Fundamental Payroll Certification Fundamental Payroll Worker Status and FLSA 4 — Questions and Answers
Question 1: Under the FLSA's administrative exemption, which of the following best describes the 'discretion and independent judgment' requirement?
- The employee must approve purchases over $500
- The employee must make decisions on matters of significance, not just apply established guidelines (Correct answer)
- The employee must supervise at least two full-time workers
- The employee must hold a college degree in a related field
Correct answer: The employee must make decisions on matters of significance, not just apply established guidelines
Discretion and independent judgment means the employee compares and evaluates possible courses of action and makes decisions that genuinely affect the business, not just following set procedures.
Question 2: A retail employee works at Store A for 30 hours and at Store B (a sister company under common ownership and control) for 20 hours in the same workweek. How many overtime hours must be paid?
- 0 hours — each store counts separately
- 10 hours — combined hours exceed 40 (Correct answer)
- 20 hours — the second employer owes all excess
- 5 hours — overtime is split proportionally
Correct answer: 10 hours — combined hours exceed 40
When employers are considered joint employers or are under common control, their hours are aggregated; 50 combined hours means 10 overtime hours must be paid.
Question 3: The FLSA allows a 'youth minimum wage' for employees under age 20. What is that rate and for how long may it be paid?
- $6.00/hour for the first 60 calendar days
- $4.25/hour for the first 90 calendar days (Correct answer)
- $5.15/hour for the first 180 days
- $6.55/hour for the first 30 days
Correct answer: $4.25/hour for the first 90 calendar days
Employers may pay new employees under age 20 a minimum of $4.25/hour during their first 90 consecutive calendar days of employment.
Question 4: Which of the following is a valid FLSA exemption from both minimum wage AND overtime requirements?
- Outside sales employees (Correct answer)
- Retail employees earning commission
- Seasonal amusement park workers in some circumstances
- Computer employees earning at least $27.63/hour
Correct answer: Outside sales employees
Outside sales employees who primarily make sales away from the employer's place of business are exempt from both minimum wage and overtime under the FLSA.
Question 5: An employer deducts the cost of a mandatory uniform from a non-exempt employee's wages. Under the FLSA, this deduction is illegal if it causes the employee's wage to fall below:
- The state minimum wage
- The federal minimum wage (Correct answer)
- $10.00 per hour
- Their agreed-upon hourly rate
Correct answer: The federal minimum wage
Deductions that reduce an employee's effective hourly rate below the federal minimum wage in any workweek violate the FLSA.
Question 6: What is the FLSA statute of limitations for filing a claim for unpaid minimum wages or overtime?
- One year for all violations
- Two years, or three years for willful violations (Correct answer)
- Three years for all violations
- Four years for willful violations
Correct answer: Two years, or three years for willful violations
The FLSA provides a two-year statute of limitations for non-willful violations and a three-year period when the violation is proven willful.
Question 7: Which of the following workers is classified as a 'statutory employee' for FICA purposes even if they may be an independent contractor under common law?
- A freelance software developer working remotely
- A full-time life insurance salesperson who sells only for one company (Correct answer)
- A real estate agent paid solely on commission
- A licensed cosmetologist who rents a booth at a salon
Correct answer: A full-time life insurance salesperson who sells only for one company
Full-time life insurance salespersons working primarily for one company are statutory employees whose earnings are subject to FICA withholding by the employer.
Fundamental Payroll Certification Fundamental Payroll Worker Status and FLSA 4
Under the FLSA's administrative exemption, which of the following best describes the 'discretion and independent judgment' requirement?