Fundamental Payroll Certification Fundamental Payroll Worker Status and FLSA 2 — Questions and Answers
Question 1: Under the FLSA, which test is primarily used by the Department of Labor to determine whether a worker is an employee or independent contractor?
- The ABC test
- The economic reality test (Correct answer)
- The IRS 20-factor test
- The common law control test
Correct answer: The economic reality test
The DOL uses the economic reality test, which examines whether a worker is economically dependent on the employer or truly in business for themselves.
Question 2: A non-exempt employee works 44 hours in a workweek at $18/hour. What is their total gross pay?
- $792.00
- $810.00
- $738.00
- $828.00 (Correct answer)
Correct answer: $828.00
Regular pay = 40 × $18 = $720; overtime = 4 × $27 (1.5 × $18) = $108; total = $828.00.
Question 3: Which of the following employees is most likely EXEMPT from FLSA overtime under the executive exemption?
- A shift supervisor who earns $35,000/year and occasionally directs two employees
- A department manager earning $70,000/year who regularly directs 10 employees and has authority to hire and fire (Correct answer)
- A team lead earning $45,000/year who has no authority to discipline employees
- A senior technician earning $65,000/year with no supervisory duties
Correct answer: A department manager earning $70,000/year who regularly directs 10 employees and has authority to hire and fire
The executive exemption requires a salary of at least $684/week, primary duty of management, directing 2+ employees, and authority over employment status.
Question 4: Under the FLSA, what is the current federal minimum wage?
- $6.55 per hour
- $7.25 per hour (Correct answer)
- $8.00 per hour
- $10.00 per hour
Correct answer: $7.25 per hour
The federal minimum wage has been $7.25 per hour since July 24, 2009.
Question 5: A worker sets her own hours, provides her own tools, works for multiple clients, and is paid per project. Under the economic reality test, this worker is most likely:
- An employee because she is paid for services
- An independent contractor because she is economically independent (Correct answer)
- An employee because she works on-site sometimes
- An independent contractor only if she files a Schedule C
Correct answer: An independent contractor because she is economically independent
Setting her own schedule, supplying tools, working for multiple clients, and project-based pay all indicate economic independence, pointing to independent contractor status.
Question 6: The FLSA child labor provisions generally prohibit minors under age 18 from working in hazardous occupations. What is the minimum age for most non-agricultural, non-hazardous jobs with unlimited hours?
- 14
- 16 (Correct answer)
- 17
- 18
Correct answer: 16
At age 16, minors may work unlimited hours in non-hazardous occupations; those aged 14–15 face strict hour and time-of-day restrictions.
Question 7: Under the FLSA, an employer and employee agree to pay a salary that covers all hours worked, regardless of how many. This arrangement is known as:
- Fluctuating workweek method (Correct answer)
- Fixed salary method
- Blended rate method
- Piece-rate method
Correct answer: Fluctuating workweek method
The fluctuating workweek method allows overtime to be paid at a 0.5 multiplier on the regular rate, which decreases as hours increase, provided the salary is fixed and the agreement is clear.
Fundamental Payroll Certification Fundamental Payroll Worker Status and FLSA 2
Under the FLSA, which test is primarily used by the Department of Labor to determine whether a worker is an employee or independent contractor?