D.C. resident Tom Shiner recently received a recruitment letter from Vector Marketing Corp. about a job paying $12.05 -- which Shiner presumed meant $12.05 an hour.
Wisconsin consumer protection investigators would tell him otherwise. They found several years ago that workers in that state earned less than $3 a day on average selling cutlery for Vector, a company that relies solely on independent contractors as salespeople.
In the D.C. area this year, Vector is recruiting salespeople through ads, roadside signs, direct mailings, flyers and a recorded phone message -- all of which refer to starting pay of $12.05, without noting that the amount is paid per sales presentation, not hourly. Nineteen people leaving recent applicant screenings at Vector's Silver Spring office all said they thought that the $12.05 is paid hourly.
"I'm assuming that they pay hourly. It would be illegal if they didn't, right?" said Shiner, 18.
There is nothing illegal about Vector's incentive and commission payment system, but authorities in Wisconsin and Arizona have ordered Vector to change its recruitment practices to make it clear that the advertised payment is not hourly. Investigators in those states found that Vector was advertising an hourly rate based upon the presentation fee and how long presentations lasted on average.
Each summer, Vector hires thousands of independent contractors nationwide, most of whom are of high school or college age. A unit of Alcas Corp., based in Olean, N.Y., Vector is not advertising in the Washington area as it did in Wisconsin and Arizona, where it was investigated for giving hourly rates. In this area, the ads state only the amount.
Vector pays workers the advertised dollar figure for each sales presentation -- of at least 35 minutes -- made to an adult with a full-time job. Don Muelrath, Vector's president of sales, said Vector does not intend to give the impression of an hourly wage. He said that by the time workers begin selling cutlery, they understand Vector's pay system.
"It would be hard to advertise $12.05 per presentation, because it's hard to get into, What is a presentation?' " Muelrath said.
David Tatar, a Wisconsin consumer protection investigator, said that state surveyed 940 Vector recruits in 1992 and found that almost half either earned nothing or lost money working for Vector, because the company encourages workers to lease or buy a sample set of knives for their presentations.
In 1994, Wisconsin ordered Vector "not to deceive young people it recruits . . . as salespeople." Tatar said the investigation was a catalyst for changes effective Aug. 1 in the state's consumer protection laws.
Vector no longer recruits salespeople in Wisconsin.
In 1990, Arizona's attorney general sued Vector, alleging violations of the Arizona Consumer Fraud Act. The state and Vector agreed to a settlement that punctuated a series of state actions against Vector's Tucson manager that spanned seven years. Vector agreed not to misrepresent its compensation system as part of the settlement.
Muelrath said Vector paid more than $500,000 last year in commissions and incentives on more than $60 million in sales, all through independent contractors. He said 60 percent of qualified presentations result in sales and that the average order placed with Vector is $130.
A worker's commitment determines his or her success, Muelrath said.
Helen Brown, 25, a Pennsylvania sales representative for Vector who said her five-year sales are about $150,000, agrees. "There's no other reason for my success other than working hard," she said.
Successful workers like Brown make most of their money from sales commissions, Muelrath said. Besides the presentation fee, workers can earn a commission ranging from 10 percent to 30 percent for the knives they sell.
However, students do not earn both the presentation fee and the commission, only the greater of the two.
Also, a presentation isn't considered "qualified" by Vector unless it's made to an adult with a full-time job. In some cases, that means the salesperson won't get the presentation fee even if the customer buys knives.
Deidre Vance, who worked for Vector in Evansville, Ind., in 1993, said that can be problematic because presentations that result in sales but aren't "qualified" can only earn a commission, which is often smaller than the presentation fee.
"I even sold a set of knives to a blind woman, but she didn't count because she was retired and on disability," said Vance, 22.
For that purchase, Vance said she earned a 10 percent commission of about $6. The presentation fee at the time in Evansville was more than $9.
Muelrath said whether or not Vector pays a presentation fee for successful but unqualified sales pitches varies by area. He wasn't certain of the policy in the Washington area.
Applicants at the Silver Spring screenings said afterward that Vector officials spoke to groups of three or four at a time for five minutes or so, asking questions such as when they could begin working.
Muelrath said that even at such screenings, which are a routine part of Vector's hiring process, there "isn't the time" to explain Vector's pay scale. He said that the system is explained in subsequent interviews.
In Silver Spring, Miguel Barbery was among those who said he thought he would be paid hourly, even after going through the screening.
Barbery, 17, a Bethesda resident, recently graduated from Walt Whitman High School and is working at a restaurant. He said he received a recruitment letter from Vector, and the pay attracted him to the Silver Spring session. "Twelve dollars an hour, that's good money. That's what I came for, that $12 an hour," Barbery said. "It's not a nice drive up here, but for 12 bucks an hour . . . " CAPTION: VECTOR MARKETING CORP.
Parent: Alcas Corp., based in Olean, N.Y.
Products: Vector sells fine cutlery manufactured by another Alcas unit, Cutco Cutlery Corp.
Offices: More than 375, including outlets in South Korea and Canada
1995 sales: $60 million
Sales force: Independent contractors CAPTION: Brockett Lang, 19, of Brookville. Lang will be a freshman at Montgomery College in the fall. CAPTION: Dar Johnson, 20, of Silver Spring. Johnson is a Howard University biology student. CAPTION: Darrel Allen, 18, of Silver Spring. Allen is a sophomore psychology major at Syracuse University.