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comments on outside sales

September 8,  2021
comments on outside sales from article on September 1, 2021
    You had some good advice for Name Withheld whose 1099 sales rep has gotten an alarm license and is selling him contracts. You recommended the Sales Affiliate Agreement, but I would suggest that Mr. Witheld, also engage you to prepare a Non Solicit Non Acceptance Agreement between him and your company and between the two companies.
    I have spent a lot of time preparing valuations (and testifying in Court) documenting the amount of damages that occur when the “Sales Affiliate,” or one of their employees, starts pilfering these customers. Many times they will wait out the original term of the contract and then approach the customer and induce them to sign another contract. I even worked on a case in which the perpetrator set up an elaborate database of customer names and contract dates. As much as I like to do valuations, preparing one for an innocent company owner who has been defrauded out of $10,000 or more RMR isn’t fun.
Mitch Reitman
Reitman Consulting Group
Fort Worth, TX
    Good point, but the Independent Affiliated Sales Agreement already covers confidentiality and protects against competition and poaching of your customers. So does the Subcontractor Agreement and so does the Employment Agreement.
I won't say K&K has thought of everything, but we try.
another comment
    In reference to your article on September 1, 2021 (Relationship with Outside Sales), do you think you should mention that not all states allow for outside sales? Technically, if you are a 1099 sales rep, you are not an employee but rather an independent "contractor". I am uncertain how anyone can work in any state under this arrangement as you are not governed by the rules and laws of licensing and the general public is having security solutions sold to them, and designed by unlicensed individuals who are not even working for a license holder. In most cases, licensing demands that the holder check the backgrounds of individuals who sell, design, and install security solutions. The license holder is also responsible for all employees that work under his license.
    I recognize the individuals in your newsletter ended up all being licensed but they started out as 1099 "employees" aka independent "contractors". In Florida that arrangement would not fly. I know other states allow it but it is a recipe for potential issues.
  Best Regards,
David Botknecht, CEO
HW Automation, Inc.
    Great observation and point. However you assume the 1099 contractor is not licensed. As you point out, if selling in a state that includes "selling" as part of "engaging in the alarm business' then the 1099 contractor needs to be licensed; should be insured too.
    If the 1099 contractor isn't licensed, and should be, the engaging company would have to list him as an employee for license purposes and that would likely defeat the 1099 status. Bottom line, independents need their own credentials.
another comment
    I am read your e-mails in respect to issues within the industry and we are also using your contract for our own accounts.
    With reference to “Relationship with outside sales” does this also pertain to California. We have significant issues in respect to Independent contractors if the state accept this category.
    I understand that the sales person below is an individual and the person has obtained an ACE license (alarm company employee or alarm company agent) and not the ACO (alarm company operator). Is this a correct assumption? Everyone in California need to have and ACE license in order to sell or install an alarm system.
    By using your form the “Independent Sales Affiliate” for a sales person with an ACE license is he/she an independent contractor also looking from the state of California and the EDD (employment development department)?
    Furthermore, I assume that the outside sales person only is doing the sale and no installation?
    I do hope that you can put some light on this issue since this is a very difficult problem in California if a sales rep is independent contractor or need to be an employee?
Martin Askgaard
Millennium Alarm Systems
    The same response I gave to David, above, applies, even in California. A distinction in California is that California has enacted strict laws regarding classification of employees and subcontractors. The law differentiates the two categories and favors the employee status. By that I mean the law sets high standards to be met in order for a subcontractor to fall in the subcontractor - or independent contractor - status. The extend of the law in CA is beyond this response, but I recall that it includes the criteria that the hiring company not engage in the service that it is subcontracting to an independent contractor. So if the alarm company doing the hiring also does its own sales then it probably can't engage independent sale affiliates in CA; they would have to be employees.
    As you point out, sales people in CA [and many other jurisdictions] need to be licensed or otherwise credentialed by registration or certification. In CA it's a license. If someone wants to be an independent operator then both the hiring company and the independent contractor needs to have whatever license is required of them; one can't depend on the other's license.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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