Originally Posted by jtgator
My company is giving us the option to either be a 1099 sales rep or W2 sales rep. Usually I would choose to be a 1099 with out question. Here's the catch.. the company is requireing each 1099 rep to buy an Errors and Omissions Insurance policy that will cost anywhere from $5000 to $8000 per year in premiums. Im trying to work out the math, but there are too many unknowns. Is anyone familiar with E&O insurance? Is this normal for orthopedic sales reps? My gross revenue is pretty low... less than 200k per year. Any thoughts?
I had this argument with Hef before. Companies are not legally permitted to "hire" agents on a 1099 unless the "employee" meets several Federal Law criteria. Circumventing payment obligations (and even more importantly, liability issues) via 1099 is not permitted.
If the company pays you a straight commission, they are handcuffed in what they can do from a "management" point as well.