1099 Ethics Situation

[1099man]

What is the name of your state? Wisconsin


I work as a 1099 contractor in the financial services. Long story short I was advised to engage in tactics to misrepresent discounts to customers for purchasing additional products to close additional sales before 2016. I did not engage in this practice and also fell short of my required quota. It is a competitive business and maintaining the contract and future income can be highly dependent on hitting these quotas. As a 1099 i am responsible for all office expenses, lease obligations, etc and at this point have been advised that performance needs to improve (part of acceptable performance is measured against peer group) or the contract will cease.

Significant financial resources have been invested in the business (including obligations that would continue even if the contract is withdrawn) and its a bit worrisome. The practices suggested certainly didn't cause the business to miss its sales goals but at the same time failure to participate in said criteria has certainly affected how the business is viewed.

Would there be a type of attorney that handles this work or any legal basis to explore? or does the 1099 situation pretty much eliminate any legal arguments?

On a related note: I have no goals of a huge pay day (if i had any legal basis) or anything of that nature. Simply getting out of the situation with no long term financial obligations would be my most realistic of hopes. There is written proof with the names of 2 superiors supporting my claim. Thank you for any responses.

 

[commentator]

As a private contractor you have the option to accept the work or not to. If you are being regarded poorly by the people you are contracting with because you will not participate in some rule bending, and threatened that the employment contract with you personally will cease, as a 1099 contractor, you have even less legal protection against being "fired" than even a regular payroll employee in an at will state. And even they would not have any recourse except possibly unemployment insurance or in some rare circumstances, an EEOC complaint.

We are certainly not going to advise you to do what they are asking. But neither is there any legal action you can take if they drop you, somewhere that you can report them to the "bureau of fairness" or good business practice or anything that will prohibit them from moving their business elsewhere if you have too many ethics to suit them.

In the profession, you can only hurt your own reputation if it becomes known that you were even affiliated with a company that participated in lying about and misrepresenting things when they were attempting to do business/sell them a product or service. Similar businesses talk among themselves. Let even one of the people you sold to find out how you (or your contract employer as a whole) misrepresented things to them, and word will get out in the industry/business over all, and your quotas may get even worse, and your reputation may be tarnished personally .

Take your 1099 and find another job quickly.

 

[1099man]

Thank you for your hasty response. I assumed 1099 would basically handcuff me. As far as the ethical violations in question I was purposely vague but they are well beyond simple rule bending. Folks in our industry can lose their license if it was shown they engage in those practices intentionally (which is very easy to prove as compliance and government insurance departments take their jobs very seriously in WI). When you have leadership promoting this activity you have an even bigger issue as you now have multiple branch locations engaging in this practice. There is fallout to say the least.

I would love to hit the reset button but unfortunately leaving the business behind would destroy me financially or walking away would be my first option. Id assume asking them to assume my remaining lease and business obligations to not raise a stink would be constituted as blackmail? I could certainly report these violations to the proper people but it will surely trigger retaliatory action against me. At the same time it may not be worth their time to deal with the fallout of something like this. But ill take it for what i thought it was and assume I should likely develop an exit strategy.

 

[tranquility]

It seems you have a contract that has certain goals (quotas) you must meet or it will not be renewed. You did not meet the criteria and you fear it will not be renewed. That seems a legitimate fear. That the person you contracted with suggested unethical or illegal means (Even if it could be proven.) of meeting the criteria you previously agreed to, is not really related to the contract or if it can be cancelled. You might make a complaint to authorities that oversee the industry you are in. It wouldn't help with your problem, but it might have them change their ways in the future.

Now, for the second part:
"Significant financial resources have been invested in the business (including obligations that would continue even if the contract is withdrawn) and its a bit worrisome."

This is almost the essence of a true independent contractor relationship. Along with your ability to control how you do your job goes with the fact you take a risk at a profit or a loss in the performance. It seems you would not have an argument that you were actually an employee rather than an IC and gain some protections there.

"Id assume asking them to assume my remaining lease and business obligations to not raise a stink would be constituted as blackmail?" Probably:

Threats to communicate derogatory information. Whoever threatens to communicate to anyone information, whether true or false, which would injure the reputation of the threatened person or another unless the threatened person transfers property to a person known not to be entitled to it is guilty of a Class E felony.

One issue would be if there was a transfer of "property" by releasing you of of debts or obligations. I think there is. The WI Legislature's citation in the code seems to make it clear that was intended. (State v. Gilkes, 345 NW 2d 531 [Ct. App. 1984]) A second, more subtle issue would be if you were known not to be "entitled" to it if the company acted in an illegal manner that created the issue at all. Still, I think great risk to threaten anything for benefit.

The area that might be useful to expand upon is how these investments and obligations arose in a way where the company can just get rid of them. Who were they with? Were they linked with the contract you failed to meet the requirements to renew? Realistically, I don't see any way out of them (where your loss seems to lie) unless you can link them directly to the demands of the company you find illegal. In other words, the company used them as a stick along with the carrot of renewal to make sure you meet the goals. Even if you were able to link them, you would need to find there was some misrepresentation to you in regards to the goals and the illegal behavior. Something like "everyone has always met the quotas" without disclosing the only way they met them was through the illegal behavior.

I don't see it in what you've written. But, I don't have all the facts. See an attorney knowledgeable in your field, perhaps one who defends licensees against regulatory action. At the least, he can point you to an attorney who might know about your situation. At best, he can review your facts and help you try to find a way out from under the rock.

 

[1099man]

Yeah you have pretty much confirmed my suspicions. And no my intentions certainly arent to hold them responsible for short comings... Im actually doing aok and dont feel performance will be an issue moving forward its an issue of comfort level dealing with these folks in the future. I believe in acting ethically and pointing fingers for performance issues would not be right.

The real issue of the promotion of this behavior is it can negatively effect me as part of maintaining the 1099 contract is comparison of your "stats" against your peers. By not engaging in these activities and being judged against peers who engaged in this practice directly reflects on my contract status as their performance was enhanced by these practices. Individual performance is judged on average performance of your peer group... given the unethical behavior it raises the bar and thus creates more pressure for me. Realistically it would make the most sense for me to probably just report this to our ethics department as they claim its "anonymous". THank you for your time. Do you want my address to send the bill?