Company Wants Money Back

[WAYNE1]

My question involves independent contractors in the state of: Georgia

I service fire extinguishers as an Independent Contractor for a company in Atlanta. The Company pays me 50% of the profit on each invoice. The company has had difficulty collecting on some large invoices that were charged and now wants me to pay the money back to them and go collect from the Company's customer myself.

The Company contracted me to do a job, I completed the job, and the Company paid me. Am I under any obligation to give the money back if the Company can not collect from their Customer?

[jk]

well, if the contract actually states 50% of profit, then if they are not paid, the profit is not as originally assumed, now is it?

If you have a contract for $XX.XX which happens to be 50% of the profit from the job, then they cannot seek the money they paid to you. As you stated, you were contracted to do ???? for $XX.XX and you did that and were paid for that.

If their customer does not pay them, it is their problem.

(of course barring any contractual agreements that alter that)

[WAYNE1]

I should have said that there is NO written contract here.
The verbal agreement is 50% of the invoice amount.
They are too lazy to do the collection work here and are trying to force me to be their FREE collection agency.

For two years they have paid charged invoices in advance without question weather they paid or not.

[jk]

if your contract was for 50% of the invoice, then no, they have no claim for you to return any money.

[SChinFChin]

They are too lazy to do the collection work here and are trying to force me to be their FREE collection agency.

I hear your frustration, but there's a bit more to this.

My first job out of colleage was in the "credit and collections" departments of several large companies. That's in the mid 1970's to the mid 1980's.

Somewhere along the way, companies found it too "expensive" to have full time collections staffs. At the time, we had a department of 8 at a Fortune 500 company, just for one division, costing the company over $1,000,000 a year in salaries and benefits. That's in the early 80's. Then, they began to have "sales reps" doing the collections.

I then moved on to a large trading company with a 8 person sales department, a five person credit department, and another 4 in accounting. Same story. Business margins went from 10% to almost zero, and the sales reps were told to start doing "collections", and the credit department was cut to two, including a part time manager. Several sales reps "balked" and was told to hit the road. Yeh, they did try to have "accounting bookkeepers" do collections, but that turned out to be a disaster. Sales reps were better at talking to customers. Bookkeepers just weren't hired to call customers.

Oh, at the first company, I was at a meeting where the VP was yelling that other companies only paid "reps" commsissions when the invoices are paid, and "reps" in our company couldn't care less since they were paid commissions regardless. I beleive they since changed the policy.

Sad to say back when I started working, I can look in the "help wanted" classifieds and they'll be two to three columns in the classifieds, full of ads for "collection" staff or managers, about 50 openings or so each week. If I open the papers today, I'll be lucky to see four ads.

My only conclusion is every company out there is "too lazy" to do collection work. And yeh, they also send more stuff to collection agencies, including billing mistakes, and all.

[jk]

not sure where you were going with this schinfchin. OP is an independent contractor and therefore not governed by employee laws and requirements. As such, they are not part of the company that sells the product and are paid per their contract, which in this case is 50% of the invoice. Since it appears the contracted payment is 50% of invoice and not 50% of payment or any other billing amount, OP would be due their pay regardless what happens between the customer and the sales company.

OP is essentially a sub-contractor and may have the right to file a mechanics lein against property owned by the customer (boy, wouldn;t that piss off the sales company?)

[SChinFChin]

not sure where you were going with this schinfchin. OP is an independent contractor and therefore not governed by employee laws and requirements. As such, they are not part of the company that sells the product and are paid per their contract, which in this case is 50% of the invoice. Since it appears the contracted payment is 50% of invoice and not 50% of payment or any other billing amount, OP would be due their pay regardless what happens between the customer and the sales company.

OP is essentially a sub-contractor and may have the right to file a mechanics lein against property owned by the customer (boy, wouldn;t that piss off the sales company?)

About half of the reps working at the "trading company" were independent contractors. They're commission based, and half work from their homes.

Still, you can see the minutia, i.e. "I'm a subcontractor with a contract" (which is why it was posted on the legal board) and miss the big picture, i.e nobody is staffing collections departments anymore. The few "reps" in the trading compnay that argued they were independent contractors and gets paid regardless, "because that was the way things are" were told to hit the road. The company told them that "requirements changed"!!

I thought I was clear that I'm JUST commenting on his thoughts that "he's forced to do COLLECTIONS".

Fine!! Don't do it, argue about contract rights, and then he also has the right to hit the road. Yeh, he can do his mechanics lien collect a few dollars on it, and have the work subcontracted to someone else, because they just can't afford him. With him, and others like him, they'll have to hire "bill collectors".

I have gone though this change, where reps gets paid regardless, and the company had to hire legions of collectors, to reps collecting and getting paid when the customer pays, on the "company end", in several companies within the past 20 years.

[jk]

SChinFChin;263301]About half of the reps working at the "trading company" were independent contractors. They're commission based, and half work from their homes.

but that does not neccessarily make them an independent contractor.

I thought I was clear that I'm JUST commenting on his thoughts that "he's forced to do COLLECTIONS".

That's fine but as an contractor, and not an employee, he has not been contracted to do collections yet the company is refusing to pay him as contracted. Personally, I would not neccessarily have problems doing collections but since that is beyond his contract, I would have a seperate contract (and subsequent billing to the company) for the additional services.

Fine!! Don't do it, argue about contract rights, and then he also has the right to hit the road. Yeh, he can do his mechanics lien collect a few dollars on it, and have the work subcontracted to someone else, because they just can't afford him. With him, and others like him, they'll have to hire "bill collectors".

this is getting way off what the guy is contracted to do. Look at it in a more open way. If this guy was a carpenter subcontracted to a general contractor, not only would he not be required to collect but he would have no legal ability to collect without the GC either hiring him to perform such duties or assigning the debt to him and then he could do as he wished with it. In many states (haven;t checked OP's), a collector must be licensed as a collector. Since this guy is an independent contractor and not an empoyee, he would have to have the requisite licensing to collect on behalf of the company.

I have gone though this change, where reps gets paid regardless,

but he is not a rep. He is a seperate company perfoming an action he was hired to do. Not only is it not part of his contract, it may not even be legal for him to act as a collector.

a real quick look at Georgia's statutes appears to support the fact that licensing is required. If true, OP cannot legally collect unless he has the proper licensing. This is not his bill he is collecting, it is the company's that he is contracted to.

[SChinFChin]

a real quick look at Georgia's statutes appears to support the fact that licensing is required. If true, OP cannot legally collect unless he has the proper licensing. This is not his bill he is collecting, it is the company's that he is contracted to.

I think you answered a question for me. I actually felt bad when the companies I was at let people (subcontractors, or 'reps") when they changed to a new business model, but after this discussion, I can see why it's important to get a clean start with a whole new crew.

I recall one company I was with was going around and around in circles with these guys, "yes you're a subcontactor", and "no I'm not", and yeh, "we never had to do this before", just as you mentioned above. They should've just called these guys in and terminated them. No discussion.

Before see say "I can see where you're going with this", I'm currently involved in a "unemployment claims" case, where a worker refused to stay 20 to 30 minutes with a disabled client, wind up quitting over it, and been fighting with us for months, right now appealing the decision against her. Sh'e been out of work since March.

Like the above situations, she's citing all kinds legal reasons where we're wrong, screwing her out of 20 minutes, and spending months on legal research. Yet, she can't even spend the 20 minutes waiting with the "disabled client" for the handicapped bus to arrive. If she did, she would've been working the last eight months.

Where am I going with this, and what does one have to do with the other?? Too many people just focus at NARROW legal issues and just miss the big picture.

[jk]

in your situation, the IC or employee (if I understand the position you are referring to, I do not see the likelihood it is legal to consider those folks IC's), was asked to continue doing their normal work for a period of time. In the OP's situation, the work requested was not part of the original contract but even greater is the fact it appears that collectors must be licensed in Ga. If OP was an employee, they could most likely collect on their own companies accounts without any licensing but since OP is an independent contractor, they MUST be licensed (if it is truly a requirement in Ga) because he would be a 3rd party collector. An employee collecting on the company's accounts is a 1st party collector. A great deal of difference between those two and the requirements and abilities and liabilities of each of those.

They should've just called these guys in and terminated them. No discussion.

You technically do not terminate the "person". Since an IC is essentially a one man company, you cancel whatever contract you have with them (the company). Now, you can have a contract where the contractee can assign job duties as they wish but they need to be careful because they border on the IC/employee line when they start playing with this. Once they start demanding too much control, they are not longer a IC/contractee relationship and they develop an employer/employee relationship very quickly and easily.