By Reynaldo A. Quintana Latorre, Esq.; Baerga & Quintana, LLC
These recommendations will help establish a healthy and legal relationship with your sales force.
Treating a salesperson correctly and legally involves applying labor laws and granting the rights they may have in terms of hours, wages, and/or benefits. According to your type of business and how sales are conducted, it is important that you properly identify and classify the positions held by your sales force to avoid mistakes that could lead to costly legal actions.
Classify your sales professionals based on these factors:
- The industry in which they work
- The type of product or services they sell
- The place where they do their job (within a given location or off-site)
- If they visit clients
- The type of clientele they serve
- Their form of compensation
The types of rights and benefits will depend on the classification. For example, sales representatives who work outside your main building (off-site) may be exempt from the legal benefit of receiving overtime pay and a meal period during their workday.
On the other hand, if your business’s compensation framework includes commissions and incentives, you should be aware of the impact that overtime pay and fringe benefits, such as vacation and sick leave, have according to the law.
Remember that commissions are a voluntary benefit and are defined by your organizational rules. Lack of clarity when describing commissions could end in litigation. Clearly state your rules regarding meeting quotas or goals as well as commission payment metrics. Most controversies arise when no specific rules define the concepts, amounts, and requirements for commission payment and liquidation.
For example, disputes may arise when:
- It is not clear if the commissions are based on gross sales or on net profit
- Periods for determining commissions have not been clearly established
- There is doubt as to whether a salesperson will get their commission only after the sale has been paid by the buyer
These legal recommendations apply to any business. Remember the three basic concepts within them: classify your salespeople properly, be clear about your rules, and communicate them.
It is also important to have a copy of Law No. 379 of May 15, 1948, as amended, also known as the law to define a workday in Puerto Rico. Being familiar with the law and applying it correctly is essential for your business and sales team.
This article is for informational purposes only and does not constitute an endorsement or guarantee of the accuracy or applicability of its content for any particular purpose. Neither Popular, Inc. (“Popular”) nor any of its affiliates, subsidiaries or related companies are, nor will they be liable for any special, direct, indirect, or incidental damages, including, but not limited to profit losses that may arise from, or be related to, the information or advice provided in this article, which was not prepared by Popular. Popular offers financial services and is not dedicated (directly or indirectly) to providing services related to the content of this article. If you require any service related to this article, you should request advice from a competent professional of your choice. Popular expressly disclaims all liability for such advice.
