Commissioned Insurance agent in Georgia Georgia

[ICBWIH]

I sincerely apologize if this has been asked previously...just direct me to the proper thread if it has.

Until 12-5-09, I was employed for the last 25 years with a large insurance company in "personal lines", like disability, cancer, life, etc. The company is domiciled in Illinois, but do business and have agents in all states, and indeed in many foreign countries.

On 12-5-09, I was advised that "my tenure was over". After the shock and surprise (and maybe a little panic!) I looked into Unemployment Benefits to hold me over until I secured new employment. Once the paperwork was finished at the DOL office, I was told that my former employer is "exempt" from having to pay Unemployment Taxes on commissioned agents. (Another shock!). The DOL made it sound like this was not necessarily the case in all 50 states, but it is here in Georgia.

How can that be? Yes, for all those 25 years I was indeed a commissioned employee...but...the key word here is "employee". I received W-2's for every year, had company benefits, participated in 401k, etc. I was not ever a 1099 commissioned employee.

Are they serious? Is there any recourse? Can anyone lead me to the laws that state this?

Thanks!

I Can't Believe What I Heard

[DAW]

We are getting outside my area of expertise here. I am not a UI expert, especially in GA. However, part of what you said is ringing some bells. The general rule of thumb is that under "common law", all workers are either "employees" or "independent contractors" (IC). There has never been anything called a "1099 commissioned employee". However, if we were looking at IRS rules only, there is such a thing as "statutory employees". That is someone that if we looked at "common law" tests only, would be considered IC, but for whom an actual law (statute) was passed that overrides common law. This includes something called "full-time life insurance salespersons", and is a function of IRS Regulation 31.3121(d)-1(d)(3)(ii). The IRS rules specifically state that the employee is not subject to FUTA (the federal UI tax) only if the all earnings were from commissions (31.3306)c)(14)-1).

Now I will never for any reason know anything about GA UI law, but if federal law considers this type of employee to be exempt from federal UI taxes, then there would seem to be a good possibility that so would state UI taxes.

I normally get IRS regulations from a paid access website, but I can point you to the actual law where the possible exemption for your position comes from. I will cite the exception, and you can search the phrase if you want to slog through the actual law. The related IRS regulations is derived from this law.

http://www.fourmilab.ch/ustax/www/t26-C-23-3306.html

(14) service performed by an individual for a person as an insurance agent or as an insurance solicitor, if all such service performed by such individual for such person is performed for remuneration solely by way of commission;