Removal of Problematic Language from National Defense Authorization Act

In July, the United States House of Representatives passed the National Defense Authorization Act (NDAA) with an amendment offered by Rep. Robin Kelly (D-IL) that would have instructed the Department of Defense to provide a report detailing programs they provide to military members and their spouses on the “risks of multi-level marketing.”

During conference negotiations with the United States Senate, that would ultimately produce a final bill, DSA spoke with members of Congress integral to these negotiations to ensure the language did not make it into the final bill passed by Congress in December.

Arkansas Anti-Pyramid

In March, Arkansas became the 25^th state with DSA-supported anti-pyramid legislation.

The language is consistent with the 2004 Council of State Governmentsmodel legislation supported by DSA that clearly delineates between illegal pyramid schemes and legitimate direct selling companies.

California Independent Contractor

DSA gained an exemption under California Assembly Bill 5, which codified the 2018 California Supreme Court decision Dynamex into statute.  Without the exemption, the bill would have created an uncertain framework for more than 2.2 million Californians involved in direct selling. 

The language in the bill incorporates state Unemployment Insurance Code Section 650, which has classified direct sellers as independent contractors for over 20 years.

Illinois Cooling Off

DSA worked with contacts in Illinois to successfully amend a bill that would have required all sales occurring in the home to consumers age 65 years and older would have a 15 day right of cancellation as opposed to federal standard and that in many states of 3 days.

The bill as amended only applies to home contractors.

Indiana Independent Contractor

In April, Indiana signed legislation into law that clearly defines direct sellers as independent contractors under all state wage and hour laws.

The language is similar to the direct seller provision under the federal Internal Revenue Code 26 USC § 3508. 39 states now clearly define direct sellers as independent contractors under the unemployment insurance code.

Massachusetts Independent Contractor

In May, the Massachusetts Department of Family and Medical Leave issued guidance that would have required entities with more than 50 1099-MISC individuals in the state would be subject to reporting and contribution requirements.

DSA worked with the Massachusetts Department of Family and Medical Leave to ensure direct sellers were not covered by these provisions. In July, they issued guidance that individuals who are independent contractors under the unemployment compensation law in the state are not covered by the Paid Family and Medical Leave Act.

New Jersey Independent Contractor

In November, only weeks prior to the new legislature convening in January a bill was introduced in New Jersey that would have codified the ABC test into state statute.

DSA opposed the bill and was part of a broad business coalition ensuring it did not pass.  

Washington Independent Contractor

DSA worked with a business coalition in Washington state to stop legislation that would have imposed the strict ABC test and a presumption of employment on all independent contractors in the state. Instead, a working group was convened to study the issue.

October Meeting with FTC Associate Director of Marketing Practices Lois Greisman

In October, DSA met with Lois Greisman, Associate Director of Division of Marketing Practices of the FTC.  Ms. Greisman reaffirmed that the FTC considers direct selling and multi-level marketing compensation plans to be legitimate, irrespective of the number of levels in such plans, provided that compensation is based on the sale and consumption of products and services by ultimate end users, and not based on recruitment unrelated to sales and consumption. 

However, if such compensation types effectively reward, encourage, or incentivize product purchases without regard to sales to ultimate consumers, they will be considered indicative of recruitment-based compensation and pyramiding.

Ms. Greisman also noted that ultimate consumers could include salespeople, and that internal consumption of product is legitimate.  But, a plan that depends significantly or exclusively on sales to those within the network might not be sustainable and could be rewarding salespeople for recruitment rather than product sales to ultimate users.

DSA Meets with Senior Officials from Department of Labor Wage and Hour Division

In December, DSA met with senior officials from the United States Department of Labor Wage and Hour Division including Deputy Administrator Keith Sonderling.

The Wage and Hour Division is the primary agency of the federal government implementing policies on independent contractors.

Deputy Administrator Sonderling expressed his gratitude for the opportunities provided by direct selling and agreed to work with DSA to clarify independent contractor status.

Rep. Richard Hudson (R-NC) Visit to ACN

In April, United States Congressman Direct Selling Caucus Co-Chair Rep. Richard Hudson (R-NC) visited ACN, Inc. in Concord, NC.

Rep. Andy Barr (R-KY) Visit to Scentsy

In August, to get a first-hand view of business activity in his district, United States Congressman, Andy Barr (R-KY) met with employees at the Scentsy warehouse facility in his hometown of Lexington, Kentucky.

Rep. Virginia Foxx (R-NC) Visit to Princess House

Also during the August recess, United States Congresswoman Virginia Foxx (R-NC) visited the 60 employees at the Princess House Distribution Center located in Rural Hall, NC.

Rep. Greg Stanton (D-AZ) Visit to Isagenix

In November, Isagenix hosted Rep. Greg Stanton (D-AZ) at their headquarters in Gilbert, AZ. In addition to a meeting with several Isagenix executive leadership team members including CEO Travis Ogden, CLO Justin Powell, CSO Joshua Plant, and Interim CIO Gary Gallant.

Direct Selling Caucus Women’s Entrepreneurship Briefing

In December, the Congressional Direct Selling Caucus hosted a luncheon briefing titled, “Women’s Entrepreneurship and Direct Selling: A Pathway to Independent Business,” in Washington, D.C. Attendees learned more about the benefits of direct selling for women entrepreneurs including flexibility, the importance of independent work and the ability to learn from a community of peers.

Fall Legal and Regulatory Conference

On October 7-8, the Direct Selling Association (DSA), hosted its annual Legal and Regulatory Seminar in Washington, D.C.  The seminar brought together industry leaders to discuss legal and regulatory issues impacting the direct selling business and how companies and the Association are best positioned to respond.

Attendees heard from Andrew Smith, Director of the Bureau of Consumer Protection at the Federal Trade Commission while also discussing enforcement procedures and standards DSA is working with the FTC to clarify.

A wide range of other government officials from departments and agencies with jurisdiction over issues important to direct selling addressed the more than 130 attendees. Sharon Lindan Mayl, Senior Advisor for Policy, Office of Food Policy from the Food and Drug Administration presented the current legal status and the agency’s path forward on use and consumption of CBD; Nazak Nikahtar, Assistant Secretary for Industry and Analysis, United States Department of Commerce, International Trade Administration, updated attendees on trade agreements and the administration’s trade policy; and Alison Kilmartin, Deputy Assistant Secretary for Policy, United States Department of Labor listed the impressive accomplishments of the department on independent work and upcoming actions.

The Seminar also had a discussion of independent work from founding members of the Coalition for Workforce Innovation; legal thought leaders discussed recent FTC enforcement actions; direct selling-focused attorneys discussed pressing legal issues; independent work professionals discussed updates on independent contractor status; and the Direct Selling Self-Regulatory Council (DSSRC) examined the first year of the program and next steps.  

In addition to the content-rich program, industry General Counsels and company compliance leads were able to participate in roundtable discussions discussing what’s keeping them up at night and how they are addressing these issues.