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Employment Law/Hiring sales reps as independent contractors/1099s


QUESTION: Hi Shirley,

I'm starting a business as a contractor for different types of distributors (medical devices, pharmacy services, medical supplies, etc.) and want to contract sales reps as independent contractors to promote and market my future client's products and services. Some sales reps will only promote for one distributor and some will promote for more than one.

I've read the IRS and my state's (MA) laws on what is an employee vs. an Ind. Contractor but I'm confused about how this impacts hiring a sales person as a 1099.I do know I have to create a work agreement.

With the type of business that I want to start, can I hire sales reps as 1099s? Can I pay a medical sales rep a commission or flat amount per sales?



ANSWER: Outside sales working as distributors outside the office are exempt from the W-2 requirements and may be paid by 1099.

Outside sales is the only exempt category. If you need FLSA webiste showing this let me know and I will look it up for you


---------- FOLLOW-UP ----------

QUESTION: Hi Shirley,

Yes, please do let me know where this is on the FLSA website or please provide me with the direct link to it. Thanks so much for your help!



As long as you have contracts and do not direct the distributor's business they will not be employees. You cannot furnish a place to work tools, tell them when to be at work or direct them on how to do the work.

If they are treated as employees they will become employees.


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Shirley McAllister, CPP, PHR


I can answer questions about payroll laws and payroll tax laws and Human Resource laws and agencies. I can answer federal payroll and human resource law questions and most states; I do not have a knowledge of the local taxes for cities and counties within the state. If and when I can I will try and send you the website where you can reference the answer and where you can obtain more information as well as a contact number if needed for that particular agency. Some agencies I have worked with are IRS, Department of Labor (federal and state), Revenue Canada (and provincial governments), Inland Revenue, OSHA (0ccupational Safety and Health Administration); Social Security Administration and National Child Support as well as other agencies in Payroll and Human Resources. Some Laws I am particularly familiar with are FLSA (Fair Labor Standards Act), ADA (Americans With Disabilities Act), FMLA (Family Medical Leave Act) COBRA (Consolidated Omnibus Reconciliation Act ) , QDRO's, QMCSO's, and other support orders and garnishments, USERRA (Uniformed Services Employment and Remployment Rights Act,PPA Act (Pension Protection Act of 2006, As well as most other employment type acts. I am also well versed in the Title V Civil Rights Act and the HIPAA (Health Insurance Portability and Accountability Act).


30 years in Payroll and Human Resources

SHRM (Society of Human Resources) APA (American Payroll Association) DOLEA (Department of Labor Employers Association) CPA (Canadian Payroll Association) NAPW (National Association of Professional Women) The Mentoring Network

PHR Certification in Human Resources CPP Certification in Payroll in U.S. Payroll Administrator and Payroll Supervisor certification in Canada

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