As far as licensing is concerned, obviously, peculiarlies of state laws would govern.
Havng been in the "collection" side of the biz for a while, I've looked into licensing of collection agencies here in NY State, as I was thinking of going to go into the collection agency business. I finally wound up owning rentals, and there are also similar requirements in requiring a "Real Estate License" to collect rent for others, as I learned after taking some RE licensing courses.
The major thrust of licensing for both professions, here in NY State, is to make sure individuals engaged in it understand the law, and also be bonded. The operative phrase is to "collect for others for a fee". Folks wtih licenses can then get paid in the name of the Collection agency, or the Property Management company, take his or her commission, then remit the remainder to the principals with funds that had to go into escrow accounts.
On the other hand, if the checks are made payable to the company, or the landlord, all the subcontractor or agent has to mail checks in an enclosed envelope, he is merely a courirer, and it is not so clear licenses are required.
I researched all of this when I set up my Real Estate management company, which I didn't call mine a RE maangement company, but a "business service" company to get around the RE licensing requirements. This is even in the case that I'm managing mostly my own properties.
I've been in several companies where independent reps were asked to help collect, and the payment of commssions had in recent years been contignent on the company receiving payment. At no time had any one complained about licensing.
About collecting rents, when I was a small boy, my dad ran a business, in a building with several stores. At one time, the owner asked him to help follow up on rents, and then forward the payments to him, for a small reduction in rent. One neighbor, a retired banker, told my dad it was illegal as collecting rent required a license. Now, after taking the licensing course, the banker may be technically correct.
However, my dad thought it was "looney", did the collections, built a good relation with the ower, who in a few years let my dad buy the property, with good terms. That was back in 1963, he still owns it, now free and clear, and makes over $5,000/month, a nice retirement. Had he listened to the banker, told the guy he needed a license, I doubt things would've turned out so nicely for him.
As to subcontractors, I'm in charge of finances at a "non profit" since I retired from my business, and we hire subcontractors for maintenance, music, dancing and singing. All of them have signed contracts as to the amounts they're paid for the duration of the contract, as well as notice required for termination. I'm responsible for maintaining these contracts.
While I was not privy to the contracts betweem the sales reps and the company when I was with the trading company, those contracte were in fact more elaborate. All of the reps work on the basis of a draw and commissions, and can owe the company substantial sums. One guy owed over $50K, never paid it, when he left, and as I was part of the finance department, I had to go after him.
When I refer to "terminating" subcontractors, I'm referring follwing these contracts.
there is a difference between being a courier and being an agent. The fact checks are made to another company is irrelevent. When I sold real estate, the checks weren;t made to me yet I was required to be licensed. That is because my "job" was to sell real estate, whcih requires a license. I recieved no money from the person selling the house or the person buying the house. My payments were from the broker I was licensed under and based upon my contract with him. I was due my commission as long as I performed as contracted. If a buyer backed out of a contract, I was still due my commission because I had gotten a person to sign the sales contract. It did not change if my broker did not get paid. If my broker failed to pay me, my action was against him, not the buyer. HIS action was against the buyer.
OP is not collecting his fees from the customer as he does not get paid by the customer. He gets paid by his employer and as such, the contract between his employer and the customer has nothing to do with the OP other than that is where they get the amount to be paid to the OP.
So, being an IC performing what he does, and then being hired to collect for that company, is not legal unless he has the appropriate licensing. He is doing more than simply being asked to pick up the payment. He is being asked to actively make collection efforts.
As far as being legal or illegal, say it's illegal, then a common practice that took hold in the last 20 or so years, practiced widely, is illegal. If that is in fact the case, then the laws have not yet caught up with "common industry practices". I know for a fact the practice is widespread due to the lack of "collection jobs" compared to years ago, in fact some weeks, no openings at all in the papers.
The common practice also is "subcontractor reps" don't get paid their commissions till the invoices are paid, it is implicit that the rep asks for the payment, and I know for a fact they do. I also know for a fact no company I was with had ever asked reps to go get "collection agency licenses".
In fact, in rent collections, where requirements are similar, a business which I am more familiar, it is common practice for one tenant of small apartment buildings, usually less than 10 units, and small commercial strips like the one where my dad helped to collect payments, one tenant collects the rent and then forward then onto the principals, despite the fact that the law says "only licensed real estate brokers" are allowed to collect rent checks. Yes, my dad does say to the other tenants "may I have the rent check", so if that is collections, and not couriering. So, just about every small apartment owner and commercial strip owner is violating the law.
Are these tenants employees?? No. Are they compensated?? Yes, they do get to pay lower rent. By defintion, for the collection tasks, they are "collecting rent for others for a fee" as described by state law, subcontractor or not.
When something becomes "industry practice", then it becomes totally ILLOGICAL to go back to the old way, legal or not. I read not long ago some people who help other list items for sale on ebay had to get an "auctioneers" license", after some complaints (probably by people with nothing better to do), and the state laws had to be changed, since the "auctioneers" licensing course had more to do with "live cattle auctions", nothing with listing "fine art" on ebay.
I would say if some state insists that any one asking for payment for another has to "get a license", then it's about time for the state law to be changed. Until then, expect "industry practice" to continue, expect the laws to be widely violated, IF in fact they are violated.
we are talking about georgia, right?
this is a bit to generic to address. Obviously empoyees (v. IC) is a very different situation. If an employee, in most states I am aware of no license is necessary.As far as being legal or illegal, say it's illegal, then a common practice that took hold in the last 20 or so years, practiced widely, is illegal. If that is in fact the case, then the laws have not yet caught up with "common industry practices". I know for a fact the practice is widespread due to the lack of "collection jobs" compared to years ago, in fact some weeks, no openings at all in the papers.
again, too generic. Depending what the contract between the IC and the employer, it could be either way. In this situation, this is not a rep for the company. It is a subcontractor that does work the main company sells.The common practice also is "subcontractor reps" don't get paid their commissions till the invoices are paid, it is implicit that the rep asks for the payment, and I know for a fact they do. I also know for a fact no company I was with had ever asked reps to go get "collection agency licenses".
Let me take this away from your types of situations and take it into my types of situations; construction and service
I worked for company A as an electrician. My company subcontracted to company B which was hired to do mainainence (all types) which was hired by yet another company (C) which is a service/maintinaence company where, say Kohl's for instance. would call company C and tell them there was a problem. Since company C is only an office, they call company B to take care of the problem. Company B discovers it was electrical in nature and called company A (that I worked for) and I would go out and fix whatever. I filled out the requisite forms and had the store management sign that the work was done.
So, you are saying was proper for me to collect from Kohl's if they did not pay comapny C? I should not get paid until company C and B get paid?
My (the company I worked for) contract was with company B so B owed A money regardless what they got from C and C owed B regardless what they got from Kohl's because C hired B and B hired me (A). Nobody has a legal claim against Kohl's except C.
This is the situation I see here. OP was hired by a company to do some work. He did that work so he is due his money regardless of whether the comapny that hired him ever gets paid. OP has no legal claim to the money the customer owed OP's employer. OP cannot collect both because in Ga you need to have a license to do 3rd party collections (which this would be because OP is not the original creditor) and OP does not have a claim against the customer for the money.
In your dads situation, there is a differnce between a person that simply collects money and a person that is an agent and collects money. An agent can act on behalf of the creditor/LL whatever. A person simply recieving the payments cannot. Your dad was not an agent of the LL, he simply recieved the rent. That is not "collecting".
A fine line? I see it as a blurry line where it would be very simple to see it one way or the other and both have a valid arguement but in the case of the OP, I see it pretty clearly as he had no right to make collections efforts on behalf of his employer.
Good discussion, I'll have to say we'll have to agree to disagree.
In the case of "independent contractor" sales and service reps, it's up to the IC and the company to agree on the scope of the duties. In the case of the trading company I was with, the scope includes both sales, service and the collection of receivables. The company never says to you, you'll have to make collection calls everyday, but just that your commissions won't be paid. So what do you do??
Some of our reps, who started as "employees" actually chose to become independent reps, on full commission, because they do much better, and many of the "high performers" make several thousand each annually, doing even better than the "president" of the company.
In cases where the company changed requirements, I can see where an IC can say "that wasn't the deal". I've seen disputes of this type during the transitionery period over the last 20 or so years.
As I also mentioned the rental business, it is not the practice here to deny "compensation" when the rents are not paid. Thus, the industry is full of property mangers PM's who couln't care less if rents are paid. A good friend of mine bought an apartment building owned by a doctor, cheap, because half the rents in the building weren't paid. The PM didn't care because he was fat and happy with the 10% commissions he's collecting on the other half of the paying tenants. If you read landlord disccussion forums, you'll find many LL's just going from one incompetent PM to another.
This situation is true in many sales and service industries previously where "reps" are not involved in the financial end of the business. In some cases, they actually go out of their way to sell and service uncreditworthy customers knowing full well other firms will not service them. As back then, they collect commission, and fees anyway, so who cares.
As you say, industries differ, state laws differ, and much is too generic. I started the discussion pointing out that sales and service reps, in many industries, employees or IC find themelves more involved in collection efforts, and more so in the last 20 or 30 years, with a corresponding drop in need of collection professionals.