Texas Crammer Practice Exam

Which statement is FALSE regarding when a real estate agent is classified as an employee or independent contractor by the IRS?

1. The brokerage can require an independent contractor to have a cell phone

2. The brokerage can provide direct supervision

3. The broker can require attendance at meetings

4. The broker can set the working hours

The correct answer is: The brokerage can require an independent contractor to have a cell phone

In the context of IRS classifications, a real estate agent's status as an employee or independent contractor significantly influences the degree of control a brokerage can exert over their work. When an agent is classified as an independent contractor, the brokerage typically has less control over how the agent performs their job compared to an employee. The brokerage can establish certain requirements, like having a cell phone, but placing such a requirement does not constitute control over how the agent operates their business. It is more about providing the tools necessary for communication rather than dictating the work process. Independent contractors maintain more freedom in managing their work, hence they are not required to adhere to demands for specific types of equipment or tools unless it directly ties to the performance of their duties. In contrast, direct supervision, setting working hours, and requiring attendance at meetings are more indicative of employee status. These elements imply a level of control and dictate how the agent performs their tasks, which aligns more closely with an employer-employee relationship as viewed by the IRS. Therefore, the statement about requiring independent contractors to have a cell phone is misleading in the context of their independent classification, making it the false statement in this assessment.