When I thought of expanding my business a few months ago I had every intention of doing exactly that. That is until I started doing some in-depth "cover my backside" research.
Basically, it comes down to this. If you hire an individual to work on commission, they are not considered to be an independent contractor in the eyes of the IRS unless the two following things apply:
#1. You cannot keep them exclusive to your business. They must be able to freely sell products for any other company that they wish in addition to yours.
#2. If you have to provide any product training, training materials, etc in order for the individual to do their job, they're an employee, not a contractor.
The only way to overcome these two issues is to guarantee them an hourly wage or commission, whichever is greater.
Example, you could guarantee them no less than minimum wage and simply make up the difference between what they've earned in commissions to achieve that minimum.
You still can't prevent them from working for someone else during their non-work hours. You could fire them for it, though. I would. It would seem like a conflict of interest to me, especially if I trained them.
That being said, this information is based on my own research and a consultation with my accountant. She basically told me that people are still doing it to avoid having to pay taxes, unemployment, health insurance, etc, but if the IRS catches you it WILL suck!
I just thought I'd pass that along.