Chapter 1 Payroll Fundamentals Exam
with Questions and Correct Answers
Latest Updated 2025
Payroll's Chief Product - the paycheck or pay statement - must be: - CORRECT
ANSWERS Both accurate and timely
What taxes, if any, must be withheld from an employee's pay? - CORRECT ANSWERS
Federal income, social security, and Medicare
What taxes, if any, must be withheld from an independent contractor's pay who provides
a TIN? - CORRECT ANSWERS No taxes are withheld
Who has the responsibility to determine if the worker is an employee or independent
contractor? - CORRECT ANSWERS Hiring entity
Prior to beginning work for a company, a chemical engineer signed a contract stating
that 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 ANSWERS 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 ANSWERS
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 ANSWERS Employee
Which of the following workers is an independent contractor? - CORRECT ANSWERS
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 ANSWERS Minimum wage
and overtime
, All of the following type of employees are classified as exempt from the FLSA's
minimum wage and overtime requirements except: - CORRECT ANSWERS Computer
repairman
A waitress is paid $2.25 per hour, and she receives $255.00 in tips during the week.
She works 40 hours per week. Which of the following is true? - CORRECT ANSWERS
Her employer is allowed to reduce her cash wage to no less than 2.13 per hour.
What is the federal minimum wage? - CORRECT ANSWERS $7.25
If a state sets the minimum wage greater than the federal minimum wage the state
minimum wage must be paid to workers in that state. - CORRECT ANSWERS True
A non exempt employee works in a state with a minimum wage of $7.35 per hour, while
living in a state with a minimum wage of $8.05. What is the minimum rate he must be
paid? - CORRECT ANSWERS $7.35
Tips can be counted toward the employees minimum wage? - CORRECT ANSWERS
True
An Employee works 40 hours per week as a fry cook. During the week, she substitutes
for one of the waitresses and reports $15.00 per week in tips. Can her employer pay her
2.13 per hour? - CORRECT ANSWERS No because she must receive $30.00 per
month in tips
Employers who provide paid vacation leave must count the hours of paid time off when
determining if the employee must receive an overtime premium when the total hours
worked in a week exceed 40. - CORRECT ANSWERS False
A nonexempt employee works the night shift (midnight to 8:00am) and works 45 hours
during the week. Under the FSLA, what must his employer pay him? - CORRECT
ANSWERS The federal minimum wage
The FLSA requires that time worked on Saturday be paid at overtime rates and time
worked on Sunday be paid at double time rates. - CORRECT ANSWERS False
A state wage and hour law requires that a nonexempt employee be
paid an overtime premium for the time over 40 hours worked in a
workweek or over 8 hours a day, whichever is greater. If an employ-
ee working in that state works the following schedule, how many
overtime hours must be paid? - CORRECT ANSWERS 5+7+6+8+10+8+6= 50 - 40 = 10
hours of OT
Last week a high school teacher spent 40 hours in the classroom, worked 10 hours
grading papers and was required to put in another 8 hours on Saturday at the school-
with Questions and Correct Answers
Latest Updated 2025
Payroll's Chief Product - the paycheck or pay statement - must be: - CORRECT
ANSWERS Both accurate and timely
What taxes, if any, must be withheld from an employee's pay? - CORRECT ANSWERS
Federal income, social security, and Medicare
What taxes, if any, must be withheld from an independent contractor's pay who provides
a TIN? - CORRECT ANSWERS No taxes are withheld
Who has the responsibility to determine if the worker is an employee or independent
contractor? - CORRECT ANSWERS Hiring entity
Prior to beginning work for a company, a chemical engineer signed a contract stating
that 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 ANSWERS 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 ANSWERS
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 ANSWERS Employee
Which of the following workers is an independent contractor? - CORRECT ANSWERS
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 ANSWERS Minimum wage
and overtime
, All of the following type of employees are classified as exempt from the FLSA's
minimum wage and overtime requirements except: - CORRECT ANSWERS Computer
repairman
A waitress is paid $2.25 per hour, and she receives $255.00 in tips during the week.
She works 40 hours per week. Which of the following is true? - CORRECT ANSWERS
Her employer is allowed to reduce her cash wage to no less than 2.13 per hour.
What is the federal minimum wage? - CORRECT ANSWERS $7.25
If a state sets the minimum wage greater than the federal minimum wage the state
minimum wage must be paid to workers in that state. - CORRECT ANSWERS True
A non exempt employee works in a state with a minimum wage of $7.35 per hour, while
living in a state with a minimum wage of $8.05. What is the minimum rate he must be
paid? - CORRECT ANSWERS $7.35
Tips can be counted toward the employees minimum wage? - CORRECT ANSWERS
True
An Employee works 40 hours per week as a fry cook. During the week, she substitutes
for one of the waitresses and reports $15.00 per week in tips. Can her employer pay her
2.13 per hour? - CORRECT ANSWERS No because she must receive $30.00 per
month in tips
Employers who provide paid vacation leave must count the hours of paid time off when
determining if the employee must receive an overtime premium when the total hours
worked in a week exceed 40. - CORRECT ANSWERS False
A nonexempt employee works the night shift (midnight to 8:00am) and works 45 hours
during the week. Under the FSLA, what must his employer pay him? - CORRECT
ANSWERS The federal minimum wage
The FLSA requires that time worked on Saturday be paid at overtime rates and time
worked on Sunday be paid at double time rates. - CORRECT ANSWERS False
A state wage and hour law requires that a nonexempt employee be
paid an overtime premium for the time over 40 hours worked in a
workweek or over 8 hours a day, whichever is greater. If an employ-
ee working in that state works the following schedule, how many
overtime hours must be paid? - CORRECT ANSWERS 5+7+6+8+10+8+6= 50 - 40 = 10
hours of OT
Last week a high school teacher spent 40 hours in the classroom, worked 10 hours
grading papers and was required to put in another 8 hours on Saturday at the school-
