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Independent Contractors AND Employee Salespeople North Carolina North Carolina

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  • Independent Contractors AND Employee Salespeople North Carolina North Carolina

    I've just started as a sales rep (independent contractor) for a company that also has some reps who are employees. The sales manager, as well as a couple of other reps, are employees working out of the corporate office. The owner of the company frequently makes sales calls outside the home office area, and he is an employee.

    Question: Is it legal to have sales reps of both type, doing the same job? It seems like it should be, but I've heard otherwise and cannot think of any examples in my own career. This is not an issue of employees vs independent contractors in the normal sense, where one is being treated like the other. That is handled fairly well.

    Thanks!

  • #2
    It would come down to if there a difference in managerial/financial or behavioral control between the two groups. There should be less constraints on the IC than the employee (i.e. the employee could also sell other products and work for other businesses or decide which hours to work and truly there should be a contract that spells out how the IC is paid and that usually is different than an employee).

    Generally, it can be a red flag to have both an employee and IC in the same position and many companies try to avoid it. It is not against the law, but is a gray area like you pointed out. Depends on how "gray" the employer wants to be and what they think they might be able to get away with I've seen some make the decision because they don't want to have to deal with income/payroll taxes in a different state, etc. So there are some good reasons...but it does get back to the "gray". Each situation is dependent on those specific facts though.

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    • #3
      Thanks

      You are right about the reason for doing it - to avoid the hassle of having employee salespeople spread out in several states. Which would be fine if the IC never found himself in competition with the employees, but that does happen sometimes. Good info - thanks!

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      • #4
        Might also depend on the industry. There is something called "statutory non-employees" where someone wrote a specific law which overrides the old Common Law tests for worker classification. Generally speaking for worker classification one looks at a number of factors and the balance of the factors determine whether the worker is an employee or independent contractor. Federal FLSA and most states tend to be pretty vanilla Common Law. IRS however has their own "20 factor" test associated with the IRC law and a few SCOTUS decisions. And IRS also tends to have the statutory employee and non-employee exceptions. Off the top of my head, life insurance sales persons, and real estate brokers are the obvious examples.
        "Reality is that which, when you stop believing in it, doesn't go away".
        Philip K. **** (1928-1982)

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