Draw on commission could threaten contractor status — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Draw on commission could threaten contractor status

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in Compensation and Benefits,Human Resources

Do you consider your commissioned salespeople independent contractors? If you pay them a draw, they may be employees for unemployment com­­pensation purposes.

Recent case: Gayle agreed to work as an independent contractor salesperson, drawing $4,000 a month against commissions. She also  received health insurance. She worked from home, provided weekly activity reports, maintained regular contact and received specific instructions on products, pricing and clients.

After a few months, she stopped trying to make sales after failing to sell any devices. She later applied for unemployment compensation.

The company argued she wasn’t an employee and therefore wasn’t entitled to benefits. But the court examined the arrangement and concluded that the draw evidenced an employer/employee relationship. Thus she was eligible. (Gluck v. DaVince 3D, No. 520144, Supreme Court of New York Appellate Division, 2015)

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