BRC Partners Is a Consulting Firm

question 15

Multiple Choice

BRC Partners is a consulting firm. Sam and Arnie are analysts for BRC. Sam was hired as an employee and Arnie was hired as an independent contractor. They both work in the same BRC office under the same supervisor. They both must work Monday through Friday during standard business hours. Both are required to report to weekly staff meetings. Sam is paid a salary and the proper federal and state tax witholdings are made. Arnie does not receive benefits like retirement and health insurance and he is paid by the project with no federal and state withholdings. Arnie signed a contract that clearly stated he was an independent contractor and not an employee.

• A) BRC has properly classified Arnie as an independent contractor.
• B) BRC has improperly classified Arnie as an independent contractor.
• C) BRC has improperly classified Arnie as an independent contractor, however, its contract with Arnie is binding and BRC will have no liability under federal or state law for the misclassification.
• D) BRC has improperly classified Arnie as an independent contractor, however, its contract with Arnie is binding and BRC will have no liability under federal and state law for the misclassification, but Arnie will have liability under federal and state law.

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Definitions:

Percentage Change

A mathematical calculation that indicates how much a number has increased or decreased in percentage terms relative to its previous value.

Price Elastic

Describes how sensitive demand for a product or service is to changes in its price; high elasticity indicates significant demand change with price fluctuations.

Nondiscretionary

Pertaining to expenses that are essential and not subject to personal choice, such as food, housing, and utilities.

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to purchase at different prices.