Ch 14 - Employee vs Contractor

What's the main difference between an employee and an independent contractor?

• Employees choose their own work schedule, while contractors follow set hours.

• Employees work under an employer's control, while contractors work independently.

• Contractors get benefits from the employer, while employees don't.

• Contractors get a fixed salary, while employees are paid per project.

Which of the following is NOT a way an agency relationship can be created?

• Through an agreement between principal and agent

• Through estoppel, when the principal's actions cause belief in the agency

• Through fraud, when someone falsely claims to be an agent

• Through ratification, where the principal approves unauthorized acts

What's one key trait of an independent contractor?

• They get tax withholdings and benefits from the hiring party

• They follow strict work hours from the employer

• They handle their own taxes and benefits

• They have no say in how they complete the job

Which situation might create an agency relationship by law (not agreement)?

• A shop owner hiring an assistant

• A company contracting a freelancer

• A spouse making emergency decisions for their partner

• Someone pretending to be an agent

What's a key difference between an employee and an independent contractor?

• Employees choose work hours; contractors follow strict rules

• Employers withhold taxes for employees; contractors manage their own taxes

• Contractors get company benefits; employees don't

• Employees always work remotely; contractors don't

Which of these does NOT create an agency relationship?

• Agreement between principal and agent

• Ratifying unauthorized acts

• An agent simply declaring they have authority

• Situations defined by law

When is a principal responsible for an agent's negligence under 'respondeat superior'?

• When the agent is working within their job duties

• Only if the agent breaks the law

• If the agent is a freelancer

• Only if the principal told the agent to do something wrong

How does someone get apparent authority as an agent?

• They say they have authority, even if it's not true

• The principal acts in a way that makes others believe the agent has authority

• Their job title gives them full power

• They sign a contract giving themselves authority

Which of these ends an agency relationship by law?

• The agent finds a better job

• The principal hires someone else

• One party becomes legally insane

• The principal silently stops communicating

True or False: An independent contractor receives the same benefits and tax treatment as an employee.

• True

• False