Independant Contractor Sales Position Trial Period
I am thinking of hiring a sales person for my business. Is it legal to: 1. Hire salesperson on independent contractor basis? 2. Have a one week trial period and if they don’t make any sales not be bound to pay if stated beforehand in a contract?
I thought about the free trial period and it sounds unfair. So I would change it to trial week where they will be paid on 100% commission and if they bring one sale their weekly base and commission mode kicks. What do you think?
Answer: You can’t have someone work a week for free, you moron. One week is a completely unfair period. Usually it’s like a 90 day probationary period. You want 6 of one and 1/2 dozen of the other. Sounds like you’re trying to get out of paying taxes. An independant contractor can be told what job needs to be done, but you cannot control how it gets done. http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
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3 Responses to Independant Contractor Sales Position Trial Period
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The Fair Labor Standards Act (FLSA) is very clear on what is an independent contractor and sales person, and the manner in which they should be paid. I suggest you go to the Department of Labor website and read up on your state laws and the FLSA. The IRS would be the least of your problems if you are reported to DOL for non payment of wages for work done. Especially if you are in states such as California. You are making a huge mistake bringing someone in to work for an entire week and because they do not make a sale they will be paid nothing. If he/she cannot make a sale does not mean he/she did not work trying to make a sale(s) for your company especially if sales will be done from a desk in YOUR office. Huge difference when it comes to inside sales/outside sales.
First, the IRS has a checklist to determine if someone is truly an independent contractor or an employee. Normally, if you direct their activities they are an employee. Here is an IRS link to help you determine if your potential sales person is an employee or not.
http://www.irs.gov/charities/article/0,,id=131136,00.html
Second, this sounds like a pure commission income only position (which would help in your independent contractor decision-making issue). If it is purely commission and they fall into the independent contractor status, you could write up the contract stating they get paid commissions only. It’s quite common actually.
But, if they are an independent contractor, you really can’t say they are on a probationary period since they are not your employee.
You need to check out the IRS rules on independent contractors — it’s a slippery slope.
You can’t sign away your right to at least minimum wage in a contract. You would be better off to run any contract by an attorney to be safe.