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socrateaser, Attorney
Category: Business Law
Satisfied Customers: 39027
Experience:  Retired (mostly)
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I am a CA based company which would like to franchise my business

Customer Question

I am a CA based company which would like to franchise my business to people outside the state of CA. The franchisee would require the use of my lecense in any states that they would like to conduct business in. However, my license requires that any employees working under my license would be required to be a w2 employee (not a 1099). There are some mortgage companies that utilize this excat model and they have the branch employees as w2 employees. They also just pay them on a commission basis which is excatly what I would like to do. How can I hire these people as w2 employees of my company without paying them a minimum wage. This would mean that an employee can make no money in a month of work if they do not generate enough sales. Is it possible to develop such a structure?
Submitted: 8 years ago.
Category: Business Law
Expert:  socrateaser replied 8 years ago.

A commissioned employee who provides services to retail consumers must earn 1.5 times the minimum wage in order to qualify for the federal exemption from being paid as an hourly employee. There is no way that an employer can consistently pay its employees nothing. Licensed real estate and insurance professionals have a statutory exception which permits them to be classified as 1099 independent contractors, so that an employer does not need to pay minimum wage. But, to pay an employee as an employee and not pay anything is simply a legal impossibility.



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