New Ruling on independent contractors in Ca

[adjusterjack]

For the truly independent agent, I think it will be business as usual. For the agencies that hold an agent captive, I think their days of 1099 are limited. There is a special rule for life agents who work for one company, but that is the exception. The P&C agencies that only allow an agent to write for them but want to do it on a 1099 basis are probably going to have to reconsider how they do business.

There are already rules and laws in place that prohibit misclassification on the state and federal level. If a misclassified agent got up and sued his "employer" he would probably win.

The question is: Why doesn't Joe Agent rise up against his "employer" and go to court on it?

I suspect that the answer is that Joe Agent is making a good living with the arrangement and doesn't want to rock the boat. Courts and legislators aren't likely to take notice of the insurance business unless the misclassified agent raises the issue like other misclassified employees have done in the past.

With regard to Nationwide what is silent in that article is just how will Nationwide present that option to it's 2000 employee agents? My guess is that it will be something like: "Agent, as of (date) your employment is terminated. As of that date you have the option of forming your own independent insurance agency so you can do business with Nationwide and other insurance companies as you desire."

 

[VolAgent]

There are already rules and laws in place that prohibit misclassification on the state and federal level. If a misclassified agent got up and sued his "employer" he would probably win.

The question is: Why doesn't Joe Agent rise up against his "employer" and go to court on it?

I suspect that the answer is that Joe Agent is making a good living with the arrangement and doesn't want to rock the boat. Courts and legislators aren't likely to take notice of the insurance business unless the misclassified agent raises the issue like other misclassified employees have done in the past.

With regard to Nationwide what is silent in that article is just how will Nationwide present that option to it's 2000 employee agents? My guess is that it will be something like: "Agent, as of (date) your employment is terminated. As of that date you have the option of forming your own independent insurance agency so you can do business with Nationwide and other insurance companies as you desire."

Several reasons. Many aren't aware that they are misclassified. Many think they would lose, and some do enjoy the arrangement. As I'm sure you know from your adjusting days, most employers get caught when there is an unemployment or worker's comp claim.

As to Nationwide, from what I understand they've already been told. I'm not aware of all the details, but I believe there were some buyouts, financing to buy other books, and help finding buyers of books. Everything I have heard is that it is a complete mess on both the captive and independent side at Nationwide.

 

[Allen Trent]

With regard to Nationwide what is silent in that article is just how will Nationwide present that option to it's 2000 employee agents? My guess is that it will be something like: "Agent, as of (date) your employment is terminated. As of that date you have the option of forming your own independent insurance agency so you can do business with Nationwide and other insurance companies as you desire."

Nationwide agents are not W2 employees, they are Captive but 1099 with limited ability to write other carriers from within Nationwides own agency. Nationwide will merely remove the language from their current contract that prohibits the agent from writing with carriers outside of Nationwide & its agency. then, I am sure there will be a ton more compensation related details & Nationwide will likely require the agent to buy their Nationwide book from Nationwide.

 

[MyGenericName123]

so are independent agents that are writing premium for many companies going to be fine? The B throng seems to suggest no.

Anyone have input?

 

[Markthebroker]

I am about 1/2 way through setting up a licensed LLC so that I can remain independent from the agency I am with. A few months ago, the owner said I needed to either go employee or form an LLC. That was not a hard decision.

 

[adjusterjack]

so are independent agents that are writing premium for many companies going to be fine? The B throng seems to suggest no.

Anyone have input?

The same input I had before. Read the ENTIRE decision and you'll understand that the independent agent writing for many insurance companies is in business for himself and shouldn't be concerned.

Too many people just read A, B and C and have no real clue about what it means.