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For this assignment, assume you are the owner of a small business in the Midwest with a sales force of ten people whose territories cover five states. Your sales force is commission-based, so their earnings depend on whether they exceed or fall short of their monthly sales quotas, which are determined by the company. At the time a salesperson joins the company, you have them sign an agreement acknowledging that they are independent contractors, not employees. The agreement prohibits them from representing any of your competitors, although they may do work for non-competing businesses. They must perform their sales duties themselves, and may not hire assistants without your approval and at no additional cost to your company. They are not reimbursed for travel, food, or lodging expenses. For convenience, they have access to cubicles at your main office, along with a laptop and cell phone, although they are not required to use the facilities or equipment. They do not receive benefits, such as sick leave, vacation, and holidays. They are paid monthly, and no payroll taxes or social security deductions are withheld from their checks. Since they are on the road a lot, you carry liability insurance. Your insurance broker told you that if they are injured while performing their duties, they could sue the company, so you told your workers’ compensation carrier that they are employees so they would be covered by workers’ compensation insurance. Although the salespeople are not required to report their hours worked each month, they are expected to meet or exceed sale quotas and complete monthly reports, indicating the number and names of clients contacted, follow-up calls, and related information documenting their activities. If they failed to meet their monthly sales quotas, they must provide a written explanation.
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