FPC Exam Chapter 1 UPDATED ACTUAL
Exam Questions and CORRECT Answers
Employee - CORRECT ANSWER - Employer controls what work is accomplished and
how it is accomplished
common-law employees - CORRECT ANSWER - A worker whose services are performed
under common-law rules for an employer
is his or her employee if that employer controls what and how the job will be done.
independent contractor - CORRECT ANSWER - payer has control of the work done by an
independent contractor and not the means and methods of finishing the job
statutory employee - CORRECT ANSWER - Independent contractors specifically
classified as employees by statute for Social Security and Medicare taxes.
statutory non employees - CORRECT ANSWER - direct sellers and licenses real estate
agents; treated as independent contracts for all tax purposes if certain conditions are met (all
payments for their services are directly related to sales and not working a certain number of
hours and a written contract guides what services they perform and that they will not be treated
as employees)
reasonable basis test - CORRECT ANSWER - established by the IRS to assist employers
in determining whether their labor force should be treated as employees or contractors for tax
purposes and bases on the judicial precedent safe haven, the past audit safe haven, and the
industry practice safe haven
judicial precedent safe haven - CORRECT ANSWER - refers to the taxpayer's using
previous legal rulings as to whether a person was a contractor or employee (within reason)
past audit safe haven - CORRECT ANSWER - Taxpayer relying on an audit by IRS for
employment taxes due. (Employee classification)
, industry practice safe haven - CORRECT ANSWER - refers to the taxpayer relying on
(within reason) recognized industry practices of a majority of industry in which he or she
participates as designating a worker as a contractor.
temporary help services and personnel - CORRECT ANSWER - Employees are hired by
temporary help services and send the workers to
companies who need employees.
employee leasing - CORRECT ANSWER - if the workers return to the leasing company
for reassignment, then it is a temporary agency. if another company is used to supply the
management of human resources, payroll, etc, then this is an arrangement of co-employment
8 and 80 overtime system - CORRECT ANSWER - employers pay time and a half
whenever the employee works over 8 hours on a given workday or over 80 hours in a fixed 14
day period
regular rate of pay formula - CORRECT ANSWER - pay amount for a workweek/number
of hours worked
fluctuating workweek - CORRECT ANSWER - ie straight time compensation,
compensates the non exempt employee with a fixed salary regardless of hours worked whether
over or under 40 hours
requirements for changing a workweek - CORRECT ANSWER - change initiated is to be
intended to be permanent, the change may not be a regular occurrence, and additionally the
change may not be made to intentionally avoid the overtime rules
compensatory time off in lieu of overtime pay - CORRECT ANSWER - overtime worked
must be irregular or occasional and compensatory time off must be used by the end of the 26th
pay period after the pay period in which the compensatory time off was earned
Exam Questions and CORRECT Answers
Employee - CORRECT ANSWER - Employer controls what work is accomplished and
how it is accomplished
common-law employees - CORRECT ANSWER - A worker whose services are performed
under common-law rules for an employer
is his or her employee if that employer controls what and how the job will be done.
independent contractor - CORRECT ANSWER - payer has control of the work done by an
independent contractor and not the means and methods of finishing the job
statutory employee - CORRECT ANSWER - Independent contractors specifically
classified as employees by statute for Social Security and Medicare taxes.
statutory non employees - CORRECT ANSWER - direct sellers and licenses real estate
agents; treated as independent contracts for all tax purposes if certain conditions are met (all
payments for their services are directly related to sales and not working a certain number of
hours and a written contract guides what services they perform and that they will not be treated
as employees)
reasonable basis test - CORRECT ANSWER - established by the IRS to assist employers
in determining whether their labor force should be treated as employees or contractors for tax
purposes and bases on the judicial precedent safe haven, the past audit safe haven, and the
industry practice safe haven
judicial precedent safe haven - CORRECT ANSWER - refers to the taxpayer's using
previous legal rulings as to whether a person was a contractor or employee (within reason)
past audit safe haven - CORRECT ANSWER - Taxpayer relying on an audit by IRS for
employment taxes due. (Employee classification)
, industry practice safe haven - CORRECT ANSWER - refers to the taxpayer relying on
(within reason) recognized industry practices of a majority of industry in which he or she
participates as designating a worker as a contractor.
temporary help services and personnel - CORRECT ANSWER - Employees are hired by
temporary help services and send the workers to
companies who need employees.
employee leasing - CORRECT ANSWER - if the workers return to the leasing company
for reassignment, then it is a temporary agency. if another company is used to supply the
management of human resources, payroll, etc, then this is an arrangement of co-employment
8 and 80 overtime system - CORRECT ANSWER - employers pay time and a half
whenever the employee works over 8 hours on a given workday or over 80 hours in a fixed 14
day period
regular rate of pay formula - CORRECT ANSWER - pay amount for a workweek/number
of hours worked
fluctuating workweek - CORRECT ANSWER - ie straight time compensation,
compensates the non exempt employee with a fixed salary regardless of hours worked whether
over or under 40 hours
requirements for changing a workweek - CORRECT ANSWER - change initiated is to be
intended to be permanent, the change may not be a regular occurrence, and additionally the
change may not be made to intentionally avoid the overtime rules
compensatory time off in lieu of overtime pay - CORRECT ANSWER - overtime worked
must be irregular or occasional and compensatory time off must be used by the end of the 26th
pay period after the pay period in which the compensatory time off was earned
