CPM Worker Classification & ABC Test 2

Question 1

Under California's ABC test (AB5), which prong requires that the worker perform work outside the usual course of the hiring entity's business?

Accepted Answer

Prong B

Answer

Prong B of California's ABC test requires that the worker perform work outside the usual course of the hiring entity's business.

Question 2

A company hires a graphic designer exclusively for one client project. Under the economic realities test, which factor weighs MOST toward employee status?

Accepted Answer

The work is integral to the company's business

Answer

When the work performed is integral to the hiring entity's primary business operations, it weighs heavily toward employee status under the economic realities test.

Question 3

Which IRS publication provides the most comprehensive guidance on employee vs. independent contractor classification?

Accepted Answer

Publication 1779 (Independent Contractor or Employee)

Answer

IRS Publication 1779 is specifically dedicated to explaining the distinction between independent contractors and employees.

Question 4

A worker passes Prong A and Prong C of the ABC test but fails Prong B. What is their classification?

Accepted Answer

Employee because all three prongs must be satisfied for contractor status

Answer

All three prongs of the ABC test must be satisfied for a worker to be classified as an independent contractor; failing any single prong results in employee status.

Question 5

Under the FLSA economic realities test, the degree of the worker's investment in equipment and facilities is examined primarily to assess:

Accepted Answer

Whether the worker is economically dependent on the employer

Answer

Investment in equipment and facilities helps determine whether the worker is truly economically independent or dependent on the hiring entity, which is the central inquiry of the FLSA economic realities test.

(CPM) Certified Payroll Manager Practice Test

(CPM) Certified Payroll Manager Practice Test

CPM Worker Classification & ABC Test 2