To determine this economic reality, the new rule considers six factors: 

• The worker’s opportunity for profit and loss. Does the worker have the option to negotiate prices for work or decline assignments and projects? Is the worker engaging in activities to expand their business or find more work? Does the worker make their own decisions about hiring, workspace rentals, etc.? Independent contractors have more freedom and responsibilities for their own income and growth. 
• Investments made by both worker and potential employer. Workers making similar investments as their employer—even if on a much smaller scale—to grow their own business suggests independent operations. 
• Work relationship permanence. Work that is indefinite, continuous or exclusive signals an employee relationship. Independent contractor work is definite in duration, non-exclusive and project-based or sporadic. 
• The nature and degree of control. Who controls the work schedule and rates for services? If there is performance supervision or a limitation on whether or not the worker can pursue other clients, independent contractor status is in question. 
• The importance of the work for the business. This does not analyze how integral an individual is to the operations, but rather how integral their function is to the overall business. If the work is central or critical to the success of the operation, the worker would be considered an employee.  
• Specialized skills and initiative. It is not specialized skills that are the determining factor, but whether or not a worker using specialized skills does so “in connection with business-like initiative” indicative of an independent contractor.  

This final rule provides additional context beyond the previous Independent Contractor Rule from 2021, particularly further insight and analysis of the “control factor”, which encompasses scheduling, price-setting, supervision and the freedom to work for others. 

The Direct Selling Association (DSA) released a statement strongly opposing the final rule, stating that it “dismisses valid criticisms raised in the Notice of Proposed Rulemaking by DSA and could require high investments to start a business, limits the use of technology, diminishes high self-regulatory standards and disregards conflicting federal statutes defining direct sellers as independent contractors.” 

Further, the DSA announced it will “support efforts to ensure the rule does not take effect and continue to support more statutory clarity including H.R. 5419, bi-partisan legislation that clearly defines direct sellers as independent contractors.” 

The post US Department of Labor Issues Final Rule Restricting Independent Contractor Status  first appeared on Direct Selling News.

Introduced by Rep. Tim Walberg (R-MI), the legislation would clearly define direct sellers as independent contractors under the Fair Labor Standards Act (FLSA) consistent with the Internal Revenue Service Code.

DSA President Joseph N. Mariano applauded Rep. Walberg for introducing this important legislation and noted that “as Congress examines the evolving gig economy, we trust that the independent contractor status of direct sellers as America’s Original Entrepreneurs continue to be supported.”

The independent contractor status of direct sellers is a long-recognized aspect of the business model that was affirmed for federal tax purposes in 1983 under 26 USC 3508 (b)(2) of the IRS Code and is reflected in state law. H.R. 7029 would incorporate the same language in the FLSA and reinforce the long-standing treatment of direct sellers as independent contractors under federal labor law.

Direct selling offers a low-risk way to participate in a fast-growing economy. People typically sell to their neighbors, friends and relatives on a part-time basis. H.R. 7029 allows these independent salespeople to continue engaging in this dynamic retail channel.

The post DSA Announces Support for H.R. 7029 first appeared on Direct Selling News.

Protecting our independent salesforce and their ability to build a business on their own terms remains our lynchpin issue.

Joseph Mariano

DSA has made independent contractors’ prevalent in their initiatives. To ensure members are apprised of the most current developments, the Association launched the Independent Contractor Update. This monthly newsletter summarizes events impacting independent contractor status across the country and provides updates on what DSA is doing to position the state of direct sellers positively.

In July, DSA hosted the first Independent Contractor Practicum in Washington, D.C. Nicholas C. Geale, Chief of Staff to the United States Secretary of Labor, discussed the policy priorities of the Administration and Department of Labor to protect and encourage independent contractors. DSA continues to foster positive relationships with government officials to protect our businesses.

In addition to this participation by the Trump administration, the practicum convened leading voices from member companies and outside practitioners to explore updates on recent legal developments for independent contractor status, implications for independent contractors of the recently enacted Tax Cuts and Jobs Act and the association’s legislative initiatives. A range of specific issues relevant to direct sellers as independent contractors such as salesforce training, social media monitoring and contract enforcement were also discussed.

DSA also began an Independent Contractor Working Group under the auspices of the Government Relations Committee. This group of legal and government affairs professionals are examining the legal landscape of independent contractor law and how to differentiate direct selling from those new economy players that now utilize the independent contractor model. A specific goal is to analyze the environment in Washington, D.C. and state capitols to gain increased insights into ways that statutes can more clearly define distributors as independent contractors to keep providing the freedom and flexibility to operate their businesses.

Pick up your print copy of the September 2018 issue in which this article appeared.

DSA has already identified several critical independent contractor initiatives:

• Federal legislation to make clear that direct sellers are not covered by the rigid employment requirements of the Fair Labors Standards Act (FLSA).
• Efforts to clarify similar laws in the states:
  • Continue DSA’s long-standing efforts to have direct selling exemptions from state unemployment coverage;
  • Work as part of a coalition to overturn the recent “Dynamex” decision in California that changed independent contractor law;
  • Remain the leader of the national coalition of businesses devoted to preserving independent contractor status;
  • Engage in our public proclamations of the “Year of the Independent Contractor” and promoting direct sellers as the “original entrepreneurs.”

I am optimistic about the future. I know that by empowering direct sellers, our industry can play to our strengths and leverage our experience, entrepreneurial know-how and drive to innovate and capitalize on the market opportunities.

Our industry has much to gain by empowering direct sellers, and we look forward to embarking on the bold, ambitious initiatives that will preserve our distributors’ ability to continue to thrive for decades to come.

The post Year of the Independent Contractor first appeared on Direct Selling News.

On Thursday, July 26, 2018, the Direct Selling Association convened its Independent Contractor Practicum to discuss pathways to protecting the direct selling industry’s most important asset— its salesforce.

Department of Labor Chief of Staff to the Secretary of Labor Nicholas C. Geale was among the leaders meeting with direct selling industry executives to explore how the Administration and Department of Labor are positively positioning independent contractors in the marketplace.

“We are committed to leading the discussion on how to address developments with independent contractor law in this economy by hosting events like the Independent Contractor Practicum and bringing the discussion to Washington. Direct selling is poised to be the retail channel of choice for U.S. consumers and it is important we are diligent in preserving America’s Original Entrepreneurs and the industry,” said Joseph N. Mariano, president and chief executive officer of the Direct Selling Association.

The Practicum agenda included updates on recent legal developments for independent contractor status, implications for independent contractors resulting from the recently enacted Tax Cuts and Jobs Act, and the association’s legislative initiatives. The event also focused on contract development, as well as recognizing social media trends that could affect independent contractor status.

The full Independent Contractor Practicum agenda and speaker information can be viewed here.

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The DSA, the national trade association for companies that offer entrepreneurial opportunities to independent sellers to market and sell products and services, reported that retail sales in the U.S. in 2017 were $34.9 billion, down 1.8 percent from 2016, and that 18.6 million people were involved in direct selling, which represents a 9.3 percent decrease year over year. Participation in the channel varied from those who joined direct selling companies as discount customers to those who are pursuing a business on a part-time or full-time basis.

Retail Sales

Estimated retail sales for 2017 were $34.9 billion, down slightly from 2016’s $35.54 billion. This marks the second year in a row that sales have declined. Sales had climbed each year from 2009 to 2015, which had an all-time high of $36.12 billion in sales.

The top states with direct selling activity continued to be Texas, California, New York, Florida and Illinois, which, collectively, accounted for nearly 45 percent of all U.S. sales in 2017.

Wellness products remained the most popular product category in the U.S. in 2017, accounting for 33.8 percent of sales, followed by Services (22.1%), Home & Family Care/Durables (16.8%), Beauty & Personal Care (16.5%), Clothing & Accessories (8.2%) and Leisure/Educational (2.6%).

Direct Selling Population

After a record 20.5 million Americans involved in direct selling in 2016, the DSA reported 18.6 million for 2017. Of those, 13.0 million were discount customers, 4.7 million part-time business builders and .9 million full-time business builders. These statistics do show growth in the number of Americans starting home-based businesses: In 2017, .9 million Americans had full-time businesses compared to 0.8 million in 2016, and 4.7 million Americans were involved in part-time businesses in 2017 compared to 4.5 million in 2016.

The direct selling channel, known for its flexible entrepreneurial opportunities for all ages, reflected that in the statistics that showed 36.9 percent of direct sellers in 2017 were Millennials; 34.0 percent, Gen Xers; and 26.4 percent, Baby Boomers.

By gender, 73.5 percent of direct sellers in the United States in 2017 were women and 26.5 percent men. After an almost 3 percentage point drop from 2014 to 2015, the percentage of men joining the channel has increased each of the last two years, with a 15 percent increase from 2015 to 2016 and another 1.9 percent increase from 2016 to 2017.

Ethnic and racial demographics for 2017 show that Americans involved in direct selling were 80 percent non-Hispanic and 20 percent Hispanic. 85 percent of those involved were White/Caucasian, 8 percent African American, 1 percent American Indian or Native Alaskan and 1 percent Native Hawaiian or Pacific Islander. These numbers closely reflect the fabric of America: the U.S. population is 82 percent non-Hispanic and 18 percent Hispanic. With regard to race, 77 percent of the U.S. population is White/Caucasian, 13 percent African American, 6 percent Asian, 1 percent American Indian or Native Alaskan and 1 percent Native Hawaiian or Pacific Islander.

For more insights and statistics on the U.S. direct selling channel, visit www.dsa.org.

The post DSA Committed to Helping Members Support “America’s Original Entrepreneurs” first appeared on Direct Selling News.

Names are essential: They carry meaning derived from the legacy of past actions and an ability to reliably deliver. While names conjure an image that may be easily recognizable, looks alone can deceive. Even Shakespeare notes that the importance of remembering the rose’s smell is what will determine if it is indeed a rose. After all, it is the sweetness of fragrance together with the name that reveals the object to be what it claims to be.

In our world of direct selling, it is the Direct Selling Association (DSA) Code of Ethics that helps ensure that those who call themselves “direct sellers” are worthy of the title and that they genuinely “pass the sniff test” laid out by our industry. As any member of the DSA knows, embedded within the moniker is a commitment to the most ethically rigorous business practices and vigilance for protecting the consumers who participate in the opportunities we create, as well as those consumers who buy our products.

The DSA Code of Ethics is the industry’s way to set bad actors apart from the visionaries whose ideas have empowered millions to start their own direct selling businesses and build better lives for themselves and their families. The Code allows the name “direct seller” to carry the same credibility as other entrepreneurial opportunities. It is what assures our nation’s budding entrepreneurs that direct selling is the flexible, profitable and modern opportunity they seek.

There is so much in the name “direct selling.” Some of the brightest brands in our industry are envisioning new ways of describing themselves and what they do.

Direct selling’s micro-entrepreneurial opportunities, combined with its high-touch, relationship-driven model, is what enables direct selling to compete in a marketplace where impersonal e-commerce, on-demand delivery and the gig economy predominate. We are up to the challenge.

During this moment of change, together with our shared commitment to doing the right thing for our customers and salespeople, we can work together to propel direct selling to new heights and prominence in the market. It is this opportunity that brings all direct sellers together through DSA.

Today the Association is actively working at the state and national levels to:

• Ensure the independent contractor status of direct sellers;
• Improve the reputation and understanding of the direct selling model among policymakers and other critical audiences;
• Reduce unnecessary regulatory scrutiny and bureaucratic requirements that might be imposed on direct selling;
• Provide the highest level of confidence to individual consumers and salespeople of direct selling companies;
• Ensure that the tax treatment of direct sellers and companies is fair and equitable;
• Protect the opportunity for individuals to start their own direct selling enterprises;
• Enact a stronger and credible self-regulatory program to cure perceived and real problems in the marketplace; and,
• Guide new proposals regarding the gig economy, job sharing and similar models to guarantee that direct selling is not inhibited, but encouraged.

All social sellers, network marketing distributors, party plan consultants, door-to-door, person-to-person and big-ticket companies who share our commitment to the highest ethical practices within our great business model are welcome to join us in this vital cause.

Joseph N. Mariano is President of the U.S. Direct Selling Association and the Direct Selling Education Foundation.

The post What’s in a Name? first appeared on Direct Selling News.

In This Issue:
The Most Influential Women in Direct Selling
Bringing Gender Parity to Direct Selling 
Advocating for the Direct Selling Community 
Navigating the Millennial-Driven World
Sticking to a Winning Business Model
Leading with Passion and Commitment
Launching New Products and Segments
Recruiting and Retaining the Field
Direct Selling Icons

Mary Kay Ash remains an ever-present figure in direct selling. Sixteen years after she passed away, the legendary founder of Mary Kay Cosmetics continues to inspire female entrepreneurs and leaders. A trailblazer when she formed her business in 1963, a time when very few women held the reins of any company, Ash championed the direct selling business model to ensure women had every opportunity to become their own bosses and achieve financial security.

Today, half of the 20 most influential women in direct selling follow in Ash’s footsteps as founders who lead their own direct selling enterprises. While much has changed over the past 50 years—certainly when considering technological advances and the ability to instantly communicate across the globe—today’s founders continue to face the same challenges as Ash once did: how to infuse passion and energy into the sales field, how to compete in a crowded marketplace, and how to encourage and train first-time entrepreneurs to grow into successful business owners.

Leading by Example

Employees and independent representatives of a direct selling company embody the vision and mission of its founder. They also reflect the passion and energy of their leader. As a channel with its foundational structure built on interpersonal relationships, direct selling’s independent representatives are finely attuned to the pulse of the executive team. Today especially, with easy access to both positive and negative information about a company, the executives we spoke to felt communication directly from the founders to the field is critically important.

Chrissy Weems, Co-Founder and CEO, Origami OwlChrissy Weems co-founded Chandler, Arizona-based custom jewelry company Origami Owl with her then 14-year-old daughter, Bella, in 2012 when Bella’s desire to own her own car inspired the entrepreneurial family.

“In the fabric of my DNA is die-hard passion, purpose and boundless energy,” says Chrissy Weems, Co-Founder and CEO of Origami Owl, a custom jewelry brand. “When you’re passionate and committed, people around you feel it. When you’re not, they feel that, too. For me, it means staying true to our genuine intention to be a global force for good. It also means, during the good times and the bad, I work hard to keep myself in a peak state of energy. I’ve learned that even as a founder and CEO, I cannot control what happens, but I can control how I respond to it.”

Mary Young, Co-Founder and CEO of Young Living Essential Oils, says she believes the best way to infuse energy into the field is by allowing them to freely offer their insights and opinions. “Personally, I enjoy building friendships with those with whom I work,” she says. “Treating those people as equals and valuing their opinions builds tremendous passion and motivation. Great creativity comes out of allowing others to express their feelings and share their ideas, knowing that the leadership or management is listening with sincere interest.”

For Melanie Huscroft, Co-Founder and Chief Visionary Officer of social-selling beauty company Younique, allowing employees and consultants or distributors to share in successes and wins, and giving credit to those involved with those successes, also breeds loyalty and passion. “Setting business goals as an organization and ensuring that everyone is aligned is very important,” Huscroft says. “Passion starts at the top and breeds its way down through the organization. Owning mistakes creates a culture of learning—I truly believe that. When the big wins happen in business everyone helps to celebrate those, but we can also celebrate the learning that comes from those mistakes as well. It helps everyone to feel passionate and motivated and personally invested in the long-term successes.”

Melanie Huscroft,Co-Founder and Chief Visionary Officer, YouniqueMelanie Huscroft founded Lehi, Utah-based beauty and personal care company Younique with her brother, Derek Maxfield, in 2012 and leads areas in marketing, advertising, product selection and branding.

There will always be ups and downs in any business. Executive leaders as well as the field understand that. But how those downs are managed is critical, especially for the morale of employees and the field. The key to managing such challenges, say these founders—especially regarding reputation, a recurring theme in direct selling—is being open and honest with everyone so they fully understand the company’s business decisions.

“Transparency and honesty—we need more of it in business,” Huscroft says. “Employees and consultants/distributors appreciate it and respect it. Not all business decisions end up being the right ones, but owning those decisions and then evaluating and sharing the insights learned helps everyone to understand the motives and filters used to help make those decisions. Decisions and outcomes can evolve as the learnings of the business evolve. Staying laser-focused on the company’s vision and mission is the purest way to stay true to what is most important in managing those inevitable challenges.”

Young agrees that communication is the key to all interaction. “If management is honest and puts the well-being of those with whom they associate first, whether they are employees or distributors, everyone will feel respected and regarded as important to management and the company, which makes it much easier to solve problems, make decisions and have positive growth and success,” she says.

Competing in the YouEconomy

In this age of the YouEconomy, honesty and legitimacy in business practices are even more critical when one considers Uber, Etsy and Airbnb. These companies also offer independent workers similar business opportunities, with a few key differences, including that earning potential is capped by time. There are only so many hours in a day to drive a car and so many days in a month that your property might be available to rent. But with direct selling, distributors have the opportunity to build their businesses through networks. Those networks can work for them, even when they are idle. That can make a big difference when looking to establish the flexibility to pursue the work-life balance important to younger generations.

Mary Young, Co-Founder and CEO, Young Living Essential OilsMary Young co-founded Lehi, Utah-based Young Living Essential Oils with her husband, Gary Young, and directs the company’s day-to-day business as well as leads the global outreach efforts of the Gary D. Young Foundation.

Consider this: According to an Intuit report, 40 percent of American workers will be independent contractors by 2020. That represents a tremendous opportunity for direct selling leaders—4 in 10 working Americans looking to start their own businesses. The challenge, both now and over the course of the next few years, is to successfully communicate the benefits the direct selling channel offers to these workers.

“Everything in our world seeks to pull us further and further away from connection with others: We shop online, we pay at the pump, we have groceries and meals delivered to our doors, we text instead of making a personal phone call,” says Weems. “What the social (direct) selling industry offers is an opportunity to earn income through flexible entrepreneurship while creating lasting relationships and empowering others to reach their definition of success. What we do connects people in meaningful ways that is so fulfilling. We offer people the opportunity to be a part of something way bigger than just what they can do or earn on their own.”

Young agrees that connection is what draws people to direct selling and what makes the channel a true community. “Our type of business offers lifestyle changes and a desire to share and help other people have the same opportunity,” Young says. “We build interpersonal relationships, trust and lasting friendships, which is the foundation that makes network marketing successful.”

The flexibility is also a key driver, Huscroft adds. “The beauty of direct sales is that one can decide the level of commitment one wants to give,” she says. “It isn’t necessarily bad nor good to realize that one individual may want a part-time investment of time and resources, while someone else may want to invest more time and energy into building an empire. It’s all possible, and proven, at all levels of success.”

A Coaching Philosophy

Another key differentiator that direct selling has over Uber, Etsy, Airbnb and many other YouEconomy companies that draws potential business owners to the channel is the focus on personal development. Direct selling was founded on the philosophy of coaching people on how to successfully build a business from the ground up. Often, new business owners have little selling or leadership experience, and personal development training helps them establish the growth mindset and learn the critical skills necessary to build their businesses. It is this focus on self-improvement that helps to set the channel apart from other businesses.

“Personal development is so critical to the very foundation of what we do each day,” says Weems. “New business owners need tools to help them succeed and strengthen their leadership abilities. We have the ability to provide the tools to help build confidence.”

The focus on personal development also shows that the company is personally invested in the new business owner. When a company leader, especially the founder, offers encouragement and support, it goes far in motivating the salesforce.

“It’s the old saying that when people feel you care about them personally, they will respond to your suggestions and perhaps direction,” Young says.

“I don’t believe in telling people what to do. I believe in giving them choices and new ideas to think about,” she adds. “Most people, when introduced to the idea of building a business, are excited because of a product they would like to share, but they don’t know how to do that. Business tools are important if they are simple and easy to follow. However, it is more important that you teach them how to use the business tools. You set the example, go with them, encourage them and show them how to talk to other people by being sincere and not desperate in their approach.”

As she notes, when new business owners share their personal experiences and why they are excited about a product or business opportunity, they can create immediate excitement in those to whom they speak. But some business owners might have the same desire to share yet are paralyzed by insecurity, and they need support and encouragement the most.

“Through coaching, when these people realize that they can do it, the idea of building a business becomes very exciting,” Young says. “The first taste of success, if it is just in being able to express themselves, can be the beginning of a new path in life for individuals who have never had this kind of an opportunity. Selling and leadership will develop with time and persistence. And with a good mentor, anything is possible.”

Huscroft agrees. “Building genuine relationships is the first fundamental principle of coaching,” she says. “While personal development tools are very important for learning valuable business-minded philosophies, I tend to believe that truly caring about others’ goals and showing a personal investment into someone else’s success is what is really going to help create a coachable mindset that will lead to duplication and, ultimately, long-term success in this industry.”

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