Legal Question in Employment Law in California

Re: How do I hire an outside salesperson?

The State and Feds do not favor independent contractor arrangements. If the individual does not look like he is "in business" you are running a risk that he will be found to be an employee and all of the tax reporting, workers comp and wage and hour rules will apply.

Certain types of sales workers are statutory employees under California law, so even of you have an independent contractor agreement, they will be found to be employees.

If you retain the services of a sales organization, such as a manufacturers representative, so long as they are clearly in business and providing sales services to other businesses you may be OK. But, if you hire an individual who is not established in business, you must meet a high standard to not be stuck with employment status.

The fact is that many businesses violate these rules. Some get caught with fines and penalties, and others are never caught. Interestingly, they are usually caught when the individual files a workers' comp or unemployment claim, and the employer denies the claim on the basis of independent contractor status. The EDD then begins an investigation into the employment status of each individual reported on a 1099 and can assess payroll taxes and penalties. Under Workers' comp, the potential for penalties for being uninsured is often the issue.

Our firm assists small and medium size businesses in complying with California and Federal employment regs. If we can be of assistance, feel free to call, 800-522-6728.

Re: How do I hire an outside salesperson?

Taking free advice over the web to make important decisions that could result in severe penalties if wrong, is probably not a good idea.

You generally can't legally have your salesmen on 1099 status. He will normally have to be an employee with normal withholdings, etc.

You should consult with experienced counsel to get an opinion and specific advice based upon all the facts of your business. Contact me if interested.