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can sales person be W-2 and 1099 at same time / Employee perks
August 2, 2018
can sales person be W-2 and 1099 at same time
I need your advice. Our company has a great salesmen with a 90% close rate that is employed as a 1099 subcontractor and a full time W-2 employee, an odd situation. Yes he signed your Subcontractor Agreement and all payment other than payroll are made out to a corporation he has, so that is not my major concern.
    From time to time he take deposits from customer and instructs them to make the deposit check payable to his company, I don't know how he explains this to the customers but I have never had a complaint. We account for the deposit in our bookkeeping system and all is reported properly. 
          My concern is two-fold; 
          First, is there any issue that could come up with the NYS license law? He does not have a NYS Alarm License. 
          Second, can this come back to bite me if someday I needed to bring a collection action and the customer claimed confusion or some impropriety.
          I don't know if I should insist this should stop or should I allow this to go on. 
Name Withheld for obvious reasons
          You have a lot of work ahead of you to fix this situation, and you need to do it quickly.
          Your salesman has signed the wrong contract with you because he is not a “subcontractor”.  The appropriate form for the relationship is our Independent Sales Affiliate Agreement.  This is for a 1099 sales person.  The Subcontractor agreement is for installation or service subcontractors.
          Your independent salesman is also an employee.  Employees should sign an Employment Agreement.
          I do not believe you can have one employee as both employee and independent sales affiliate, a W-2 and 1099, employee and subcontractor.  Pick one, and it’s most likely a W-2 employee.
          That brings us to another issue.  As an employee you must “document” him with the Division of Licensing Services, fingerprints and all.  If he was a true independent sales person you would have to make sure he had his own license. 
          Because you are licensed you should be able to enforce the contract with the subscriber.  That isn’t the case in some other states where the sales person is required to identify himself on the contract with a registration number or id.  
          As far as a customer claiming it was defrauded, the check does make its way back to your company, the contract is your company and unless the sales person is claiming to be some other company I don’t see that as an issue.
Employee perks
          How are others on the forum handling employee systems and what's your perspective on the liability? I've pondered a few options, including:

·        Allowing purchase / payroll deduction at cost.  (But do I want everyone in the shop knowing what our cost is?)

·        Allowing them to "borrow" the gear for the duration of employment.  (But do I really want it back when they leave? Not worth the effort to recover.)

·        Treating them as a customer - discounted sale

·        Treating them as a customer - discounted lease

·        Just give them the stuff - they already get to drive a $30k van loaded with $10k of inventory and go to customer sites where all kinds of things could be done wrong.  In for a pence, in for a pound.  Besides, how bad does it look if they end up using a competitor's gear?  Not to mention the "I don't value you" message it sends to them.  Leaning this direction.
    It is unreasonable to make viewing / editing another employee's central station account / system config a fireable offense?  Has this ever been an issue for anyone on the board?
Best Regards,
Bob Long, Senior Advisor
Insane Packets, LLC
Celebration Fl 
          Lots of companies give free or discounted alarm service to their employees [relatives, friends and freeloaders too].  It is a perk. And, like all good intentions and good deeds, can come back to bit you, you know where.
          You need to make the arrangement clear.  I’ve had matters where the employee leaves the alarm company’s employee and insists on continued free alarm services.  Make it clear that the services do not survive the employment; in fact the services can be terminated any time by the employer.  
          If you are providing discounted services and expect to get paid something I would try and stay away from payroll deductions and could also end up with you looking to withhold payroll to pay for services.  You need to be careful with deducting from payroll.  Better practice would be to charge the employee and if not paid, cancel the service.
          If you provide a device make sure your agreement requires that it be returned, just like any other company property.
          And, finally, and most importantly, be sure your employee signs your Standard Alarm Contract, just like any other customer should be required to sign.  Your employee can suffer the same losses as any other customer, and like any other customer they will be looking to you for reimbursement if their alarm didn’t work.  And if they won’t, their insurance company will.  This is even more essential for the relatives, friends and freeloaders.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
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