An American Approach to Social Democracy

Topic: Business Analysis
Words: 1406 Pages: 5

The present paper studies the case of a company that sells insurance policies concerning the relations between the employer, which is the company, and employees, who are sales leaders. The description of the case stresses that sales leaders are former sales agents who are promoted to the positions of sales leaders after several years of hard work for the benefit of the company. However, the job of the sales leader is quite ambiguous since the company does not hold any money from their salary for the taxes, but at the same time, they are considered independent contractors. Considering all the information about the case, it is possible to single out several problems the present study will address. They are: establishing whether the sales leaders may be considered the employees of the agency, figuring out their rights and responsibilities as well as the fact if they have chances of getting any compensation.

When speaking about the issue of whether sales leaders should be considered employees or independent contractors the company works with, it is necessary to understand the differences between these two concepts. Employees are workers who are officially covered and protected by the US labor and employment law (Griffith, 2018). Independent contractors are people who usually perform their jobs as self-employed workers. As a rule, they report their employer only about the results of their work, but not about the process of performing it. In other words, the payer is eligible to control only the result of the independent contractor’s work, but the worker has the freedom to do his job the way he likes and chooses.

In order to establish whether the sales leaders who work in the company selling insurance policies are independent contractors or employees, it is necessary to compare their employment conditions with the descriptions of these notions. First of all, the case details say that sales leaders only agree to remain in the company as independent contractors after their promotion, but that does not mean that they stop being the company’s employees. Independent contractors are self-employed, which means they are free to work on any project with a company they choose themselves (Gliffith, 2018). However, the company whose worker-employee relations are analyzed in the paper does not permit its sales leaders to work for any other person or company and strictly determines their areas of responsibility. Such a policy is usually applied to the employees but not to self-independent workers. Apart from that, the company controls the process of sales leaders’ hiring, firing, and promotion that is also included in the sphere of responsibility of the employer.

However, the fact that the sales leaders have a free schedule and are eligible to work without much supervision may mean that they can be considered independent contractors. In addition, they have the right not to attend the company’s meetings and training sessions that are not permitted to other employees. The privileges of sales leaders described above may mean that their chiefs treat them as independent contractors. This statement may also be confirmed by the fact that the company pays sales leaders without withholding taxes from their wages, as sales leaders are supposed to pay self-employment tax (IRS, 2021). However, the fact that employers treat their workers as independent contractors does not mean that they are independent contractors legally.

After the analysis of sales leaders’ role in the life of the company as well as of the way their heads treat them, it is possible to conclude that they should be considered the employees. As a rule, good sales leaders take care of the workers and develop their professional skills (Longenecker & Mallin, 2020). However, it will be quite difficult for those who do not participate in the company’s life and do not communicate with their colleagues, which is typical of the majority of independent contractors. In addition, the fact that the employee-employer relationships among the company and sales leaders exist also confirms that the latter is the employees of the former. Hence, it seems that sales leaders working in the company are rather employees than independent contractors because they are officially employed by the company but not self-employed, which is the key characteristic of independent contractors.

In order to understand if sales leaders can be the subject of the Fair Labor Standards Act (FLSA), it is necessary to understand whom it influences the most. First of all, FLSA targets people who work either full-time or part-time both in private and federal institutions. Apart from that, the law guards the rights of the workers of the majority of factories. The basic requirements are applicable to the employers whose annual profits constitute five hundred thousand dollars or whose workers take part in interstate commerce. FLSA laws take into account the rights of both individual workers and collective workers since collective and individual labor laws are a part of the system (Andrias, 2018). In addition, FLSA laws protect people who work in domestic services, hospitals, and educational institutions.

Taking into account the information and FLSA statements mentioned in the previous paragraph, it is possible to conclude that sales leaders of the company in question may be considered the subject of the FLSA laws. The company is a business that earns more than five hundred thousand dollars per year, so all its workers are guarded by the Fair Labor Standards Act. However, there is one point here that is needed to be taken into account. It concerns the fact that executive workers who manage other employees are exempt from overtime and minimum wage rules of the laws. This statement also applies to those who have the power and authority to influence employees’ hiring, firing, or promotion and earn at least $455 per week (Andrias, 2018). Thus, if sales leaders working in the company meet these requirements, they may not get a minimum wage or overtime pay because their salaries are not based on the number of working hours.

When speaking about the compensation the sales leaders are entitled to if they are employees, it is necessary to point out that different violations require different compensations. Considering the overtime pay law in general, the FLSA claims that employers are required to pay their workers a fair wage for every working hour. Overtime pay is also called time-and-a-half pay, which means that for every hour of work in excess of the usual forty hours working week, the employer should pay one and a half times (Andrias, 2018). The case study details say that sales leaders tried to sue the company for overtime work several times. However, considering all the details and nuances described above, it may be concluded that the chances of the court to honor their claim and make the company pay compensations are quite low.

Regarding the fact that sales leaders may be considered executive workers since they manage other workers and may influence the process of their hiring, firing, training, and promotion, they cannot get overtime pay. However, if their salary is less than four hundred fifty-five dollars per week, their right to overtime pay may be disputed. It is possible because it is unclear from the law if those who weekly earn less than the mentioned sum should be paid for overtime work or not (Andrias, 2018). Still, the chances that the sales leaders will get monetary compensation for working more than forty hours per week are significantly low because their salary does not depend on the working hours.

Taking into account all mentioned above, it is possible to conclude that the sales leaders of the company described in the details of the case should be considered its employees but not independent contractors. It is confirmed by the fact that they are not self-employed, and the employee-employer relationship between them and the company exists despite their flexible schedule and tax-free wages. Since sales leaders are considered employees, they are protected by the Fair Labor Standards Act because the company’s workers get into the category of those who are guarded by the FLSA. However, it is hard to say whether the sales leaders may get overtime pay due to the fact that they are executive workers who manage other employees. As a rule, executive workers do not get overtime pay or minimum wage because their salary does not depend on the number of working hours. The company’s sales leaders meet these requirements, so there is a high probability of their not getting compensation for overtime pay.

References

Andrias, K. (2018). An American approach to social democracy: The forgotten promise of the Fair Labor Standards Act. Yale L. J., 616. Web.

Griffith, K. L. (2018). The Fair Labor Standards Act at 80: Everything old is new again. Cornell L. Rev., 557. Web.

Longenecker, C.O. and Mallin, M.L. (2020), Key leadership skills of great sales leaders, Development and Learning in Organizations, Vol. 34 No. 3, pp. 7-10. Web.

IRS (2021). Independent contractor defined. IRS. Web.