Chapter 1 Payroll Fundamentals
Payroll's Chief Product - the paycheck or pay statement - must be: correct answer Both accurate and
timely
What taxes, if any, must be withheld from an employee's pay? correct answer Federal income, social
security, and Medicare
What taxes, if any must be withheld from an independent contractor's pay who provides a TIN? correct
answer No taxes are withheld
Who has responsibility to determine if the worker is an employee or independent contractor? correct
answer Hiring entity
Prior to beginning work for a company, a chemical engineer signed a contract stating the she agreed to
work as an independent contractor. She performs all her duties in the company's laboratories, where
she has full access to the company's testing equipment. She works under their direction and maintains
regular office hours. What is her status? correct answer Employee
A retired safety inspector for the company was rehired as a consultant when the company expanded its
plant operations. The retired employee was a natural choice. The tasks he undertook as a consultant
were the same as the one he performed before retirement. Paid monthly, he has agreed to work under
the direction of his old boss until the new plant facilities are fully operational. What is his status? correct
answer Employee
A receptionist has agreed to work afternoons at the company until they can find a full-time replacement.
What is the receptionist status? correct answer Employee
Which of the following workers is an independent contractor? correct answer A lecturer who is paid a
percentage of the money collected at fundraisers when he speaks on behalf of a non profit clinic
What are exempt employees exempt from? correct answer Minimum wage and overtime
