Would this compensation structure qualify our salesmen as employees?

[fstep2]

What is the name of your state (only U.S. law)? NY

Basically to this point we have been paying our sales team on a pure commission structure. What we are considering doing now in the interest of acquiring higher level talent is offering x$ per completed appointments.

Example: $100 for every 25 completed and confirmed appointments per week (meaning they get to the clients location, complete say a 15 minute pitch, get us on the phone at the end and we confirm). If a salesmen does less than 25 appointments in a week they get nothing.

What we don't want to do is turn the salesmen into employees, right now they are basically affiliates, so I want to make sure this addition will not force us to do that.

 

[quincy]

What is the name of your state (only U.S. law)? NY

Basically to this point we have been paying our sales team on a pure commission structure. What we are considering doing now in the interest of acquiring higher level talent is offering x$ per completed appointments.

Example: $100 for every 25 completed and confirmed appointments per week (meaning they get to the clients location, complete say a 15 minute pitch, get us on the phone at the end and we confirm). If a salesmen does less than 25 appointments in a week they get nothing.

What we don't want to do is turn the salesmen into employees, right now they are basically affiliates, so I want to make sure this addition will not force us to do that.

I do not see your plan as a good way to meet your intended goal of attracting higher level talent. I suggest you sit down with a business law professional to discuss better options.

 

[fstep2]

I do not see your plan as a good way to meet your intended goal of attracting higher level talent. I suggest you sit down with a business law professional to discuss better options.

This model has been proven to work and my background is primarily in marketing so I know how to sell it. I am just concerned about the issue above.

 

[quincy]

This model has been proven to work and my background is primarily in marketing so I know how to sell it. I am just concerned about the issue above.

What company-examples do you have of this type of commission structure working to attract higher level talent?

I do not see a work-around for you, fstep2. You can perhaps get a sales force willing to work without commission until a quota is met, but they will need a base pay so I do not see you doing this with independent contractors.

In fact, I sort of question the way you are classifying your workers now.

Again, I suggest you sit down with a business law professional to go over your current business structure and to see if anything close to what you want to do is possible.

 

[fstep2]

What company-examples do you have of this type of commission structure working to attract higher level talent?

I do not see a work-around for you, fstep2. You can perhaps get a sales force willing to work without commission until a quota is met, but they will need a base pay so I do not see you doing this with independent contractors.

In fact, I sort of question the way you are classifying your workers now.

Again, I suggest you sit down with a business law professional to go over your current business structure and to see if anything close to what you want to do is possible.

kirby vacuum is one that does it very well

Well this is a tricky form of base pay, under which they are not guaranteed base pay unless they complete x appointments. I know my conversion rate so it works out for me, but shouldn't it fall under this (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Statutory-Nonemployees) since payment is tied to output considering they don't get paid if they don't complete the set # of appointments?

 

[cbg]

Considering Kirby Vacuum's reputation, I'm not sure I'd be making the comparison in public.

 

[fstep2]

Considering Kirby Vacuum's reputation, I'm not sure I'd be making the comparison in public.

They have a poor reputation because their products are overpriced and their pitches are annoying, but they do attract salesmen doing this very thing from pretty decent companies who do pay base (my former client lost 2 of their best who were making 40k base + high comm), so the pitch does work.

 

[quincy]

kirby vacuum is one that does it very well

Well this is a tricky form of base pay, under which they are not guaranteed base pay unless they complete x appointments. I know my conversion rate so it works out for me, but shouldn't it fall under this (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Statutory-Nonemployees) since payment is tied to output considering they don't get paid if they don't complete the set # of appointments?

First, I agree with cbg. Kirby is not a company whose business structure is one you want to copy. They have been sued numerous times for labor violations.

Here from the New York Department of Labor is a decision involving Kirby that you might find informative, on employee versus independent contractor classification (make note of the penalties): https://labor.ny.gov/iba/decisions/pdf/PR 08-090.pdf

I think you need to sit down with a business law professional in your area of New York, fstep2. I do not see your proposed payment plan a workable one. The attorney you see can advise and direct you after a personal review of your current business structure.

Good luck.