1. If Waiau had been paid a salary in addition to her commission, how might that impact the court’s analysis?

2. Although the Agreement did not prohibit Waiau from working for another company, as a practical matter she was working full time for Avanti. Shouldn’t that be a factor in the court’s analysis? Why or why not?

Waiau was an employee of One Coast, a company that represented various businesses, including Avanti. In early 2009, One Coast dissolved. Waiau, who had nearly 30 years of experience as a product sales representative in the greeting card and gift industries, then entered into a written Service Agreement (Agreement) with Avanti to sell the company’s greeting cards, journals, and calendars. The Agreement provided, among other things, that:

■  Waiau would be Avanti’s exclusive sales representative for retail outlets in southwestern Oregon and would personally visit Avanti customers at their retail outlets at least once every 12 weeks for purposes of soliciting orders in accordance with the services Agreement and Avanti’s policies, catalogs, supplements, and price information furnished to Waiau by Avanti. 

■  Waiau had no authority to bind Avanti to any sales and had no authority to accept orders or receive payments on Avanti’s behalf.

■  Avanti reserved the right to establish and change prices, products, ways, methods, or terms of payment or shipment and any other conditions or terms of sale.

■  Waiau had the authority to hire, fire, and train her own sales associates. Waiau would pay all employee taxes and all her own expenses. 

In exchange for her services, Avanti would pay Waiau a commission based on a percentage of the product invoice price less cash discounts, taxes, shipping, insurance, and other deductions. The Agreement would automatically renew for one-year terms, unless earlier terminated by 30 days’ written notice from either party.

During the relevant time, Waiau maintained a home office with a desk, chair, fax machine, scanner, printer, telephone, computer, travel case, and sample bags. She used the office equipment almost exclusively for business and deducted home office expenses on her personal income tax return. She also used her personal vehicle for business travel. Avanti did not reimburse Waiau for postage, travel, meals, or lodging expenses. Waiau set her own work schedule and decided how frequently to visit customers. Her commissions were based entirely on her sales, and not on the number of hours that she worked. 

However, Waiau did not register a business name, nor did she carry liability insurance or performance bonds, and she did not advertise or market her services as a product sales representative. During that period, she passed out business cards that stated, “Andrea Waiau, Avanti Greeting Cards.” After Waiau sought unemployment insurance benefits claiming that she was an employee rather than an independent contractor, the state’s labor agency determined that Waiau was, in fact, an employee  of Avanti, thereby making Avanti liable for unemployment taxes. An Administrative Law Judge (ALJ) ruled that Waiau was an employee and Avanti appealed.

The Oregon Court of Appeals reversed the findings of the ALJ and ruled in favor of Avanti. The court reasoned that Avanti did not have a sufficient amount of direction and control over Waiau and that she should be classified as an independent contractor. The court concluded that Waiau controlled when and how often she worked. Specifically, the court pointed to the fact that Waiau set her own schedule and that Waiau could decide how frequently to visit customers. The court also found that Waiau worked strictly as a commissioned salesperson and worked as frequently or infrequently as she liked and that a commission sales representative who works on a part-time basis, selling only at her convenience or when the opportunity presents itself, is typically an independent contractor. They rejected the assertion that managerial control existed because the company expected her to make a certain amount of sales per month because such an expectation has to do solely with end results rather than with method. 

“Waiau had her own home office and vehicle; set her own hours and visited customers as frequently or infrequently as she desired; was compensated solely based on commission; communicated with Avanti concerning only the results of her efforts; and could simultaneously perform the same services for other greeting card companies. Those facts, too, must be considered in the context of the agreement itself. As noted, Waiau had been per-forming the same services for Avanti while she was employed by another company, One Coast; after One Coast dissolved, Waiau and Avanti entered into an agreement by which she agreed to provide the same services directly to Avanti as an independent contractor. The terms of that agreement and the parties’ conduct are consistent with their express understanding that Waiau would be working as an independent contractor, not an employee subject to the company’s direction and control.”