Here is a question that could easily be ranked a silly. If you are a 1009 Agent to a company are you allowed to contract with other companies? I spoke to a person today about a position with their company and he said that it was a 1099 position.
Just learning about insurance the reason for the question.
When you say other companies, are you talking about carriers or agencies? 1099 is only a designation for taxation, meaning you are an independent contractor. No taxes are witheld by the agency or company, but you are responsible to pay your taxes at a later time.
A contract might prevent you from being independent, hence captive. Different terms.
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You can't close if you can't open.
I had a captive contract a while back and when I read the non-compete clause, it really didn't say anything about being captive. I was told I was captive, but all the contract really said was that I was not allowed to solicit other business to clients, employees and managers for 2 years. Didn't really say anything about new prospects other than the company would have the first right of refusal. My company let me go outside for health insurance as they did not offer it. Maybe my manager just turned his back, I don't know. But nowhere did it say about not being able to contract out.
Maybe I'm a little naive, but could they really do anything if they found out other than terminate your contract. Could they really find out if you wrote a referral another company unless the referral called and told the captive company. I'm no lawyer, but my interpretation was that if they offered it, you had to write it through them, if not take it elsewhere.
Am I wrong, could they take you to court or sue or something.
Before I resigned from the FMO I was with, I was managing our captive teams. In the contract it stated you were not allowed to appoint with any other company outside of the brokerage.
I saw it happen a couple times....
One guy had his commissions frozen, and no release...
If you are a 1099 employee, or independent contractor by IRS definition, you MUST be able to contract/work for other companies. If they company you work for attempts to bind you to work "exclusively" for them (with a whatever contract or...whatever!), and are not withholding taxes (i.e. consider you an employee, which is what you truly are) then they are breaking the law and you can easily fight it. Throw in that they have you on a set schedule, you use all of their equipment and NONE of your own to do your daily work, and you've got yourself a slam dunk.
Don't forget to mention all the other 1099 folks in the building if it goes that far and they really get you upset.
If you are a 1099 employee, or independent contractor by IRS definition, you MUST be able to contract/work for other companies. If they company you work for attempts to bind you to work "exclusively" for them (with a whatever contract or...whatever!), and are not withholding taxes (i.e. consider you an employee, which is what you truly are) then they are breaking the law and you can easily fight it. Throw in that they have you on a set schedule, you use all of their equipment and NONE of your own to do your daily work, and you've got yourself a slam dunk.
Don't forget to mention all the other 1099 folks in the building if it goes that far and they really get you upset.
The information stated may not be true as for insurance agents. I think the IRS views them as independent contractors but the insurance company can still give them a W-2 status if they so choose. They have a statutory standing by the IRS:
Statutory Employees If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.
A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.
The information stated may not be true as for insurance agents. I think the IRS views them as independent contractors but the insurance company can still give them a W-2 status if they so choose. They have a statutory standing by the IRS:
Statutory Employees If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute ( statutory employees ) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social security and Medicare taxes , below.
A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer s business operation. The work performed for you must be the salesperson s principal business activity. Refer to the Salesperson section located in Publication 15-A, Employer s Supplemental Tax Guide for additional information.
Thanks for including that, as I had never read it. However, I guess we're missing still a few key notes of interest. Seadevil needs to mention what TYPE of insurance he/she is selling, and the above listed are the 4 categories, but we still need to reference the 3 conditions under the SS and Medicare taxes.
1099 Agent - Question
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