Question

Salvatore and Annette are sales managers for Acme USA. Both work full-time in the Acme offices under the same manager, and share the same type of job responsibilities. Salvatore was hired as an employee, and is paid a salary. Required federal and state tax withholdings are made by Acme for Salvatore. Annette was hired as an independent contractor, and is paid by the project. No federal and state withholdings are taken for Annette, and she does not receive retirement or health insurance benefits. Which of the following is the likely true?
a. Acme properly classified Annette as an independent contractor.
b. Acme willfully misclassified Annette as an independent contractor and is liable under Fair Labor Standards Act of 1938.
c. Acme has no rights to withhold federal and state taxes for Salvatore if he is classifed as a full-time employee.
d. Acme has to provide more health and retirement benefits to Annette than Salvatore because Annette is an independent contractor.

Answer 1

Answer:

A

Explanation:

Acme classified Annette as an independent contractor and as such, isn't entitled to certain benefits as compared to Salvatore that was hired as an employee. A contracting staff's timing and work benefits are always limited in comparison to that of an actual employee.

Answer 2

Answer: B. Acme willfully misclassified Annette as an Independent Contractor and is liable under the Fair Labor Standards Act of 1938.

Explanation:

A full-time employee is bound by the rules and regulations guiding the organization he works for and is placed on a salary with accompanying benefits. Whereas, an independent contractor is a self-employed worker hired by the company to handle some projects or tasks for them. He has the freedom to work at his own pace.

If Annette is now a full-time worker, he is entitled to benefits as well as tax withholdings by the company. Since the company now makes Annette work full-time, it simply means that he was willfully misclassified as an independent contractor and therefore, the company is liable under the Fair Labor Standards Act of 1938.