Deck 1: The Regulation of the Employment Relationship

Question 1

Arber Systems Inc.solicits bids from various independent contractors to develop and maintain the grounds of its new office complex.Carl,the head of facilities management at Arber Systems tells Rosie,his secretary,that he will not accept any bids from Asian contractors.He goes ahead and rejects a bid made by an Asian contractor without any legitimate reason.The Asian contractor brings a lawsuit against Arber Systems for discrimination.Which of the following is true of the scenario?

A) Carl's refusal to hire Asian companies is a violation of the Social Security Act.
B) Carl's refusal to hire Asian companies is a violation of the Consumer Protection Act.
C) Carl's refusal to hire Asian companies is not an offense because employers in the United States are free to discriminate against employees based on their race or national origin.
D) Carl's refusal to hire Asian companies is not a violation of Title VII of the Civil Rights Act because that law does not cover discrimination against independent contractors.

Answer 1

D
Explanation:Arber Systems Inc. will not be charged for discrimination because Title VII of the Civil Rights Act of 1964 applies to employers and prohibits them from discriminating against employees. It does not, however, cover discrimination against independent contractors.

Question 2

A willful misclassification of workers by an employer under the Fair Labor Standards Act of 1938 (FLSA)may result in imprisonment and up to a $10,000 fine.

Answer 2

True
Explanation:An employer who maintains employees has the responsibility to pay Social Security (FICA), the FICA excise tax, Railroad Retirement Tax Act (RRTA) withholding amounts, federal unemployment compensation (FUTA), Internal Revenue Service (IRS) federal income tax withholdings, Medicare, and state taxes. Employers may intentionally misclassify employees in order to avoid these other costs and liabilities. A willful misclassification under the Fair Labor Standards Act of 1938 (FLSA) may result in imprisonment and up to a $10,000 fine, imposed by the Department of Labor.

Question 3

In an employment-agency relationship,if an agent acts beyond his or her authority,the principal is not liable for any resulting loss to a third party.

Answer 3

False
Explanation:In an employment-agency relationship, the employee-agent is under a specific duty to the principal to act only as authorized. As a rule, if an agent goes beyond his or her authority or places the property of the principal at risk without authority, the principal is now responsible to the third party for all loss or damage naturally resulting from the agent's unauthorized acts (while the agent remains liable to the principal for the same amount).

Question 4

Nebusa Inc.is a consulting firm.Sam and Arnie are analysts for Nebusa.Sam was hired as an employee,and Arnie was hired as an independent contractor.They both work five days a week during standard business hours in the same Nebusa office and under the same supervisor.Both almost share the same job responsibilities.Sam is paid a salary and the required federal and state tax withholdings are also made by the company.In contrast,Arnie is paid by the project with no federal and state withholdings and does not even receive benefits such as retirement and health insurance.Which of the following is an implication of this scenario?

A) Nebusa has properly classified Arnie as an independent contractor.
B) Nebusa has willfully misclassified Arnie as an independent contractor and is liable under Fair Labor Standards Act of 1938.
C) Nebusa has no rights to withhold federal and state taxes for Sam if he is classified as a full-time employee.
D) Nebusa has to provide more health and retirement benefits to Arnie than Sam because Arnie is an independent contractor.

Question 5

The National Labor Relations Act of 1935 (NLRA)protects independent contractors from unfair labor practices of employers.

Question 6

The Food Cult Restaurant (FCR)employs part-time workers through a staffing firm.After the staffing firm sent over a part-time waitress,FCR asked the firm to replace her with someone from a different race.If the replaced waitress proceeds with a discrimination claim under Title VII of the Civil Rights Act,FCR cannot be liable because the part-time waitress was never its employee.

Question 7

Under the economic realities test,courts consider whether a worker is economically dependent on the business or is in the business for himself or herself.

Question 8

The law relating to the employment relationship is based on the traditional law called master and servant,which evolved into the law of agency.

Question 9

An employer has vicarious liability if an employee causes harm to a third party while the employee is in the course of employment.

Question 10

The Rehabilitation Act of 1973 applies to federal contractors who maintain contracts with the federal government in excess of $10,000 annually for the provision of personal property or nonpersonal services.

Question 11

The Civil Rights Act of 1866 applies to employers with 15 or more employees.

Question 12

Employment law based on agency principles imposes a duty on an employee to act as authorized.If the employee exceeds his or her authority,the employer is:

A) not liable for any loss or damage that results from the employee's unauthorized acts.
B) liable for damages or losses incurred by third parties and has no recourse against the employee for the losses incurred.
C) liable for damages or losses incurred by third parties, while the employee remains liable to the employer.
D) not liable for any loss or damage incurred by third parties, unless the damage is beyond $35,000.

Question 13

Employers are liable for most torts committed by an independent contractor within the scope of the working relationship.

Question 14

Clarence works as an independent contractor for a law firm jointly owned and managed by Allan,Rose,and Grisham.Which of the following implications can be drawn from the scenario?

A) Clarence will be solely responsible for making payments for his Social Security (FICA), federal income tax, state taxes, and Medicare.
B) The law firm will be completely responsible for paying Clarence's federal unemployment compensation (FUTA), Medicare, and state taxes.
C) Clarence will be protected from unfair labor practices just like an employee under the National Labor Relations Act of 1935 (NLRA).
D) The law firm will have to mandatorily include Clarence in its dental, medical, pension, and profit-sharing plans.

Question 15

There is one commonly accepted definition of "employee" used by courts,employers,and the government.

Question 16

Tobin is an independent contractor for Pagoneer Inc.While driving to a meeting at Pagoneer's headquarters,Tobin causes a car accident in which a cab driver is hurt.Upon investigation,it was learnt that Tobin was talking to one of the managers at Pagoneer over the phone when he was driving on that unfortunate day.Which of the following is true in the context of liability for the accident?

A) Pagoneer has no liability only if Tobin is a member of a protected class.
B) Pagoneer has vicarious liability.
C) Pagoneer has strict liability.
D) Pagoneer has no liability because Tobin is not a full-time employee.

Question 17

Gabriel is a nursing assistant in a retirement home run by RedTree Care Home.She works at least 50 hours every week.After looking at her payroll stubs for the past six months,she concludes that she has not received her share of overtime pay.With the help of a friend in the payroll department,Gabriel learns the she has been classified as a temporary employee so that her overtime pay can be avoided.She complains to her supervisor,but her employer makes no changes.Which of the following legal courses can Gabriel take against RedTree Care Home?

A) Gabriel can bring a complaint to the U.S. Department of Labor, under the Social Security Act.
B) Gabriel can bring a complaint to the U.S. Department of Labor, under the Fair Labor Standards Act of 1938 (FLSA).
C) Gabriel can bring a complaint to the U.S. Department of Labor, under the Employee Retirement Income Security Act of 1974 (ERISA).
D) Gabriel can bring a complaint to the U.S. Department of Labor, under Equal Employment Opportunity Act.

Question 18

Kevin provides auditing services to the Global Trusted Bank as an independent contractor.Thus,the bank is responsible for paying Kevin's federal unemployment compensation (FUTA),Social Security (FICA),and the FICA excise tax.

Question 19

Sanah works as a salesperson at Ave's Garden Needs.While demonstrating to a customer how to use a hedge trimmer,she accidentally cuts the customer on the arm,requiring a visit to the hospital and several stitches.Which of the following is true of the scenario?

A) Ave's Garden Needs is not vicariously liable because it was an accident.
B) Ave's Garden Needs is vicariously liable because Sanah was not acting within the course of employment.
C) Ave's Garden Needs is not vicariously liable because Sanah was not acting within the course of employment.
D) Ave's Garden Needs is vicariously liable because Sanah was acting within the course of employment.

Question 20

Jeremy,a freelance accountant,is hired by Ave Supermarket whenever there is some auditing work at the supermarket's back-end office.Jeremy is called to the office on a need basis and is paid $200 per day for his services.Which of the following is true of this scenario?

A) Ave Supermarket will need to withhold a certain percentage of Jeremy's wages for federal income tax purposes.
B) Jeremy cannot be held liable for any torts committed by him within the scope of the working relationship.
C) Ave Supermarket will be liable to Jeremy if he makes any discrimination or wrongful discharge claims.
D) Jeremy cannot claim for medical or retirement benefits from Ave Supermarket as he is an independent contractor.

Question 21

In an employment relationship,a non-compete agreement is enforceable:

A) when the agreement violates the doctrine of promissory estoppel.
B) when the employee receives something in exchange for the agreement.
C) when the competitor receives something in exchange for the agreement.
D) when the agreement is contrary to the public interest.

Question 22

As used by the Equal Employment Opportunity Commission (EEOC),the term contingent worker includes a(n):

A) employee hired and trained directly by an employer.
B) permanent worker who works for only one employer at a time.
C) full-time worker.
D) independent contractor.

Question 23

Sun Supermarket hired a temporary salesperson through a staffing firm.The salesperson is on the payroll of the staffing firm.After three months,the manager of the supermarket asked the staffing firm to replace the salesperson with someone of another race.The replaced salesperson decides to file a case of racial discrimination.Which of the following is true of this scenario?

A) The salesperson cannot bring a legal case against the supermarket because she is an employee of the staffing firm.
B) The supermarket can be held liable for discrimination under Title VII of the Civil Right Act.
C) The salesperson cannot bring a case against the staffing firm because it did not initiate the discriminatory action.
D) The staffing firm alone will be held liable for discrimination because third parties cannot be held liable for violation of Title VII.

Question 24

Just Systems Inc.often hires Abdul to train its employees.He is paid $300 for every session.His job also requires him to travel once a month to different branches of Just Systems and train employees there.When he is required to travel,the company pays him $450 per session.All training materials have to be provided by Abdul himself.When he is not hired by Just Systems,Abdul works for other smaller companies as a trainer.Thus,Abdul is mostly like a(n):

A) full-time employee at Just Systems Inc.
B) social worker.
C) independent contractor for Just Systems Inc.
D) trade creditor.

Question 25

Mega Big Box Stores has been hiring programmers at its headquarters to maintain its online retail operation.As the size of the online business grew,Mega changed the status of the programmers from employees to independent contractors,although their job responsibility increased.For the past 3 years,all new programmers brought on board have signed documents classifying them as independent contractors.Some of the programmers brought a court case regarding their status and got a verdict that they were misclassified.Which of the following is an implication of this scenario?

A) The Internal Revenue Service (IRS) can hold the employer liable for its share of Social Security and federal unemployment compensation that should have been withheld.
B) The Internal Revenue Service (IRS) will require the employer to exclude its programmers from its dental, medical, pension, and profit-sharing plans.
C) The Internal Revenue Service (IRS) will hold the employer liable for a minimum of 10 percent of the wages received by the programmers.
D) The Internal Revenue Service (IRS) will require the programmers to pay all the outstanding federal taxes, state taxes, and Medicare on their own if their employer fails to pay.

Question 26

Paula works as an accountant at Axva Inc.Per the company's payroll Paula is currently an independent contractor.Paula will be misclassified as an independent contractor if:

A) Axva Inc. has the right to discharge Paula at any time.
B) Paula can realize a profit from the business through management of resources.
C) Paula has significant investment in the business.
D) Axva Inc. allows her to work for more than one firm at a time.

Question 27

According to the Office of Federal Contract Compliance Programs (OFCCP),one of the criteria for an individual to qualify as an Internet applicant for a job is to:

A) send an e-mail inquiry about the job.
B) simply post his or her resume on a third-party job board.
C) simply use the Internet to find potential jobs for oneself.
D) submit an expression of interest in employment through the Internet.

Question 28

Benjamin,a 45-year-old white male,is denied employment at a private club.He notices that the club has younger,white male employees working for it.Thus,Benjamin decides to file a discrimination claim against the club.As per the Age Discrimination in Employment Act,Benjamin:

A) cannot file a complaint of race, sex, or age discrimination because he is white.
B) can bring an age discrimination claim because the act does not recognize the business necessity defense.
C) can file a complaint because the act does not exempt private membership clubs.
D) cannot file a complaint of age discrimination because only individuals above the age of 60 can make such claims under the act.

Question 29

The First Family Painting Company (FFPC)employs two supervisors,seven painters,four helpers,two schedulers,two carpenters,and one office manager.They are all permanent workers of the company who work throughout the year for eight hours each day.The company's owner wants to know whether her employees are covered under Title I of the Americans with Disabilities Act of 1990,Title VII of the Civil Rights Act of 1964,and the Age Discrimination in Employment Act of 1967.In this context,which of the following is true?

A) All three laws apply to the employees of the company because the company has at least 15 employees who work throughout the year for eight hours each day.
B) The employees are covered only under Age Discrimination in Employment Act.
C) Only the painters and carpenters are covered under Title VII of the Civil Rights Act.
D) The employees are covered under Title VII of the Civil Rights Act and the Americans with Disabilities Act but not under the Age Discrimination in Employment Act.

Question 30

Title VII of the Civil Rights Act of 1964:

A) prohibits individuals with temporary or permanent disabilities from seeking employment.
B) prohibits discrimination in employment based on specified protected class.
C) applies to government-owned corporations.
D) applies to bona fide private membership clubs.

Question 31

The three main tests courts use to classify employees and independent contracts are:

A) the Master-servant rule, the Darden test, and the economic realities test.
B) the Master-servant rule, the common-law agency test, and the GAP analysis.
C) the common-law agency test, the Internal Revenue Service (IRS) 20-factor analysis, and the economic realities test.
D) the Internal Revenue Service (IRS) 20-factor analysis, Myers Briggs test, and earned value analysis.

Question 32

After graduating from college with a bachelor's degree in business administration,Emily sent an email,with her resume attached,to the Melica Marketing Company (MMC).In her email,she was only inquiring about an entry level position at the firm.When she found out that MMC had hired two of her classmates who were not of her race,Emily filed a discrimination complaint against MMC under Title VII of the Civil Rights Act.Which of the following is true of this scenario?

A) Emily has a good case against MMC because her email was clear that she was interested in the entry level position at the firm, and they did not even consider her.
B) Emily does not have a valid case because employment laws do not permit people to apply for a job via the Internet or related electronic data technologies.
C) Emily does not have a valid case because sending an email inquiry about a job does not qualify the sender as an applicant.
D) Emily would have had a valid case against MMC had she submitted her resume via a third-party job board.

Question 33

Title I of the Americans with Disabilities Act of 1990 applies to:

A) all employers with 20 or more workers, excluding state and local government employers, employment agencies, and labor unions.
B) all employers with 15 or more workers, including state and local government employers, employment agencies, and labor unions.
C) Indian tribes and bona fide private membership clubs.
D) corporations fully owned by the U.S government and the executive agencies of the U.S government.

Question 34

Which of the following is true of contingent workers hired by a company using a staffing firm?

A) They are required to be treated as employees of the company hiring them, not as independent contractors.
B) They are on the payroll of the company using the staffing firm's service.
C) They can often give joint liability between the staffing firm and the company hiring them.
D) They can be legally discriminated by the company using the staffing firm's service.

Question 35

Which of the following factors is part of the economic realities test used by courts to determine whether a worker is an employee or an independent contractor?

A) The worker's investment in an employer's business.
B) The worker's productivity.
C) The worker's age and national origin.
D) The worker's personal savings and total liability.

Question 36

In the context of the Fair Labor Standards Act of 1938,individual coverage refers to the protections offered to:

A) shareholders if a publicly held company incurs a minimum loss of $ 300,000.
B) consumers if the damages incurred by them from using a product is more than $10,000.
C) employees if their work regularly involves them in commerce between states.
D) employers if their work is temporary or seasonal.

Question 37

Which of the following laws must an employer operating a private membership club comply with,even though the business does not serve the general public?

A) Title VII of the Civil Rights Act of 1964.
B) Title I of the Americans with Disabilities Act of 1990.
C) The Age Discrimination in Employment Act of 1967.
D) The Whistleblower Protection Act of 1989.

Question 38

To determine whether a worker is an employee or an independent contractor,the Internal Revenue Service (IRS)20-factor analysis includes a consideration of whether:

A) the worker was previously employed in the same industry.
B) an employer is engaged in interstate commerce.
C) an employer provides training to the worker.
D) the worker is the member of a minority group.

Question 39

The Civil Rights Act of 1866:

A) requires employers to include independent contractors in their dental, medical, pension, and profit-sharing plans.
B) prohibits individuals with temporary or permanent disabilities from seeking employment.
C) regulates the actions of all individuals entering into a contract to employ someone else.
D) mandates wages, hours, and ages for employment in the United States, among other labor standards.

Question 40

Under the common-law agency test,the most critical factor in determining employee status is whether a(n):

A) employer has the right or ability to control the work.
B) worker has more than two years of experience in a particular industry.
C) employer is engaged in interstate commerce.
D) worker belongs to a protected group of individuals.

Question 41

Describe how the freedom to contract is important to freedom of the market.

Question 42

Cara's employer intentionally misclassifies her as an independent contractor in order to avoid the costs associated with a full-time employee.What are the consequences that Cara's employer will have to face for misclassifying her?

Question 43

Patty worked as a chief chef in the Red Tales Restaurant (RTR)in Jacksonville,Florida.When the management of the restaurant changed,Patty was asked to sign a non-compete agreement to keep her job.The non-compete agreement required Patty not to work as a chef for any other restaurant or open her own restaurant in the United States for the next 15 years if she decided to quit her job at RTR.A court would likely determine that this non-compete agreement:

A) violates common law.
B) is reasonable.
C) is enforceable.
D) violates the doctrine of unconscionability in contract law.

Question 44

Which of the following refers to a clause in a contract that identifies the state law that will apply to any disputes that arise under the contract?

A) Supremacy clause.
B) Just cause clause.
C) Due process clause.
D) Forum selection clause.

Question 45

What are the main factors when determining joint employer,or joint and several,liability?

Question 46

What are the qualifications for a valid restrictive covenant?

Question 47

Carl was employed as a chief architect with Splendid Infrastructure Inc.in Winston-Salem,North Carolina.He signed a covenant not to compete when he was hired two years ago.The agreement states that Carl cannot work with Splendid Infrastructure's competitors in the state of North Carolina for one year in case his employment with the company ends.Carl's employer finds out that Carl has been working part-time for himself,and is immediately terminated.Carl now wants to be an architect with Harold's Structures Inc.in Greensboro,North Carolina.Which of the following is true of this scenario?

A) Carl can take up the new job without any restrictions because he did not voluntarily quit his job at Splendid Infrastructure Inc.
B) Carl can take up the new job without any restrictions because a covenant not to compete is only valid for six months, and Carl had signed the agreement two years ago.
C) Carl cannot take up the new job if the location and time restrictions in the not-to-compete agreement are deemed to be reasonable by a court.
D) Carl cannot take up the new job because he was terminated from Splendid Infrastructure Inc., which makes him ineligible for a new job for the next two years.

Question 48

To be enforceable by a court,a non-compete agreement within an employment relationship:

A) must be reasonable in scope and duration.
B) must not be supported by any additional consideration to the employee.
C) should be contrary to public interest.
D) should provide benefits only to the employer.

Question 49

List the four criteria that must be satisfied by an employer to classify a worker as an independent contractor.

Question 50

Under the theory of inevitable disclosure,courts:

A) allow an employee to disclose trade secrets of his former employer to a customer.
B) prohibit a former employee from working for an employer's competitor if the employer can show that there is imminent threat that a trade secret will be shared.
C) protect government-owned corporations against the practice of whistleblowing.
D) require publicly-traded companies to publish all their financial activities at the end of every financial quarter to protect the investors' interests.