A city or traveling salesperson is someone who takes orders for merchandise for another person or company.

City or traveling salespeople

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  usually get orders from wholesalers, retailers, contractors, hotels or restaurant operators, or other similar establishments for merchandise for resale or business supplies;

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  must sell the merchandise at company-set prices;

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  must work full time;

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  usually cannot work for competitors;

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  must produce a certain amount of business regularly; and

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  may terminate the work relationship on short notice.

Employers of city or traveling salespeople

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  assign territories and provide price lists, samples, or descriptions of the merchandise the salespeople will sell;

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  reserve the right to accept or reject orders;

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  ship and bill orders directly to the customers;

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  compensate the salespeople with a percentage of the price the customers pay for the merchandise; and

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  may terminate the work relationship on short notice.

An employer-employee relationship exists when the employer has control over how, when, and where the salesperson performs the services. Consider city or traveling salespeople employees when their services are subject to scrutiny and control by the company. Employers usually exercise such control by requiring the salespeople to:

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  report to the company's offices regularly;

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  canvass territories at regular intervals;

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  follow and report on leads;

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  participate in sales meetings or training courses; and

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  work fixed hours or at certain times.

Workers must conform to the company’s established routines and schedules. In many cases, salespeople who are employees may have a certain amount of freedom in their sales activities. The company has the right to set the order of, and control, the salesperson’s services at any time.

NOTE: Manufacturers’ representatives and multiple-line salespeople that work for a number of people or companies are usually not employees.

Full-time city or traveling salespeople operate away from the employer's premises. They sell merchandise for a principal employer full-time (for one person or business). Full-time does not refer to the time spent on a job. Sideline sales activities for some other person do not exclude the salesperson from being employees.

These salespeople are ordinarily paid on a commission basis. Generally, they are not controlled as to the details of their service or how they cover their territories. However, they must work their territory with some regularity, take orders, and send the orders to the employer for delivery to the purchaser. This group does not include agent-drivers or commission-drivers.

Full-time city or traveling salespeople cannot qualify as employees under the common-law rules, but they work under conditions so similar to those who do, that Congress provided for their coverage as employees, rather than as self-employed persons.

A full-time city or traveling salesperson is an employee if:

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  the work contract states that the worker will do most of the work;

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  the worker has no substantial investment in the facilities to do their work (except for tools, equipment, transportation, or clothing);

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  the worker has an on-going work relationship with the person for whom they are doing the work;

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  the salesperson solicits orders for merchandise on behalf of another person or company as the principal activity;

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  the salesperson obtains orders from businesses whose primary function is to furnish food or lodging (e.g., wholesalers, retailers, contractors, hotel and restaurant operators); and

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  the salesperson sells merchandise for resale or to use as supplies in their customer's business operations.

We do not include salespeople that buy and sell merchandise on their own in this occupational category. We also do not include in this category, a manufacturer's representative who holds out as an independent businessperson and serves the public through connections with a number of firms.

Generally, multiple-line salespeople are not statutory employees because they do not devote their principal business activity to soliciting orders for one principal. However, we do not exclude the salesperson who solicits orders primarily for one principal because of sideline activities on behalf of other businesses. In such a case, the salesperson can be a statutory employee only of the person for whom they principally solicit orders.

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  IRS Publication 15-A, Employer’s Supplemental Tax Guide at http://www.irs.gov/pub/irs-pdf/p15a.pdf

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  IRS Publication 15, Employer's Tax Guide at http://www.irs.gov/pub/irs-pdf/p15.pdf

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  Social Security Handbook, Section 828 Full-Time Life Insurance Salesperson

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  Social Security Handbook, Section 829 Traveling or City Salespersons