KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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relationship with independent sales person and contracts
September 7, 2017
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relationship with independent sales person and contracts
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Ken,
We have a salesperson who is an independent contractor who has his own corporation for his tax reasons. He is paid by us on a commission only basis. Many times when he makes a sale/lease he has the customer make out the deposit payment to his company and takes a credit against his commission. We do use your contracts.
My question to you is, is this proper and will it interfere with the contract the customer signs either in a legal sense with our insurance carrier or if a collection case is brought at some point in the future. All payments are recorded to the customer account but this does give me some concern.
Please let me know your thoughts.
Anonymous
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Response
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Some alarm companies prefer to treat their sales help as independent contractors rather than employees. This arrangement is acceptable, both from an employment and enforcement of contract perspective, but fraught with issues that can complicate both employment and contract legal issues.
- you won't be withholding and paying in taxes
- the person won't be covered by the company's disability and workers comp policies
- the person won't be covered under the company's Errors and Omissions policy
- the person won't be covered under the company's license
- A truly independent contractor, including an independent sales person,
- will not be subject to any specific work schedule you impose
- will not be restricted from engaging in other activities, business or otherwise, though you can impose certain non-compete restrictions
- should carry all necessary insurance, which will include E&O, unless you can name the independent contractor to your E&O policy by additional insured endorsement
- should be licensed, registered, documented or certified, depending on what your jurisdiction requires for an alarm sales person. Even though you treat the relationship as independent contractor your choice may be to either cover the sales person as an employee for license purposes, or require the sales person to get his or her own alarm license.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com