Chapter 2
THE EMPLOYMENT RELATIONSHIP
Test Bank Questions, 5e
MULTIPLE CHOICE QUESTIONS
1. Distinguishing between employees and independent contractors is important because:
a. income tax must be withheld for employees, but not independent contractors
b. employers have fewer legal obligations to independent contractors
c. employers can defend their actions under employment laws by proving that
persons performing work are independent contractors
d. all of the above
e. none of the above
2. Under the economic realities test:
a. if the hired party depends on the job for the majority of her income, that favors
the conclusion that she is an employee
b. if the hired party performs tasks that are central to the hiring party’s business, that
favors the conclusion that she is an independent contractor
c. if the hired party performs low-skilled work, that favors the conclusion that she is
an independent contractor
d. if the hired party provides her own tools and materials, that favors the conclusion
that she is an independent contractor
e. all of the above
3. In Narayan v EGL, Inc., the plaintiffs were drivers hired in California by a Texas firm,
which had them sign independent contractor agreements under Texas law. They sued,
contending they were employees, entitled to overtime pay and other benefits, and
summary judgment was entered against them because of the independent contractor
agreement. They appealed, and on appeal, the court ruled:
a. that they were independent contractors, because they signed the independent
contractor agreement
b. that they were employees, because Texas law did not apply in California
c. that summary judgment was vacated, and the case remanded for trial, since a jury
could reasonably determine from the evidence that they were employees
d. none of these
4. Which of the following is true of the common law test?
a. it is especially useful for distinguishing partners from employees
b. it focuses on the right of control
c. it focuses on the hired party’s ability to sell his services to a variety of hiring
parties
d. it is especially useful for determining whether individuals should be covered as
family members under benefit plans
e. none of the above
5. If a worker is an employee, the employer must:
a. withhold income taxes
b. pay the employer’s share of Social Security and Medicare taxes
c. pay the employee’s share of Social Security and Medicare taxes
d. all of these
e. a and b only
6. Which of the following is an accurate statement regarding independent contractor
agreements?
a. they will usually be treated as indicators of independent contractor status,
provided that they are signed and notarized
b. they are useless as indicators of independent contractor status
c. they can be renewed automatically and as often as necessary
d. they can support a claim to independent contractor status, but the actual
relationship is the most important factor
e. a and c
7. The primary lesson to be learned from the lawsuit brought by Microsoft’s temporary
workers in the 1990s is that:
a. it is safest legally to hire temp workers through a temporary staffing agency
b. employers must provide benefits to all of their employees
c. companies that use temp workers will often be deemed joint employers of those
workers
d. employers cannot arbitrarily exclude some employees from benefit plans by
labeling them as temporary workers
e. none of the above
8. If a worker is an employee, the employer must:
a. provide worker’s compensation coverage for the employee
b. provide unemployment insurance for the employee
c. provide health insurance for the employee
d. all of the above
e. a and b only
9. Persons performing volunteer work are more likely to be deemed employees if:
a. their services are provided to non-profit agencies
b. they receive significant remuneration for their services
c. they retain control over their volunteer work schedule
d. all of the above
e. none of the above
10. A company has one office with nine employees and a second office with 12 employees. If
an employee who works in the first office is harassed and attempts to sue under Title VII,
which of the following questions becomes a relevant issue:
a. whether this is a single, integrated enterprise
b. whether these are joint employers
c. whether the multi-employer doctrine applies
d. whether the joint payroll method applies
e. whether Title VII applies extraterritorially
11. Which of the following statements regarding managers is most correct?
a. under most employment laws, managers are not deemed to be protected
employees
b. managers are usually not individually liable when they violate employees’ rights
c. employers are liable for the actions of managers taken within the scope of their
employment
d. a and c
e. none of the above
12. Employers may be liable for the actions of their employees within the scope of
employment. With regard to the actions of employees outside the scope of employment,
which of the following statements is true?
a. An employer can never be liable for the actions of its employee outside the scope
of employment.
b. An employer is always liable for the actions of its employee outside the scope of
employment.
c. An employer might be liable for the actions of its employee outside the scope of
employment if the employer was negligent or reckless in allowing it to occur, or
for other reasons.
d. None of these is true
13. You started your own business 2 years ago, and needed several part-time workers, but did
not want and could not afford to pay them a minimum wage, or payroll taxes, so you
classified them as independent contractors. At the time, a decent argument could be made
that they were independent contractors, as there had been no rulings on your particular
arrangement. Recently, for a business very similar to yours, the Department of Labor
ruled that the workers of the business were employees, and not independent contractors.
What should you do?
a. nothing, unless the Department of Labor challenges your arrangement
b. nothing, unless one of the workers complains
c. have all of the workers sign independent contractor agreements immediately
d. begin to treat them as employees, including paying a minimum wage, and
withholding income taxes
14. The main reason employers would rather hire independent contractors than employees is:
a. its cheaper
b. the employer has more control over independent contractors
c. the independent contractor has fewer rights under law than an employee
d. all of these
e. a and c only
15. A worker who is not an employee is likely:
a. a partner
b. a volunteer
c. an independent contractor
d. any one of these
16. What test is used to determine whether a worker is an employee or an independent
contractor?
a. The Economic Realities Test
b. The Right to Control Test
c. The Common Law Test
d. Each agency or entity having an interest in the question uses a different test
e. None of these
17. Your sister works at a large, well- known firm which has had trouble sustaining the kind
of profit margins their shareholders want to see. In order to keep their numbers up over the years,
they have tried every cost-cutting measure they could think of, including some that were of
questionable legality. You know about this only because you and your sister talk regularly. You
know that she is concerned about losing her job, as there have been many rounds of downsizing,
and you have promised her that you would not disclose these matters to anyone. Yesterday, she
told you that the firm has been using temp workers for about the last two years, and they are a
continuing problem. They come from a temp agency, and there are new workers every month or
so, whom she must train. They do little to no work all day, and they are seemingly accountable to
no one, since the supervisors don’t make them work, yet they still get paid. Your sister knows
you are taking this Employment Law course, and she wants you to tell her whether what the
company is doing with the temp workers is illegal. Is it?
a. Yes
b. No
18. Regarding independent contractor (IC) agreements, which of the following statements is
NOT true?
a. There is no point in using an independent contractor agreement.
b. A good, well-drafted independent contractor agreement can help avoid liability for the
firm hiring the worker.
c. Independent contractor agreements can help the parties clarify their employment
relationship.
d. A well-drafted IC agreement will address many issues that are used by agencies in
determining the status of workers.
19. Which of the following items should NOT be included in a well-drafted independent
contractor agreement?
a. a requirement that the worker hire his own assistants
b. a requirement that the firm provide health insurance for the worker
c. a flat fee payment arrangement for the work
d. a requirement that workers pay their own expenses
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20. Regarding employees, actions within the scope of employment are those which:
a. relate to work the worker was hired to perform
b. occur on company time at the usual place of work
c. occur during work hours
d. serve only the interests of the employer
e. all of these
f. a thru c only
ESSAY QUESTIONS
1. Why is each of the following good legal advice?
a. When using independent contractors, firms must be prepared to relinquish most of their
control over how work is done.
b. Firms should closely review the status of long-term independent contractors and not
assign new projects to them without renewing agreements.
c. Independent contractor agreements should be used, but only when they document actual
independent contractor relationships.
d. Be particularly cautious about changing the status of workers from employees to
contingent workers or having workers with different statuses perform the same work for
long periods of time.
e. Client companies should refrain from closely supervising agency temporary workers or
selecting individual temp workers for hiring or firing.
2. Regarding undocumented workers (non-citizens in the US illegally), the policy of federal
agencies has been to enforce employment laws for such workers without inquiring as to
their legal status. However, the remedies available to such a worker may be limited
because of his status. State and explain the policy reasons behind each of these decisions.
3. With regard to Question # 2 above, do you agree or disagree with each stated policy?
Why or why not? State and explain what kind of policies as to enforcement of
employment laws and remedies for violations of such laws you believe would most
encourage compliance with employment laws, and describe what the incentives would be
in your preferred policies to encourage the desired conduct.