Thoughts on Succession Planning

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Having served as legal counsel to hundreds of sales representatives, perhaps the worst type of call that I receive is from an owner of a successful sales rep agency who has waited too long to think about — let alone implement — a succession plan, but who now has an urgent need for one.

In many instances, the urgency for having a succession plan is compelled by one of the agency’s principals (manufacturers), which has threatened termination unless an acceptable succession plan is in place by a given (typically short) deadline. But, what if you (as the owner) are not … Read the rest

What Happens in California Doesn’t Necessarily Stay in California (Part II)


This is the second of two articles on the effect that California law can have on businesses throughout the country and even abroad. Last month’s article delved into California’s recently enacted “AB5” statute which provides an “ABC” test to determine if a worker/service provider is an independent contractor or an employee. AB5 was enacted in response to the new “gig” economy in which businesses seek to utilize independent contractors, as opposed to direct employees, to sell their services and products in an effort to avoid employment-related benefits and legal obligations. The scope of that statute, of course, is important to … Read the rest

What Happens in California Doesn’t Necessarily Stay in California


California has recently enacted a number of new laws that can affect businesses throughout the country, including manufacturers and sales representatives. This multi-part article focuses on two of them: California Assembly Bill 5 (“AB5”), which provides a test to determine if a worker/service provider is an independent contractor or employee, and “Proposition 65,” which addresses environmental and health-related concerns about products sold in California.

Why should I be concerned about these statutes if my company is not located in California, you ask? It’s a good question. Well, whether your company is in San Diego, San Antonio, Saint Augustine or points … Read the rest

Tips to a Better Rep Agreement


A sales representative typically will review a sales representative agreement twice — at the start of its relationship with a new principal, and then at the end.

If the rep takes the time to read, understand, question, and yes, even negotiate the terms of a rep agreement at the start, there should be no surprises, and hopefully no problems, at the end. It’s the difference between fire prevention and extinguishing a raging fire. But, too often, reps belatedly learn that their multi-year contracts can be terminated upon 30-days’ notice, or that they won’t receive post-termination commissions, or that their principal … Read the rest

Product Liability Claims: How to Minimize Your Exposure


Most independent sales representatives are not involved in the design or manufacture of the products they sell. Moreover, they don’t consider the products they sell to be inherently dangerous. As a result, many sales representatives are not overly concerned about product liability claims, if at all. However, ignoring the possibility of such claims can be a big mistake, for regardless of the rep’s “limited” role in the underlying sale, and despite the seemingly benign or safe nature of the products being sold, sales representatives can be, and often are, included as defendants in product liability lawsuits — which can be … Read the rest

What Happens When Your Principal Files For Bankruptcy


All too often attorneys get inquiries from sales reps who have just received notice that one of their principals has filed for bankruptcy.

Invariably, their first question is whether they will get paid the commissions owed to them. Unfortunately, there is no simple answer, for bankruptcy cases involve many variables and technical issues that are controlled by the voluminous United States Bankruptcy Code (referred to in this article as the “Code”), which is subject to judicial interpretation and enforcement by the United States Bankruptcy Courts. As such, before answering that or any other of the rep’s questions, an attorney first … Read the rest

Complying with the Fair Labor Standard Act’s Overtime Requirements in a Hyper-Connected Workplace

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In a world in which computers and smart phones allow work to be performed at all times and in all locations, the concept of a 40‑hour workweek can often appear to be a relic of the past.

Perhaps that is the reason for the recent increase in claims and litigation under the Fair Labor Standards Act (FLSA), the federal law that requires an overtime premium to be paid once an employee works more than 40 hours in a week unless an exemption applies. The FLSA can be a surprisingly confusing law, with many factors that can transform seemingly exempt employees … Read the rest

How to Soften the Impact of Customer Bankruptcy


A special report for buy-sell reps.

Every day seems to bring a report of another financially troubled business that has filed for bankruptcy, or which is on the verge of doing so. All too often, such companies are more than just headlines in the news. Rather, if you happen to be a “Buy-Sell” rep — one that buys its principal’s products for resale to customers, and which assumes the risk of collection for such sales — a bankrupt company may also be a customer to whom you recently sold and delivered goods on credit.

  • What impact will such a bankruptcy
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Working Without a Contract

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Reps often provide their valuable professional services without the benefit of a formal written contract, or even a less formal, but equally enforceable, oral contract.

In such situations, the rep is often told by the principal that they are not going to be paid despite the fact that the rep has just brought in significant business. The principal contends that the sale was “outside” of an existing contract, or that no contract exists between the parties. Typically, with a great deal of resignation, the rep wonders whether or not they will ever be paid. But alas, all is not lost. … Read the rest