District Court Holds a Financial Advisor is a Common Law Employee Not Entitled to Business Deductions.

On September 24, 2025, the United States District Court for the Eastern District of Pennsylvania issued a memorandum opinion finding that a Wells Fargo financial advisor was a common law employee rather than an independent contractor, upheld the IRS’s disallowance of business expense deductions, and granted the government’s motion for summary judgement. Francisco Gil, a longtime financial advisor at Wells Fargo, argued that his flexibility in setting his schedule, recruiting clients, and working primarily on commission made him an independent contractor entitled to deduct business expenses on Schedule C. Alternatively, he sought classification as a statutory employee.

The IRS maintained that Gil was a common-law employee, pointing to Wells Fargo’s significant control over his work. The firm supervised him through annual reviews, performance goals, and access to his calendar; provided benefits such as health insurance and a 401(k); supplied office space, equipment, and assistants; withheld taxes from his pay; and retained ownership of his client lists. Wells Fargo also consistently treated him as an employee, issuing W-2s rather than 1099s.

Applying the common-law test for worker classification, the court found that the degree of control, provision of benefits, permanency of the relationship, and integration of Gil’s services into Wells Fargo’s core business overwhelmingly supported employee status. Although his commission-based pay and scheduling flexibility weighed in his favor, they did not overcome the broader evidence of employee treatment.

Because Gil was neither an independent contractor nor a statutory employee, he could not claim Schedule C deductions. The court concluded that Gil and his wife were entitled to smaller refunds than they sought—$17,074 for 2020 and $14,413 for 2021—reflecting only their overpayment as employees. The government’s motion for summary judgment was granted, and the taxpayers’ motion was denied. For further questions regarding whether you or your employee qualifies as an independent contractor, contact Liskow attorneys Leon Rittenberg III and Kevin Naccari and visit our Tax practice page.