How do I classify a new sales position?
September 13, 2011 1:55 PM   Subscribe

As an employer in WA state is it better for me to classify a new position as a independent contractor or as an 'outside salesperson'? How do I find out?

I am adding a new position to makes sales calls. The position definitely fits all the criteria for an 'outside salesperson', which means exempt from minimum wage and overtime pay. (commission based, from home, part time, etc).

I am having a draft contract agreement drawn up and my lawyer suggested that this position would be better classified as an independent contractor. From my working with ICs in the past it seems that the position would fill those requirements as well. What are the practical differences for me? How do i calculate which is best?
posted by bq to Law & Government (4 answers total)
"Better" in what way? I'm assuming that you and your lawyer are correct that the position will satisfy the federal and state criteria for the outside sales exemption. The obvious practical advantages of using independent contractors are that you need not involve yourself with their payroll taxes or benefits. You just pay them what's agreed upon in the contract. A downside is the lack of control you then have over them, if that's in any way significant.
posted by MoonOrb at 3:34 PM on September 13, 2011

What kind of control? (really)
posted by bq at 4:54 PM on September 13, 2011

What kind of control? (really)

You can obligate employees to follow certain policies that you can't as easily obligate an IC to follow. Maybe like wearing a particular uniform, doing tasks in a particular order or particular way, keeping a certain schedule, using certain materials for their work, and so on. Or, to think of it another way, you can only obligate your IC to do what's agreed upon in the IC agreement. In the case of an employee, you can reassign them to other responsibilties, locations, dictate their work hours, to name a few examples. (Some of these things you could include in the IC Agreement, but the more of this that's in there, the more they're in fact your employee--and then you're on the hook for payroll taxes, L&I contributions, etc.) Think of all of the policies and procedures that you might see in an employee handbook. Seriously, if you can't really think of the type of control you'd like to have over someone who's working for you, this doesn't sound like a really big deal.

Having outside salespeople be ICs is pretty common--just think of the real estate and insurance industries, for example. What your lawyer is proposing isn't radical at all. As long as you're confident that they'd otherwise meet the outside sales exemption, you don't need to worry about minimum wage/OT issues in the first place, and it's a lot less administration for you as long as you don't mind that they only do what's laid out in the IC Agreement.

Some businesses might just prefer to have employe
posted by MoonOrb at 5:10 PM on September 13, 2011

Thanks - I have been trying to think of practical differences, but in this case I just can't think of any. No uniforms, no required hours, etc., etc., etc. In the end I think I will want them NOT to be ICs because I don't want to force them to have to pay payroll taxes. Thanks for the feedback.
posted by bq at 2:27 PM on September 16, 2011

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