Announcement

Collapse
No announcement yet.

1099 vs W-2 employees - sales Louisiana

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • lawrenea
    started a topic 1099 vs W-2 employees - sales Louisiana

    1099 vs W-2 employees - sales Louisiana

    We recently had a DOL audit and they said that Louisiana is one of the few states adopting the new labor laws requiring that sales staff be paid with W-2s rather than 1099s. We have two salesmen on staff, one is a person, the other is paid commission through his LLC. Not a big deal to hire the other guy and pay his commissions out of payroll. Obviously, the LLC would like to continue to be paid through his LLC and 1099'd at the end of the year. But, can we still do that? Or do we have to hire him because he is classified as outside sales? Since he is a corporate entity, it makes sense but does his classification within the company supersede his role? Thanks!

  • DAW
    replied
    The last changes to 29 CFR 541 occured in 2004. I will give you a pointer to the current rules on Outside Sales.
    http://www.dol.gov/whd/regs/complian...tsidesales.htm

    You probably should also look at the following:
    http://www.dol.gov/whd/regs/complian...a_overview.pdf

    The federal DOL's misclassification initiative is something they do every few years. Generally every time a new President is elected, their new DOL Secretary is just shocked to discover that people are breaking the law by misclassifying workers as non-employees. Something that was happening all the way back to when FDR was president. But if it was illegal now (and it probably is), then it was equally illegal back when these folks got hired. I understand that is not what you want to hear. It is nice that your state has signed on but that does not effect federal law one way or the other.

    Sellling contract for construction work does not trigger one of the IRS statutory non-employee exceptions.

    Leave a comment:


  • lawrenea
    replied
    Thanks for your reply! I can't for the life of me find the law but our attorney refers to 29 CFR Sec. 541, which covers exemptions of outside sales. She also referenced DOL press release dated 2/9/12 that Louisiana signed on to partner to correct misclassified employees. www.dol.gov/misclassification

    I guess what I really need to know is should the LLC guy dismantle his LLC because he must be hired and paid through "normal" channels and not as a sub/1099? All this makes my head spin!

    These guys -- under an entity and as person -- were selling contracts for construction work.

    Leave a comment:


  • DAW
    replied
    It is very unlikely that there are any new laws in play. It is very likely that the workers were always legally employees and the person who paid them was not doing things correctly. Federal DOL rules on worker classification have not changed significantly in a long time, and the feds could not care less whether or not any state wants to adapt the federal rules. All states are subect to federal labor law, period, no excpetions.
    http://www.dol.gov/whd/regs/compliance/whdfs13.pdf

    In theory your state could have passed some laws and by DOL you meant your state's DOL, but federal labor law (FLSA) has been in play since 1938.

    Can I ask just what is being sold? There is a small chance that from IRS's viewpoint we are talking about statutory non-employees. IRS and DOL do not always agree on just who is an employee. In fact federal and state DOL do not always agree on just who is an employee. But there is nothing any state can do to make a federal "this is an employee" decision go away. State rules affect state wage/taxes only.

    Leave a comment:

Working...
X