Are stock brokers independent contractors

FSI has fought for years — both in the states and in Washington, D. The classification of workers as independent contractors is an issue of great interest on Capitol Hill in particular. During the th Congress, Senator John Kerry D-MA and Rep. Jim McDermott D-WA-7 introduced The Fair Playing Field Act of FPFA S.

Additionally, the FPFA would have required employers to give all independent contractors a written statement to be developed by the Department of Treasury informing them of:.

Lastly, the FPFA would have increased the penalties for improperly classifying an employee as an independent contractor. The IBD business model provides those investors with access to products and services that maximize their ability to achieve their financial goals. The IBD industry is able to efficiently serve consumers and offer services at affordable prices because the primary business relationship is between the financial advisor and the consumer, not the broker-dealer and the consumer.

The IBD industry is a network of financial advisors who operate with maximum flexibility and who are responsible for all of their business operations. These independent financial advisors are small business owners and entrepreneurs who usually own or rent their own office, employ their own staff, and are subject to inspection primarily for securities laws compliance.

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The FPFA sought to eliminate Section and its safe harbor language. Elimination of Section would have occurred one year after the date of enactment of the act. Section has functioned effectively for over thirty years.

Eliminating the current safe harbor would discourage entrepreneurship and damage our fragile economy. These general concerns would be further heightened in the independent broker-dealer industry.

FSI | Independent Contractor Status

Under Sectionif an employer has a reasonable basis for treating the worker as an independent contractor, that classification will be accepted by the IRS.

Unfortunately, the language in the FPFA was not written as a safe harbor. While the act incorporated the language from the Act, it also attempted to eliminate Section from the Revenue Act of Instead, the FPFA would have directed the IRS not to consider compliance with investor protection standards imposed by a regulator or self-regulatory organization SRO as a sufficient determination of control when establishing independent contractor status.

Are stock brokers independent contractors February 1,the U. District Court for the Southern District of California recognized that financial advisors in the IBD industry are properly classified as independent contracts.

These changes to the IRS Code would have imposed significant negative unintended consequences for FSI members. Independent broker-dealers could be subject to substantial back taxes, penalties, and interest stock market 1938 chart. As a result, forex trading mentality status of this successful and necessary business model would have been significantly threatened.

Any move to eliminate the independent contractor status without carving out our industry would undermine the entrepreneurial spirit and the independence that is so vital to the advice, products, and services provided by independent financial advisors to their clients.

This would be a tragedy for middle class investors who have come to rely upon the unbiased professional financial services they receive from their local independent financial advisor.

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Download the FSI App for the latest calls to action, industry news, FSI updates and more, accessible anytime, anywhere. Retrieve Log In Log In. Navigation About Membership Issues Advocacy Action Center Events Newsroom Blog. Yet, the assault never ends, and FSI has been on the front lines defending our members. Additionally, the FPFA would have required employers to give all independent contractors a written statement to be developed by the Department of Treasury informing them of: Their federal tax obligations; That labor and employment law protections do not apply to independent contractors; And of their right to obtain a worker status determination Form SS-8 from the IRS.

Court Ruling Acknowledges the Legitimate Use of Advisor Independent Contractor Status On February 1,the U. Conclusion These changes to the IRS Code would have imposed significant negative unintended consequences for FSI members. Get the App Take action on the go! Back to Top Financial Services Institute 14th Street, NW Suite Washington, DC Financial Services Institute 14th Street, NW Suite Washington, DC