Many firms collect payments from their customers for merchandise sold or services rendered through individuals who work away from the companies' premises. They rent offices, furnish all necessary equipment and materials, and hire collectors to perform the necessary collection work. Some collectors have offices where customers come in to pay bills, while others work on a door-to-door basis in assigned territories. Many collectors devote their entire work time or principal efforts to their collecting duties, while others collect as a sideline. Some collectors work independently, while others are employees subject to considerable control.

Collection agents or outside collectors (collectors) are individuals who collect payments for companies from their customers for merchandise sold or services rendered. The collectors must keep the office open during the hours set by the firm. They cannot hire helpers or substitutes to conduct any business other than for the firm. Collectors must operate the office in the manner prescribed by the firm and must observe the firm's accounting procedures in the receipt of, and accounting for, the money they collect. Periodically, a firm representative examines the books and picks up cash collections. The collectors forward customer complaints to the firm, adjust complaints, and collect delinquent bills under the firm’s instructions. The firm pays the collector a salary for these services. Either party may terminate the relationship at any time.

Collectors who work under substantially similar conditions to those described above are employees and are integral parts of the employing firms’ business activities. Firms obtain these services to further their business and require the collectors to work within the schedule and routine of the office. The collectors do not invest in their own business and have no business expenses. The employing firm regulates the payment for services and has first priority as to the collector’s time and efforts and the right to set the order and time of their services. The collectors are not free to choose their own methods and means to render services, but they must work when, where, and in the manner their firm dictates.

Generally, as an employee, the collector:

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  furnishes his or her own transportation;

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  may quit or be terminated at any time;

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  must collect a certain percentage of the contracts to continue the relationship;

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  must contact, and collect monthly or weekly payments from the people named on the contracts;

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  personally performs the services and cannot work for others;

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  receives instructions at mandatory conferences, and personally in the form of criticism of his or her work;

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  receives other tasks in addition to collection duties;

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  receives pay in the form of a percentage of collections;

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  reports to the office each morning and receives a number of time payment contracts (tardiness or failure to report results in reprimands);

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  returns to the office at the end of the day and submits collections, along with a report of accounts that were not collected and the reasons why; and

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  works either directly out of the company's main office or one of its branch offices.

As an independent contractor, the door-to-door collector:

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  is not guaranteed a minimum income;

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  is not required to conform to fixed hours, devote any particular amount of time to the business, or produce a minimum volume of collections;

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  is required to cover his or her territory regularly, but works out his or her own schedule of contacts;

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  is usually assigned a specific territory and list of people to collect;

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  is usually free to engage in other employment, including collecting accounts for other firms;

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  may quit or be terminated at any time;

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  receives a fixed percentage of the collection, out of which he or she pays all work expenses; and

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  reports to the office only to turn in collections and obtain new lists.

Some firms, particularly public service organizations, enter into arrangements with storeowners who agree to accept bill payments from the firm's customers. Under such arrangements, there is an understanding that customers can pay bills at all times the store is open for business. The storeowner does not have to be present if someone is in the store to receive payments. The firms do not require the storeowner to:

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  be partial to the firm's customers;

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  conform to fixed hours; or

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  devote any particular amount of time to the firm's business.

The storeowner deposits all money collected in a bank and periodically forwards copies of bank deposit receipts, complaint forms from customers, etc. to the firm.

Generally, the firm furnishes the storeowner with the necessary business forms, postage, and stationery. The storeowner must purchase a surety bond. The firm may pay a salary for the collection services, or the storeowner may receive a percentage of the money collected. Such arrangements are usually terminable by either party on 30 days' notice.

Collectors who work under conditions like those described in this section are independent contractors because they:

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  obtain their desired results by their own methods and means and without direction and control;

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  receive no work training;

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  do not have to follow prescribed routines;

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  receive a salary to produce a certain result; and

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  may decide the days, hours, and how to do the work to produce the desired results.

The employing firms cannot set the order of their services or demand first call on their time and efforts. The assignment of territories and furnishing of collection lists are merely guides and do not dictate the manner to perform the services.

In addition, collectors who operate under conditions similar to those of the storeowner are free to conduct their private business activities along with their collection services.

The firms select collectors who can coordinate the collection work with their private activities. The important issue to the firms is the collectors’ use of the facilities the firms provide, rather than how the collectors perform personal services.

In the collection field, several factors are common in both employer-employee and independent contractor cases. Give less weight to the following factors to determine an employment relationship. These factors are:

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  not hiring helpers or substitutes;

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  not setting the hours of work;

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  performing the services away from the employer's office;

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  requiring collection reports; and

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  terminating the relationship on short notice.

The principal factors that indicate an employment relationship exists are:

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  the employer’s right to first call on the worker’s time and efforts;

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  the employer’s right to interfere with, or set the order of the services;

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  the worker must perform services at certain times;

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  the worker must follow the employer's established routines;

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  the worker must report at the firm's office regularly for conferences, training, and instructions;

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  the worker cannot integrate his or her services into another business; and

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  the worker does not incur business expenses or invest in the facilities.