Do Not Pay Sales Commission to Independent Contractor Sales Reps

For many years we have advised our clients, do not pay sales commission to independent contractor sales reps. We have frequently been met with, “but everyone does that.” In 2024, the OIG entered into a settlement of multiple thousands of dollars with a company in multiple thousands of dollars for precisely that activity. The government claimed the practice violated the civil money penalties law. There are other ways that independent contractor reps can be compensated, but commission payments from federal doollars is not one of them. This prohibition does not pertain to bona fide employees.