- CFA Exams
- CFA Level I Exam
- Topic 10. Ethical and Professional Standards
- Learning Module 71. Guidance for Standards I-VII
- Subject 12. Standard IV (A) Loyalty
CFA Practice Question
A written or implied contract must exist between employee and employer. True or False?
Correct Answer: False
An employee is someone in the service of another who has the power or right to control and direct the employee in the material details of how work is to be performed. A written or implied contract may or may not exist.
This question applies to Standard IV as a whole.
User Contributed Comments 5
| User | Comment |
|---|---|
| kalps | An employee does not have to have a written contract, as long as the employer can direct the actions of the employee then he or she is classed as an employee, please note that a contracor is exemppt from certain actions such as getting other clients on the basis the he is independent |
| bobert | When would a person be considered an employee who is not contracted or paid? |
| stevens | being an employee does not have anything to do with money, as long as the employer can control and direct ...... |
| apiccion | @bobert, I believe it depends on the legal classification of the relationship. In my country an employer/employee relationship requires that the employer fulfill certain obligations to the employee such as deducting income tax from salary, providing due notice and/or compensation for termination, etc. A contract relationship could be a consultant/company relationship. Where the terms of the arrangement are largely determined by the written agreement between the company and the consultant. |
| mtsimone | In the US tax code, providing the tools to do the job and controlling how and when the work is performed defines and ER/EE relationship. To control only the work product (and presumably the delivery date) defines an independent contractor. As always, facts and circumstances will round this general outline out. |