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100% Commissioned Sales Reps and Company Rules

Lori1Lori1 29 Posts
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Our company has outside sales reps that work on commission only. We pay their commission and take care of all taxes. Several of these employees feel that they are independent and do not have to follow company rules. They feel that they can take as much vacation time as they want because they feel if "we don't work, we don't get paid". Are commissioned outside sales reps considered to be independent contractors or company employees and are they required to follow rules associated with other salaried and hourly employees. Please advise


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  • PorkPork 1,271 Posts
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    Lori1 get a free copy of Fed Regulations Part 541 from your DOL for free. 541.500 specifically covers the definition of outside sales, an exempt employee. Your concerns are not well founded as an HR issue! Instead your concerns read like a performance issue. Most outside sales people are after their goals at any hour or activity which will assist them in getting to the sale and delivery of product or sales goal. HR should not be concerned or get involved in trying to discipline benefit systems designed to support the labor and management team unless you are going to likewise provide credit for the sale he/she made on the golf course or at a dinner table or while on a day off for whatever reason. They can be either exempt employees or independent contractors. You should hope they are independent contractors so that you do not have to keep an accounting of their benefits, etc. Good luck Pork
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  • Lori BLori B 172 Posts
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    This could require someone with expertise in your state. There are some states that have separate laws on point just for sales reps that are paid by comm'n only. For ex, in Ilinois, such people are specifically exempted from coverage under the wage laws that cover ees. Thus, an inference is created that they are truly independent. If (this is a big if) they are truly independent, the Fair Labor Standards Act and its accompanying regs, would not even apply.

    The solution is to outline mutual expectations in your contracts with these folks. If you expect them to comply with company procedures, then make them agree to that up front.
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  • PorkPork 1,271 Posts
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    Lori B except when you are in an "At Will" state and then you do not want anything having to even resemble a contract. You could create a letter of offer and in there lay out the terms of your offer. Pork
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