Chapter 2

Question 1

Nike Tran, a nonexempt employee at Refurbished Woods, in Marquette, Wisconsin, works a standard 7:00 a.m.–4:00 p.m. schedule with an hour for lunch each day. Nike received overtime pay for hours in excess of 40 per week. During the week, Nike worked the following schedule:

Day Hours
Monday 9.25 hours
Tuesday 7.5 hours
Wednesday 8.75 hours
Thursday 6.75 hours
Friday 8.25 hours
How many hours of overtime did Nike work this week?

Answer 1

0.50 hours

Explanation
Day Hours
Monday 9.25 hours
Tuesday 7.5 hours
Wednesday 8.75 hours
Thursday 6.75 hours
Friday 8.25 hours
Total 40.50 hours
40.50 hours − 40.00 hours = 0.50 hours

Question 2

London Weatherby is paid every other week while working for the federal government. Which of the following choices describes the pay frequency?

Answer 2

Biweekly

Question 3

Sage Rivera is a new employee for De Terra Glass.

Required:
Which federal forms must be completed as part of the hiring process?

Answer 3

W-4
I-9

Question 4

West Matthews, a resident of Texas, resigned from employment with Grand Lake Cattle Farms on October 6, 2023. The next pay date for the company is October 13. By what date should the final pay be received?

Answer 4

October 13

Question 5

Xailen Kelley is a new nonexempt sales associate for Oyondo Retail Stores. After completing the time card for the pay period, what is the next step in the payroll review process to ensure proper internal controls?

Answer 5

Submit the time card to her manager for review

Question 6

Addison Silva needs additional filing space at the end of the year in the company’s off-site, secured storage. There are several boxes of payroll records marked for the current year’s destruction.

Required:
What methods can Addison use to dispose of the payroll records?

Answer 6

Contact an off-site record destruction service
Shred the records, and then dispose of the shredded paper
Incinerate the payroll records marked for destruction

Question 7

Jaylin Blue is a payroll clerk at Quaking Aspens Antiques.

Required:
Through reviews of the employee files, what information should be present for each employee?

Answer 7

Occupation
Pay rate

Question 8

Camryn Klein is the payroll clerk for Neolane Transportation. A colleague who is classified as an independent contractor asks to be classified as an employee.

Required:
What factors should Camryn consider?

Answer 8

Relationship of the parties
Behavioral control
Financial control

Question 9

What are the forms of identification that establish employment authorization for the I-9?

Answer 9

Native American tribal document
Social Security card

NO - Driver’s license
Voter registration card

Question 10

What are the forms of identification that establish identity for the I-9 for employees over the age of 25?

Answer 10

U.S. passport
State-issued driver’s license

NO - School record
Certified copy of the birth certificate

Question 11

Rylen Patil is a candidate for the position of sales manager with Retrozz Furniture. This position will be required to supervise several employees and can determine the direction in which assignments will be completed.

Required:
What guidelines should be followed when classifying workers as exempt or nonexempt?

Answer 11

Department of Labor
IRS
FLSA

Question 12

Tanner Robledo is the office manager for Wardley and Sons Auto Detailing. Because it is a small office, Tanner is required to keep track of all employee records and pay both employees and contractors.

Required:
Which of the following are legal factors that will distinguish exempt from nonexempt employees?

Answer 12

Amount of supervisor-given direction
Type of work performed

Question 13

Dallas Walters, a nonexempt employee of Consolidated Utilities, works a standard 10:00 a.m. to 7:00 p.m. schedule with an hour for lunch. Dallas works in Weed, California, and the state requires overtime pay for hours exceeding 8 per day and for those exceeding 40 in a week. During the week, the following schedule was worked:

Day Hours
Monday 8.75 hours
Tuesday 7.75 hours
Wednesday 8.50 hours
Thursday 8.00 hours
Friday 8.25 hours
Based on the state’s requirements, how much overtime has Dallas worked during the period?

Answer 13

2.75 hours

Explanation
8.75 hours + 7.75 hours + 8.50 hours + 8.00 hours + 8.25 hours = 41.25 hours for 1.25 hours of overtime over 40 hours per week

0.75 hours + 0.50 hours + 0.25 hours = 1.5 hours over 8 hours per day for a total of 2.75 hours overtime in the period

Question 14

Micah Volkov is a salaried employee earning $49,850 annually. Micah is paid twice per month. Which of the following best describes the pay frequency?

Answer 14

Semimonthly

Question 15

On June 21, 2023, Dorian Goodman was terminated from Black Diamond Sports in New Hampshire. Black Diamond Sports pays its employees biweekly on Fridays, and the next payday is 7/7/2023. When must Dorian receive the final paycheck?

Answer 15

Within 72 hours

Question 16

Kal Andrews resigned from Atlas Inks on March 21, 2023. When is the earliest that Atlas Inks may destroy Kal’s payroll records?

Answer 16

March 23, 2026

Question 17

Blake Brown is a new payroll accountant at Zata Imports, a company with 250 employees. After completing all time card data for the pay period, what should Blake’s next step in the payroll review process be?

Answer 17

Ask the supervisor to verify the accuracy of the payroll data

Question 18

Jesse Oliveria needs additional filing space at the end of the year in the company’s office and chooses to use off-site, secured storage. Upon arriving at the storage facility, the unit is nearly full and there are several boxes marked for destruction at the end of the calendar year.

Required:
What are Jesse’s options regarding the destruction of the payroll records marked for destruction?

Answer 18

Jesse should arrange to have a document destruction service pick up the boxes marked for destruction.
Jesse should bring a shredding machine to the storage facility and prepare to shred the records marked for destruction.
Jesse should make arrangements to pulp or burn the paper payroll records marked for destruction.

Question 19

Sam Rogers is conducting a review of the payroll files for each employee at Meejo Games.

Required:
Which of the following items must be present in the file?

Answer 19

Hours worked during each pay periodCorrect
The basis upon which compensation is paidCorrect
Overtime pay earned during each pay period

Question 20

Jamie McCarthy is preparing to compute employee pay and needs to determine the amount of employee federal income taxes to be withheld. Which of the following should be consulted?

Answer 20

IRS Publication 15-T

Question 21

Dana Baker is a new employee of Farnsdel and Babcock, LLP.

Required:
Which of the following will provide proof of employment authorization for the completion of the I-9?

Answer 21

U.S. passport
U.S. citizen identification card

Explanation
U.S. Passport – a U.S. Passport will establish both identity and employment authorization.

Question 22

Reed Pelliere is completing the I-9 as part of the new employment file with the state of New Mexico.

Required:
Which of the following provides proof of identity?

Answer 22

New Mexico driver’s license
U.S. passport

Explanation
U.S. passport – a U.S. passport will establish both identity and employment authorization.

Question 23

Corey Watkins is a candidate for the position of marketing manager with the promotions department of Paramba Productions, earning $17.50 per hour. Corey will work occasional overtime in the new position and will not have managerial or supervisory duties as a regular part of the job description.

Required:
Why should Corey be classified as a nonexempt employee?

Answer 23

Corey has no supervisory or managerial duties.

Question 24

Ryan Marshall manages a ski resort with year-round and seasonal employees.

Required:
Assuming that the ski resort engages in interstate commerce, what FLSA requirement(s) should Ryan consider?

Answer 24

Number of hours worked per week
Employee age and weekly work schedule
Hourly wages paid to employees

No- Safety of the working conditions

Question 25

Xian Oni is a part-time worker for Senior Solvers and uses company equipment to perform job duties. Xian asks the payroll supervisor to grant independent contractor status.

Required:
What should the payroll supervisor tell Xian?

Answer 25

Since Xian uses the company’s equipment in the performance of his duties, there he would not qualify for an independent contractor since he does not have financial control of the equipment.

Question 26

You are the new payroll supervisor for your company. Which payroll documentation control procedures are now your responsibility?

Answer 26

Training of payroll staff
Separation of duties
Maintenance of paid time off (i.e., vacation, sick, etc.)
Access to payroll data
Payroll system security

Question 27

Finley Figueroa is a new employee in the payroll department of Octolium Computers. After working at the company for one week, Finley asks you why it is so important to submit new-hire documentation.

Required:
What guidance will you offer?

Answer 27

Finally to enable the tracking of COBRA benefits
Reporting creates a registry to monitor child support obligations.
Tracks immigration to ensure individuals are legal to work in the United States
Ensures that individuals in professions that can have sanctions are legally able to continue to work

Question 28

You are the payroll accounting clerk for your company, Conose Advertising, which has 50 employees. The controller has recently switched the firm from an in-house payroll system to an outsourced payroll provider. What are your responsibilities within the company for payroll records and employee file issues?

Answer 28

Retention periods
Maintaining payroll records
Ensuring timely filing of tax and withholding amount
Document destruction

Question 29

Maria Rupert is the payroll supervisor at All Family Investments. Management is asking to have the investment salespeople, who are paid on an hourly basis, be classified as exempt employees because their job duties occasionally require evening and weekend work.

Required:
What tests should the investment salespeople meet to achieve exempt status?

Answer 29

Advanced knowledge
Independent judgment
Duties
Advanced learning

NO - Reimbursement of board, lodging or other facilities availed
Compensation such as discretionary bonus

Explanation
The U.S. Department of Labor requires that employees meet all tests to achieve exempt status under one of the following: executive exemption, administrative exemption, and professional exemption. Since the investment salespeople do not meet the qualifications for exemption, they would need to stay non-exempt.

Question 30

Twinte Cars, a California corporation, has internal corporate requirements that stipulate a three-year payroll document retention period. It enters into a contract with an international company that mandates a six-year payroll document retention requirement. How should Twinte Cars balance these requirements?

Answer 30

The longer retention period would be appropriate to satisfy the record retention requirements under the contract.

Question 31

Teagan McCormick is a full-time life insurance agent with Centixo Insurance, a small insurance company. The company has classified Teagan as an employee. Teagan feels the classification should be independent contractor because there are no company benefits and Teagan sets the office hours. Should Teagan be reclassified as an independent contractor?

Answer 31

No, of the three tests, Teagan does not meet the relationship of the parties and should be treated as an employee.

Question 32

Ash Hardy is an employee of Polyent Plastics, a company with headquarters in Rock Island, Illinois. Ash lives and works in Doha, Qatar, and earns an annual salary of $97,300. The company has been withholding U.S. federal income taxes from the pay, but Ash believes the wages should be exempt as an expatriate. What course of action should Ash take?

Answer 32

Ash would need to file IRS Foreign Earned Income Exclusion.

Question 33

Stevie Webb is an independent contractor for Antimbu Exports, where you are the payroll accountant. Stevie feels entitled to employee benefits based on the number of hours dedicated to the company.

Required:
What guidance could you offer Stevie?

Answer 33

Independent contractors are most frequently treated as a vendor and would not be included in employee benefits.
The number of hours committed is not one of the defining traits.
There are specific tests that determine the relationship between employer and employee.

NO - Stevie’s compensation should be handled by the payroll department because she is a human resource.

Question 34

Max Wexler was terminated for cause by Santel Auto Parts in North Carolina on July 20, 2023. As of the date of his termination, he had worked 22 hours of regular time. Employees at Santel Auto Parts are paid semimonthly on the 15th and last day of the month. Max would like to know when the final paycheck will be available.

Required:
What will you tell him?

Answer 34

North Carolina states that terminated employees should receive their paycheck on the next regularly scheduled payday, so it will be the end of the month.