Mortgage Loan Officer 1099

[Blacky1]

What is the name of your state? AZ

I am curious as to why we cant use 1099 contract loan officers if we do not make them sign a non-compete clause. 1099 is a Federal issue and I was wondering how states are now overiding the federal law now. There are only 3 states left which allow 1099 loan officers. Colorado, Oregon & Washington. Please clarify.

 

[LdiJ]

What is the name of your state? AZ

I am curious as to why we cant use 1099 contract loan officers if we do not make them sign a non-compete clause. 1099 is a Federal issue and I was wondering how states are now overiding the federal law now. There are only 3 states left which allow 1099 loan officers. Colorado, Oregon & Washington. Please clarify.

Whether or not someone's income can be reported on a 1099 has everything to do with whether or not that person is truly "self-employed". It has nothing to do with a "non-compete" clause, and has everything to do with whether or not that person truly directs their own income, working hours, and has the choice with whom they do business.

I know lots of mortgage agents in many states other than CO, OR and WA who are self employed.

Perhaps your confusion is the definition of self employed.

 

[Blacky1]

Re:

I'm not referring to Broker/Owners. I am asking why can't I as a broker 1099 a contract LO in AZ?

 

[Blacky1]

The only states which allow Brokers to 1099 their LO's are WA, OR & CO. My question is why?

 

[LdiJ]

The only states which allow Brokers to 1099 their LO's are WA, OR & CO. My question is why?

Again, odds are that its because they don't meet the definition of "self-employed".

A person is only supposed to receive a 1099 if they are truly self-employed.....if not, you should be withholding taxes and reporting their income on a form W2.

 

[Blacky1]

Re:

So would they not be considered self employed if they are contractors? Doesn't make sense. They would not be obligated to use me exclusively for the business they generate, which is where the non-compete disclosure comes in to play. I'm not telling them they have to put their business through me.