Compensation and Benefits
What the exam tests
Compensation and benefits covers total rewards: base pay, variable pay, benefits, pay structures, job evaluation, market pricing, and legal compliance. Know how pay is built and how it is regulated.
Job evaluation values jobs internally; salary surveys price them externally. A pay grade groups similar jobs, and a midpoint represents the competitive rate. Compa-ratio equals base salary divided by midpoint. A ratio below 1.0 means pay is below midpoint; above 1.0 means above midpoint.
FLSA classification is a top trap. Exempt status generally requires the salary basis test, the duties test, and meeting the salary threshold; salary alone is not enough. Overtime is generally 1.5 times the regular rate for hours over 40 in a workweek. The regular rate includes nondiscretionary bonuses and may include shift differentials, not just hourly pay.
Benefits compliance includes ERISA, COBRA, HIPAA, and the ACA. COBRA generally gives 60 days to elect coverage and 45 days to pay after election. FMLA eligibility typically requires 12 months of employment and 1,250 hours in the prior 12 months.
Worked example: An employee earns $52,000 and the pay grade midpoint is $60,000. Compa-ratio is 52,000 divided by 60,000, or 0.87, meaning pay is 13% below midpoint.
Rule of thumb: Classify by duties first, then confirm the salary basis and threshold. Never classify as exempt based on job title or salary alone.