Question 60

Licensee A is a contractor and Licensee B is an employee.

Licensee A operates as a contractor, receiving commissions based on a split agreement and working independently from home. In contrast, Licensee B is classified as an employee, working regular hours in the office and receiving a salary plus bonuses for performance.

A) Licensee A is an employee and Licensee B is a contractor.

This option is incorrect because Licensee A is not considered an employee; rather, they work as a contractor under a commission structure. Licensee B is clearly identified as an employee due to their fixed hours and salary arrangement.

B) Licensee A is a contractor and Licensee B is an employee.

This option is correct as it accurately reflects the working arrangements outlined in the extract. Licensee A operates as a contractor, earning commissions, while Licensee B is an employee, receiving a salary for their work in the office.

C) Licensee A and Licensee B are both contractors.

This option is incorrect because Licensee B’s status as an employee contradicts the assertion that both are contractors. Licensee B's salary and structured work hours establish them as an employee, which cannot align with this choice.

D) Licensee A and Licensee B are both employees.

This option is also incorrect as it misrepresents the relationship of Licensee A. Licensee A is a contractor working independently, while only Licensee B is classified as an employee.

Conclusion

The correct answer, that Licensee A is a contractor and Licensee B is an employee, is supported by their respective working conditions and payment structures. Licensee A’s commission-based income and independent work arrangement distinctly classify them as a contractor, while Licensee B's salary and set office hours clearly indicate employee status. Thus, all other options fail to accurately represent their relationships with ABC Realty.