Which statement about the employee definition in payroll terms is most accurate?

• A. An individual who works for an employer, is listed on payroll records, and is under direction or control
• B. An independent contractor
• C. A volunteer
• D. A person who is a subcontractor

Answer: (A)

In payroll terms, an employee is someone who works for an employer, is included on the employer’s payroll records, and is under the employer’s direction or control. This combination matters because being on payroll means taxes and withholdings are taken for the worker, and the employer has authority over how, when, and where the work is done.

An independent contractor, by contrast, typically works for themselves or another company, is paid under a contract, and controls how the work is performed, with no payroll withholding by the employer. A volunteer isn’t compensated at all, so they aren’t on payroll. A subcontractor is usually a separate business or individual contracted to provide services, not an employee on the employer’s payroll.