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A detailed infographic showcasing various types of worker classifications including employees and independent contractors, with symbols and simple graphics to illustrate concepts.

Worker Classification Quiz

Test your knowledge on the intricacies of worker classification, including topics such as independent contractors, statutory employees, and tax regulations. This quiz is designed for anyone looking to deepen their understanding of employment law.

35 multiple-choice questions
Covers federal regulations and best practices
Perfect for professionals, educators, and students

35 Questions9 MinutesCreated by AnalyzingEagle402

1. Which of the following must be withheld from an independent contractor’s payments?

A. Federal income tax, social security and Medicare taxes

B. Employer social security and Medicare taxes

C. Federal unemployment insurance

D. None of the above

2. If an employer has the right to control what work will be done and how that work will be done?

A. The worker is a common-law employee

B. The common law test does not apply

C. The worker cannot be called a contractor

D. The employer has the right to classify the worker as an employee or an independent contractor.

3. Which of the following is true concerning worker classification?

A. Unreimbursed business expenses classifies the worker as an independent contractor

B. Independent contractors must have a significant financial investment in the facilities they use to perform services

C. Work location and hours of work are not important factors in determining worker classification

D. Independent contractors are paid by the job only.

4. Copy editor Rose Bush works on a part-time basis for N. E. Goode Books on their premises and is paid by the page. Her work is reviewed by a production editor, and she can be discharged or can quit at any time. She also works for other publishers since her hours at N. E. Goode Books vary greatly.

A. Rose is an employee of N. E. Goode Books

B. Rose is an independent contractor

C. Rose must be paid by the hour

D. Rose will receive a 1099-Misc from N. E. Goode Books

5. Technical services specialists such as engineers or computer programmers

A. Are independent contractors under the reasonable basis test

B. Are specifically excluded from the reasonable basis test under Section 530

C. Are employees of the client company under the common law test

D. Both b and c

6. A private letter ruling from the IRS indicating that a worker is not an employee is an example of:

A. The common law test

B. The Federal Wage-Hour law

C. The reasonable basis test

D. The technical services test

7. While waiting for the IRS to respond to Form SS-8 for a worker status determination, the employer should treat the worker:

A. As an employee with all wages and taxes reported and withheld

B. As an employee with only the employer taxes reported

C. As an independent contractor with all wages and taxes reported and withheld

D. As an independent contractor with only the employer taxes reported.

8. Payments made by an employer to statutory employees are subject to withholding for

A. Federal income tax, social security and Medicare taxes

B. Social security and Medicare taxes

C. Federal income tax

D. None of the above

9. To qualify as statutory employees, workers must

A. Agree with the employer that all services are to be performed personally by the worker

B. Not make a substantial investment in the business equipment

C. Be part of a continuing relationship with the employer

D. All of the above

10. Real estate agents are

A. Employees

B. Independent contractors for federal income tax withholding purposes

C. Statutory employees

D. None of the above

11. Withholding and employment taxes for leased employees are the responsibility of

A. The employee

B. The client company

C. The leasing company

D. None of the above since withholding is not mandatory

12. Overtime pay is regulated by

A. The Fair Labor Standards Act

B. The common law test

C. Section 530

D. State unemployment insurance laws

13. In classifying a worker for state unemployment insurance purposes, work performed outside the usual course of a company’s business or away from the employer’s facilities in one factor of

A. The technical services test

B. The ABC test

C. The common law test

D. The reasonable basis test

14. To prove identity and work authorization, a newly hired employee

A. Must provide a U.S. Social security card without employment restrictions

B. Must provide documents designated by the employer proving identity and work authorization

C. Can present documents proving either identity or work authorization

D. Can present documents proving both identity and work authorization

15. An employer with employees in 12 states reporting new hires electronically

A. Must report its newly hired employees to the 12 states

B. Must report its newly hired employees to the Department of Health and Human Services

C. May report all its new hires to one state where it has employees

D. Must report all its new hires to the state of it corporate base of operations

If the employer has the right to control what work will be done and how that work will be done, an employer-employee relationship exists under the common law test.

True

False

Full-time life insurance salespersons are always considered statutory employees and are never subject to FUTA tax.

True

False

Telemarketers working under the direction of a company are usually independent contractors.

True

False

An accountant who provides bookkeeping and payroll services to several local businesses and works at her own office is an independent contractor.

True

False

The responsibility for determining the employment status of an individual who performs services rests with the employer.

True

False

If an independent contractor timely provides the employer with a correct Taxpayer Identification Number, there will be no backup withholding.

True

False

If an employer uses the E-Verify Program, a new hire does not have to enter their SSN in Section 1 of Form I-9.

True

False

Managers and executives are excluded from the employer-employee relationship for tax purposes.

True

False

Technical services specialists are specifically excluded from the “reasonable basis” test.

True

False

Under the ABC test, one of the determining factors is whether the worker in question is free from control or direction in performing the work both by agreement and in reality.

True

False

Part-time employees are not covered under the federal payroll tax laws even if they meet the common law test for employment status

True

False

If an employee is rehired by an employer 75 days after being terminated, the employer must report the employee as a new hire.

True

False

Employers can demand specific documents to prove an employee’s eligibility to work in the U.S.

True

False

Employers who claim Section 530 status for their workers because a significant segment of their industry classifies similar workers the same way must show that at least 50% of the industry treats these workers as independent contractors.

True

False

An employer that changes its classification of a worker from independent contractor to employee may still claim Section 530 protection for the period before the change in treatment.

True

False

An IRS agent conducting an employment tax audit must give the employer written notice of the availability of the Section 530 protections.

True

False

Under the federal new hire reporting requirements, multistate employers must report a new hire to the state in which the employee works.

True

False

If an employee resigns after working for an employer for five years, the employer must retain the employee’s Form I-9 for three years after the employee’s last day of employment.

True

False

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