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
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
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
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
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
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.
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