Worker Classification & ABC Test Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Worker Classification & ABC Test flashcards as text
When the IRS reclassifies independent contractors as employees, which of the following tax liabilities does the employer face for each reclassified worker?
Answer: Both the employer's and employee's share of FICA taxes plus federal income tax withholding
Upon reclassification, employers generally owe both the employer and employee shares of FICA taxes plus any federal income tax that should have been withheld, though relief provisions may reduce the income tax portion.
Form 8919 is used by workers who believe they were misclassified as independent contractors. What is its primary purpose?
Answer: To compute and report the employee's share of Social Security and Medicare taxes on unreported wages
Form 8919 allows workers who were incorrectly classified as contractors to calculate and pay only their employee share of Social Security and Medicare taxes on the wages.
Which DOL test is applied when determining worker classification under the Fair Labor Standards Act for minimum wage and overtime purposes?
Answer: Economic realities test
The Department of Labor applies the economic realities test—not the IRS common law test—when determining whether a worker is an employee entitled to FLSA protections.
A staffing agency places workers at client sites where clients control day-to-day work. Under joint employer doctrine, which parties may be liable for wage and hour violations?
Answer: Both the staffing agency and the client company
Under the joint employer doctrine, both the staffing agency and the client company can be held jointly and severally liable for FLSA wage and hour violations.
In the context of worker classification, what does the term 'economic dependence' specifically measure?
Answer: Whether the worker is financially dependent on the hiring entity as their primary income source
Economic dependence examines whether the worker is financially reliant on the hiring entity in a way that resembles employment rather than operating a truly independent business.
A company uses a Voluntary Classification Settlement Program (VCSP) agreement with the IRS. What is the primary benefit of this program?
Answer: The company pays a reduced employment tax liability for prior years and avoids full back taxes and penalties
The VCSP allows eligible employers to prospectively reclassify workers and pay just 10% of the employment tax liability for the most recent tax year, with no penalties or interest.
Under the IRS three-category analysis for worker classification, 'type of relationship' factors include all of the following EXCEPT:
Answer: Whether the worker markets services to the general public
Marketing services to the general public is considered under the 'financial control' category, not the 'type of relationship' category in the IRS three-category framework.