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?

Question

Quizplus · Accepted Answer

Nebusa has willfully misclassified Arnie as an independent contractor and is liable under Fair Labor Standards Act (FLSA) of 1938. Where a worker is considered an employee, the FLSA regulates the amount of money an employee must be paid per hour and overtime compensation. Employers may intentionally misclassify employees in order to avoid these and other costs and liabilities. A willful misclassification under FLSA may result in imprisonment and up to a $10,000 fine, imposed by the Department of Labor.