Certified Payroll Professional Practice Exam

When considering worker classification, which factor evaluates if the worker exercises managerial skills affecting profit and loss?

1. Equipment control

2. Managerial skills

3. Business judgment

4. Control by the employer

The correct answer is: Managerial skills

When considering worker classification, the factor that evaluates if the worker exercises managerial skills affecting profit and loss is "Managerial skills." This is an essential criterion in determining whether a worker should be classified as an employee or an independent contractor. Workers who possess managerial skills and have the ability to make decisions that impact profit and loss are more likely to be considered independent contractors due to their level of autonomy and control over their work. In contrast, factors such as equipment control, business judgment, and control by the employer do not directly assess the worker's managerial skills in influencing profit and loss, making them incorrect choices in this context.