Chapter 02 - Pay, Benefits, and Work

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1. Overtime pay is not considered when you calculate your gross pay. a. True b. False ANSWER: False

2. Employers must pay all employees overtime at the rate of 1.5 times the regular rate. a. True b. False ANSWER: False

3. Some deductions are required by law, but others are optional. a. True b. False ANSWER: True

4. Allowances are additions to the amount of income tax that must be withheld from your paycheck. a. True b. False ANSWER: False

5. Employers must contribute matching amounts into each employee’s Medicare and Social Security accounts. a. True b. False ANSWER: True

6. An employee required to work on a paid holiday is usually paid 1.5 times his or her regular hourly rate of pay. a. True b. False ANSWER: False

7. It is customary for employees to receive three to ten days a year as “sick days” without deductions from pay. a. True b. False ANSWER: True

8. When an employee is entitled to his or her full retirement account, the employee is said to be vested in the account. a. True b. False ANSWER: True

9. Employees who telecommute often submit work to their employer using e-mail and cloud computing. a. True b. False

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ANSWER: True

10. Under flextime, employees do not need to work a set number of hours per day. a. True b. False ANSWER: False

11. A job requiring heavy physical labor is probably not a good candidate for a compressed workweek. a. True b. False ANSWER: True

12. The main function of a labor union is to provide support services for members. a. True b. False ANSWER: False

13. The process of negotiating a work contract for union members is called bargaining. a. True b. False ANSWER: True

14. If a union and employer cannot agree on the terms of a new contract, the union may decide to mediate, or refuse to work until an agreement is reached. a. True b. False ANSWER: False

15. Professional organizations often participate in political activities for the benefit of their members. a. True b. False ANSWER: True

16. A standard workweek is a. 32 hours. b. 36 hours. c. 40 hours. d. 44 hours. ANSWER: c

17. Rate × Hours Worked = a. Net Pay. b. Gross Pay. c. Overtime Pay. d. Incentive Pay. ANSWER: b

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Chapter 02 - Pay, Benefits, and Work

18. If you are a salaried worker, a. you will probably be paid twice per year. b. your overtime pay rate is higher than that of an hourly worker. c. no deductions will be taken from your paycheck. d. your gross pay is the same as your salary. ANSWER: d

19. For employees, the Social Security deduction is withheld at the rate of a. 1.45 percent of the first $117,000 earned. b. 1.45 percent of all pay earned. c. 6.2 percent of the first $117,000 earned. d. 6.2 percent of all pay earned. ANSWER: c

20. In most cases, the amount of "take-home pay" an employee receives is a. equal to gross pay. b. less than gross pay but more than net pay. c. about 65 to 70 percent of gross pay. d. equal to net pay plus overtime pay. ANSWER: c

21. Which of the following benefits are employers required by law to provide? a. child care b. workers’ compensation c. paid vacations d. all of the above ANSWER: b

22. A type of incentive pay based on quality of work done or years of service on the job is called a a. bonus. b. stock option. c. profit -sharing plan. d. pension plan. ANSWER: a

23. In a flexible-scheduling arrangement, the core time period is a. the time of day when employees get their daily assignments. b. the starting time for most employees. c. the schedule requested most often by employees. d. a crucial time of day when all employees must be working. ANSWER: d

24. A work schedule that fits the normal 40-hour workweek into less than five days is called a. job sharing. b. flextime. c. job rotation. d. a compressed workweek. ANSWER: d

25. Members of this type of union are skilled, semiskilled, or unskilled employees in a particular industry. a. craft union b. industrial union c. public -employee union d. trade union ANSWER: b

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Chapter 02 - Pay, Benefits, and Work

26. The total amount you earn before any deductions are subtracted is called ______pay. ANSWER: gross

27. ______is time worked beyond the regular hours. ANSWER: Overtime

28. The amount of your paycheck, often referred to as your “take-home pay,” is your ______pay. ANSWER: net

29. Forms of employee compensation in addition to pay are called ______. ANSWER: benefits

30. Money offered to encourage employees to strive for higher levels of performance is called ______pay. ANSWER: incentive

31. ______is a plan that allows employees to receive a portion of the company's profits at the end of the corporate year. ANSWER: Profit sharing

32. ______is a type of work schedule that allows employees to choose their working hours within defined limits. ANSWER: Flextime

33. Job ______is a job design in which employees are trained to do more than one specialized task. ANSWER: rotation

34. A(n) ______is a group of people who work in the same or similar occupations, organized for the benefit of all employees in these occupations. ANSWER: union

35. ______is an organized activity intended to influence public officials to pass laws and make decisions that benefit a certain group. ANSWER: Lobbying

36. Last week, Josie worked 45 hours at her job. Her regular hourly rate is $10. What was Josie’s gross pay last week if her company paid the typical rate of overtime pay? ANSWER: $475

37. Martin is a salaried employee who earns $30,000/year. He is paid on the 1st and 15th of every month. What is his gross pay per paycheck? ANSWER: $1,250

38. Last week Andy worked 44 hours at his job. His regular hourly rate is $12 and his employer pays the typical rate for overtime. He had the following deductions:

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Chapter 02 - Pay, Benefits, and Work

Federal income tax: $40.00 State income tax: $25.00 Social Security tax: $34.22 Medicare tax: $8.00 Health insurance: $15.00

Calculate Andy’s net pay for the week. ANSWER: $429.78

39. The Social Security deduction is withheld at a standard rate of 6.2 percent. Suppose your gross pay this week is $500. How much Social Security tax will be withheld from your paycheck? ANSWER: $31

40. The Medicare deduction is withheld at a standard rate of 1.45 percent. Suppose your gross pay this week is $750. How much Medicare tax will be withheld from your paycheck? ANSWER: $10.88

41. What are deductions? Give two examples of possible deductions. ANSWER: Amounts subtracted from your gross pay are deductions. Examples of deductions include federal income tax, state income tax, local income tax, Social Security tax, Medicare tax, health insurance premiums, union dues, credit union payments, retirement contributions, and charitable contributions.

42. Identify and describe two basic types of retirement plans that employers might offer their employees. ANSWER: Some employers provide traditional pension plans that are funded by the employer and provide monthly payments to employees when they retire. These plans, however, are disappearing. More commonly today, employers offer employer-sponsored retirement savings plans, such as 401(k) plans for employees of private- sector companies and 403(b) plans for employees of government and nonprofit entities. These plans are funded by money that is voluntarily withheld from employees' paychecks. In some cases, employers may "match" employee contributions up to a specified limit, but the employer is not obligated to do so.

43. What are some of the "extras" many companies offer to their employees to improve morale and company loyalty? ANSWER: Examples of "extra" nontaxable benefits and services include: employee discounts on company products, social and recreational programs, wellness programs, free parking, tuition reimbursement, and mental health counseling. Some employers also provide on-site child-care facilities for working parents.

44. What are cafeteria-style employee benefits? ANSWER: Cafeteria-style employee benefits are programs that allow workers to select from a range of employer-paid benefits up to a certain total value, based on personal needs.

45. What is job sharing? ANSWER: Job sharing is a job design in which two people share one full-time position.

46. What is seniority? How is seniority used in union-negotiated work contracts? ANSWER: Seniority refers to the length of time on the job and is used to determine transfers, promotions, and vacation time according to most union contracts.

47. Explain how deductions for federal and state income taxes, Social Security tax, and Medicare tax are calculated. Cengage Learning Testing, Powered by Cognero Page 5

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Chapter 02 - Pay, Benefits, and Work

ANSWER: The amounts withheld from an employee's paycheck for federal and state income taxes are determined from withholding tables based on the employee's gross pay and the number of withholding allowances reported on Form W-4 for that employee. Social Security and Medicare taxes are calculated as a percentage of an employee's gross pay up to an annual amount, or "base," specified by law.

48. What is profit sharing? Why do some employers offer profit-sharing plans to employees? ANSWER: Profit sharing is a plan that allows employees to receive a portion of the company’s profits at the end of the corporate year. The more profits the company makes, the more the company has to share with employees. Profit sharing is considered incentive pay—money offered to encourage employees to strive for higher levels of performance. Employers offer profit sharing because it links part of employee pay with company profit goals, giving employees an incentive to work harder and reduce waste.

49. How does hiring permanent part-time workers benefit an employer? How does part-time work benefit an employee? What types of workers might find permanent part-time work especially attractive? ANSWER: Many employees choose to work only part time (generally 16 to 25 hours a week). Companies can save on salary and benefits by hiring permanent part-time employees. Part-time work usually provides some benefits to the employee, such as job security, while allowing freedom to spend more time away from work. Parents with small children, older employees, and others may find that permanent part-time work best meets their needs.

50. What is a professional organization? What kinds of services does a professional organization perform for its members? Name one example of a professional organization. ANSWER: A professional organization consists of people in a particular occupation that requires considerable training and specialized skills. Professional organizations also collect dues from members and provide support services.

Professional organizations provide the following services for members: establish and maintain professional standards; set and enforce ethical practices by members; discipline, sanction, and suspend members for unethical or illegal activities; supervise and enforce educational updating of skills and certification; administer exams, accreditations, and admission requirements; publish professional journals to help keep members up to date in their field; maintain contact with members and keep them apprised of current practices, new research, and emerging trends in the field; provide pension, retirement, and insurance benefits for members; participate in political action activities to promote and protect the interests of members.

Examples of professional organizations include the American Bar Association (for lawyers), the American Medical Association (for doctors), and the National Education Association (for educators).