That is not the case. Insurance agents are treated different. If you are at Allstate or Farmers or SF your are not an employee.
Becoming a State Farm Agent
- Thread starter shawn17ths
- Start date
That is not the case. Insurance agents are treated different. If you are at Allstate or Farmers or SF your are not an employee.
You may have set a record for waiting 4 years to make your first post!
Also, I have never heard this before about captive agencies. Does this mean they would be required to pay agents, at least, minimum wage, health insurance, etc?
Wish I'd have known this when I started out.
- 17,069
It may be different state to state but in Indiana, employees can be on straight commission. They do not have to have a salary. They just have to average out to at least minimum wage (over the year) with their commissions and hours worked.
- 9,744
Sorry bub, this has been litigated to death. You're wrong.
- 111
Definitely he is wrong!
Did not mean to say that what I said is how MOST carriers work, but only to say that THEY are WRONG!
Check out the following post....
Then tell me that I am wrong.
As to minimum wage: different states have different rules, however most carriers are not following them. Some states, however, do exempt "door-to-door salesmen" from minimum wage requirements. However, if you sit in an office, then you are not door-to-door.
My main emphasis was meant to be on the "captive" status of many agents. If you are required to do things in a certain way, at a certain time, or with a certain method, then you are not being paid for the result, but for the process, and are therefore an employee, according to the IRS.
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From irs.gov
Behavioral Control
Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work.
The behavioral control factors fall into the categories of:
An employee is generally subject to the business's instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
Degree of Instruction means that the more detailed the instructions, the more control the business exercises over the worker. More detailed instructions indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.
Note: The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right.
Evaluation System
If an evaluation system measures the details of how the work is performed, then these factors would point to an employee.
If the evaluation system measures just the end result, then this can point to either an independent contractor or an employee.
Training
If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods is even stronger evidence of an employer-employee relationship. However, independent contractors ordinarily use their own methods.
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Services available to the market
An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.
I do not have enough posts on this site to be allowed to post a link, however, these are ALL from the IRS website...
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Check out the following post....
Then tell me that I am wrong.
As to minimum wage: different states have different rules, however most carriers are not following them. Some states, however, do exempt "door-to-door salesmen" from minimum wage requirements. However, if you sit in an office, then you are not door-to-door.
My main emphasis was meant to be on the "captive" status of many agents. If you are required to do things in a certain way, at a certain time, or with a certain method, then you are not being paid for the result, but for the process, and are therefore an employee, according to the IRS.
- - - - - - - - - - - - - - - - - -
From irs.gov
Behavioral Control
Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work.
The behavioral control factors fall into the categories of:
- Type of instructions given
- Degree of instruction
- Evaluation systems
- Training
An employee is generally subject to the business's instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.
- When and where to do the work.
- What tools or equipment to use.
- What workers to hire or to assist with the work.
- Where to purchase supplies and services.
- What work must be performed by a specified individual.
- What order or sequence to follow when performing the work.
Degree of Instruction means that the more detailed the instructions, the more control the business exercises over the worker. More detailed instructions indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.
Note: The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right.
Evaluation System
If an evaluation system measures the details of how the work is performed, then these factors would point to an employee.
If the evaluation system measures just the end result, then this can point to either an independent contractor or an employee.
Training
If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods is even stronger evidence of an employer-employee relationship. However, independent contractors ordinarily use their own methods.
- - - - - - - - - - - - - - - - - -
Services available to the market
An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.
I do not have enough posts on this site to be allowed to post a link, however, these are ALL from the IRS website...
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Whew! Glad it's not me!How would you like it if your first and only post on this forum was incorrect?
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Legal Alert: Ninth Circuit Finds Insurance Agent is Independent Contractor, Not Employee - Ford Harrison - Labor and Employment Attorneys
Legal Alert: Ninth Circuit Finds Insurance Agent is Independent Contractor, Not Employee
August 5, 2010
The Ninth Circuit recently held that a "career agent" who sells the financial products and services of a group of financial services companies is an independent contractor and, accordingly, cannot sue the companies for sex discrimination under Title VII because that statute only covers employees. See Murray v. Principal Financial Group (9th Cir. June 17, 2010). In reaching this decision, the court noted that it and "virtually every other Circuit to consider similar issues, have held that insurance agents are independent contractors and not employees for purposes of various federal employment statutes."
The Ninth Circuit also clarified the test to be used in determining whether a worker will be considered an employee or an independent contractor. Relying on the U.S. Supreme Court's 1992 decision in Nationwide Mutual Insurance Co. v. Darden, the court held, "when determining whether an individual is an independent contractor or an employee for purposes of Title VII, a court should evaluate 'the hiring party's right to control the manner and means by which the product is accomplished.'" The factors relevant to this inquiry are:
Employers' Bottom Line:
This decision is good news for insurance companies because it clearly sets forth the standards to be used (at least by courts in the Ninth Circuit's jurisdiction) for determining whether a worker is an employee or an independent contractor. Additionally, the court's decision is important because it emphasizes that the key issue is control and that the "minutiae" of the relationship are not determinative.
If you have any questions regarding this decision or other labor or employment related issues, please contact the Ford & Harrison attorney with whom you usually work.
Legal Alert: Ninth Circuit Finds Insurance Agent is Independent Contractor, Not Employee
August 5, 2010
The Ninth Circuit recently held that a "career agent" who sells the financial products and services of a group of financial services companies is an independent contractor and, accordingly, cannot sue the companies for sex discrimination under Title VII because that statute only covers employees. See Murray v. Principal Financial Group (9th Cir. June 17, 2010). In reaching this decision, the court noted that it and "virtually every other Circuit to consider similar issues, have held that insurance agents are independent contractors and not employees for purposes of various federal employment statutes."
The Ninth Circuit also clarified the test to be used in determining whether a worker will be considered an employee or an independent contractor. Relying on the U.S. Supreme Court's 1992 decision in Nationwide Mutual Insurance Co. v. Darden, the court held, "when determining whether an individual is an independent contractor or an employee for purposes of Title VII, a court should evaluate 'the hiring party's right to control the manner and means by which the product is accomplished.'" The factors relevant to this inquiry are:
- the skill required;
- the source of the instrumentalities and tools;
- the location of the work;
- the duration of the relationship between the parties;
- whether the hiring party has the right to assign additional projects to the hired party;
- the extent of the hired party's discretion over when and how long to work;
- the method of payment;
- the hired party's role in hiring and paying assistants;
- whether the work is part of the regular business of the hiring party;
- whether the hiring party is in business;
- the provision of employee benefits; and
- the tax treatment of the hired party.
Employers' Bottom Line:
This decision is good news for insurance companies because it clearly sets forth the standards to be used (at least by courts in the Ninth Circuit's jurisdiction) for determining whether a worker is an employee or an independent contractor. Additionally, the court's decision is important because it emphasizes that the key issue is control and that the "minutiae" of the relationship are not determinative.
If you have any questions regarding this decision or other labor or employment related issues, please contact the Ford & Harrison attorney with whom you usually work.
Additionally, Murray is paid on a commission basis only, reports herself as self-employed to the IRS, and, in some circumstances, sells products other than those offered by Principal.
There is the key. The agent is free to sell other carriers products.
By definition, a "captive" agent is NOT free to do so, and is therefore NOT an Independent Agent, but, rather, an employee.
The IRS will be cracking down on this when ObamaCare kicks in full force, since carriers with more than 50 "captive" agents will be required to provide health insurance for their "employees"
There is the key. The agent is free to sell other carriers products.
By definition, a "captive" agent is NOT free to do so, and is therefore NOT an Independent Agent, but, rather, an employee.
The IRS will be cracking down on this when ObamaCare kicks in full force, since carriers with more than 50 "captive" agents will be required to provide health insurance for their "employees"
Hey everyone, I have a family member who is, according to him, very close to becoming a State Farm agent. He's been working in a local SF agency for the last year or so and by all accounts he's been doing well.
However, I've read this thread, and from my own knowledge of the industry, I feel like he's being led on.
Some of the things he's told us:
- They're letting him pick his market/agency location (I believe it would be new, not an existing book); they've given him two huge metropolitan areas/cities
- He's been telling people he'll be a SF employee and will be getting a monthly salary (or something) from them
- His current employer (an agent) is really pushing for him to get placed as an agent somewhere else. Does he get a kickback or something? It makes no sense why he wants to remove a successful employee from his office.
He's been talking with them (interviews and what not) for months and months now, and they've basically promised him he's getting his own agency. Is it possible that this could fall through? I'm just concerned he's being taken advantage of. And parts of it, like SF giving him a choice of market and promising him his own agency, just seem too good to be true.
I'm also fairly certain he got another family member to pony up the $50k already.
However, I've read this thread, and from my own knowledge of the industry, I feel like he's being led on.
Some of the things he's told us:
- They're letting him pick his market/agency location (I believe it would be new, not an existing book); they've given him two huge metropolitan areas/cities
- He's been telling people he'll be a SF employee and will be getting a monthly salary (or something) from them
- His current employer (an agent) is really pushing for him to get placed as an agent somewhere else. Does he get a kickback or something? It makes no sense why he wants to remove a successful employee from his office.
He's been talking with them (interviews and what not) for months and months now, and they've basically promised him he's getting his own agency. Is it possible that this could fall through? I'm just concerned he's being taken advantage of. And parts of it, like SF giving him a choice of market and promising him his own agency, just seem too good to be true.
I'm also fairly certain he got another family member to pony up the $50k already.
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