Federal Nursing Home Administrator Practice Exam

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What does COLA stand for in employment contexts?

Cost of Living Adjustment
Class of Labor Associations
Composition of Labor Agencies
Category of Labor Averages

The correct answer is: Cost of Living Adjustment

In employment contexts, COLA stands for Cost of Living Adjustment. This term refers to an increase in an employee's salary or wages that is intended to offset the rising costs of living due to inflation. Employers often implement COLAs to help employees maintain their purchasing power as prices for goods and services increase. COLAs are a common practice in labor contracts and can be adjusted based on various factors, including governmental indices that track inflation rates. By providing this adjustment, organizations aim to ensure that their employees' compensation keeps pace with economic changes, fostering financial stability and job satisfaction among their workforce. The other options do not accurately reflect the commonly understood meaning of COLA within the employment context. They represent concepts that are less relevant or do not pertain to salary adjustments.