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Rashana is a human resource specialist at Piper Co., a business consulting company. To support human resource planning, Rashana monitors trends in the Consumer Price Index. In recent months, the CPI has been rising at an increasing rate. What can Rashana predict based on this information?


A) A rising cost of living will lead workers in the labor market to seek higher pay.
B) A falling cost of living will cause workers to leave the labor market.
C) A rise in employment costs will lead companies to demand more labor.
D) Competitors in Piper Co.'s product markets will hold wages steady.
E) Uncertainty about prices will cause workers to accept lower-paying jobs.

F) All of the above
G) None of the above

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Ron and Yin are welders working for two different divisions of the same company. Both have the same level of experience. However, Ron earns more than Yin. Under the Fair Labor Standards Act (FLSA) , which statement justifies the organization's decision to pay Ron more than Yin?


A) Ron lives in a location where living expenses are higher.
B) Yin is younger than Ron.
C) Ron is a U.S. citizen.
D) Yin is physically disabled.
E) Yin works the night shift.

F) C) and D)
G) B) and E)

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What will most likely be the result of using an unplanned approach, in which each employee's pay is independently negotiated?


A) dissatisfied employees
B) equal pay distribution
C) rates that are stable
D) easy employment
E) cost control

F) A) and D)
G) A) and E)

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A pay structure helps an organization achieve goals related to cost control.

A) True
B) False

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Which statement is true according to the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936?


A) Under these laws, individuals aged 18 and 19 may not be employed in hazardous occupations defined by the Department of Labor.
B) Federal contractors must pay their employees at rates at least equal to the prevailing wages in the area.
C) The overtime rate applies to the hours worked beyond 45 in one week.
D) Employers must pay a training wage to workers under the age of 15 for a period of up to 60 days.
E) Organizations can defend themselves against claims of discrimination by showing that they pay the going market rate.

F) A) and B)
G) B) and E)

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Mighty Mixers, a cement company, receives more than $2,000 in federal money. The company hires employees belonging to the age group of 25 to 40. Soon after, Mighty Mixers is charged for violation of law under the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936. Which of the following would most likely explain the reason for the company being sued?


A) The employees of the company are not being paid at rates at least equal to the prevailing wages in the area.
B) Cement industry employees are being paid only 15 percent above the minimum wage.
C) The company hired employees belonging to the age group of 25 to 40, and they are being employed in hazardous environments.
D) Individuals eligible for overtime are being paid at one and a half times the employee's regular pay rate.
E) Employees below the age of 25 are not being hired by the company.

F) A) and B)
G) C) and D)

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Which statement is true of compensable factors?


A) They are generally statistically derived.
B) They are the characteristics of a job that a firm values and chooses to pay for.
C) They refer to the factors that are important for setting the two-tier wage system.
D) They describe all aspects of the jobs being evaluated.
E) They are used to ensure equity among employees.

F) C) and E)
G) A) and E)

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Ergo Co. is a manufacturing company based in Texas. In the year after Ergo Co. implemented a comparable-worth policy, its expenses increased, and as a result, profits declined. What difficulty of comparable-worth policies does this example illustrate?


A) The employer is at an economic disadvantage because of increased pay for some jobs.
B) The policy overlooks the undervalued work performed by women.
C) The policy uses job enrichment to establish a pay structure based on market rates.
D) The employer ignores the evaluation points for each job.
E) Employees in lower-paid jobs are encouraged to meet the goal of comparable worth.

F) A) and B)
G) D) and E)

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Which statement is true about job-based pay structures?


A) A pay structure that rewards employees for winning promotions will encourage them to gain valuable experience through lateral career moves.
B) Their focus on higher pay for higher status can work in favor of efforts for empowerment.
C) They typically reward desired behaviors, particularly in a rapidly changing environment.
D) Organizations may avoid change because it requires repeating the time-consuming process of creating job descriptions and related paperwork.
E) They always encourage flexibility, innovation, quality, and customer service.

F) A) and D)
G) A) and C)

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Overlapping ________ give the organization more flexibility in transferring employees among jobs, because transfers need not always involve a change in pay.


A) pay rates
B) pay ranges
C) pay policies
D) pay differentials
E) pay ranks

F) All of the above
G) A) and B)

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Research on the effects of two-tier wage plans found that


A) lower-paid employees were less satisfied on average than higher-paid employees.
B) lower-paid employees were more satisfied on average than higher-paid employees because they made comparisons with lower-paying alternatives for themselves.
C) lower-paid employees expected to be promoted into the second tier in a short time span.
D) equity theory did not come into play for either group and neither group experienced more or less job satisfaction than the other.
E) both existing employees and new employees have a similar pay rate.

F) C) and E)
G) A) and B)

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What is a drawback of setting pay rates based strictly on a pay policy line?


A) It increases the administrative burden of managing the compensation system.
B) Employees have difficulty interpreting regression analysis.
C) The estimated pay for a job may not reflect conditions in the labor market.
D) It increases the costs of surveying the market.
E) It groups jobs, which will result in rates of pay for individual jobs that precisely match the levels specified by the market.

F) A) and D)
G) None of the above

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At Methods Corp., a maker of premium art pencils, the human resource department is evaluating its pay structure. A compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio of this size?


A) The company may have difficulty keeping costs under control.
B) The company may have difficulty attracting and keeping qualified employees.
C) The company may be in violation of the Fair Labor Standards Act.
D) The company may have misclassified these employees as exempt when they are nonexempt.
E) The company may not have met minimum-wage requirements.

F) C) and D)
G) B) and C)

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Keegan, the human resource manager at R&S Inc., is advising the company's business executives that paying more for labor than competitors can support the company's strategy. Under what conditions might Keegan's idea be most valid?


A) R&S pays more to attract top talent, applying employees' knowledge to be more innovative than competitors.
B) R&S intends to charge more than competitors for the same kinds of products.
C) R&S hopes other companies will eventually match R&S's pay scale.
D) Labor costs are a large part of R&S's total costs.
E) R&S is developing a low-price strategy that will generate more sales.

F) A) and D)
G) A) and E)

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Ty earns a base rate of $12 an hour and receives a weekly attendance award of $20. He works 40 hours this week. What would be his total compensation for the week?


A) $480
B) $600
C) $500
D) $520
E) $250

F) B) and C)
G) A) and B)

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Which statement is true of the FLSA requirements for overtime pay?


A) The overtime rate is one and a half times the employee's hourly rate, excluding any bonuses or piece-rate payments.
B) Time worked includes hours spent on production or sales, but not on activities such as attending required classes, cleaning up the work site, and so on.
C) Overtime must be paid whether or not the employer specifically asked or expected the employee to work the extra hours.
D) Everyone is eligible for overtime pay.
E) Most workers paid on an hourly basis are exempt and therefore not subject to the laws governing overtime pay.

F) A) and E)
G) A) and C)

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How do organizations compare actual pay to pay structure?

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As part of its management responsibility...

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Techniques., a software company, uses job evaluations to establish the value of its jobs in terms of criteria such as their difficulty and their importance to the organization. The company then compares the evaluation points awarded to each job with the pay for each job. If jobs have the same number of evaluation points but are not paid equally, the pay of the lower-paid job is raised. Based on the scenario, identify the policy adopted by the company.


A) comparable-worth policy
B) minimum wage policy
C) average pay policy
D) merit pay policy
E) piecework rate policy

F) A) and D)
G) B) and C)

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Roger is the head of the insurance claims department. Roger works for longer hours than his subordinates, however, he is not paid overtime for working more than 40 hours per week. Under the FLSA, which statement justifies the organization's decision not to give Roger's overtime pay?


A) Roger is not a U.S. citizen.
B) Roger comes from an economically strong background.
C) Roger is unmarried.
D) Roger is considered as an exempt employee.
E) Roger has lower educational qualifications than his subordinates.

F) A) and E)
G) B) and E)

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Pay policies are one of the most important human resource tools for


A) reducing competition in the product market.
B) automating routine activities.
C) persuading customers that high quality is worth a premium price.
D) making decisions about product pricing.
E) encouraging desired employee behaviors.

F) B) and D)
G) All of the above

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