to qualify for the executive exemption?