AmFam Insurance misclassified agents, says federal jury

AmFam Insurance misclassified agents, says federal jury

AmFam Insurance misclassified agents, says federal jury An Ohio jury ruled this week that thousands of former and current American Family Insurance agents should be considered as employees and not independent contractors.

If the judge rules in favour of the plaintiffs in the class action suit against the major insurer, it will be required to pay more than $1 billion in retirement benefits to almost 7,000 agents.

The decision comes after a two week trial, which followed more than four years of litigation. The collective complaint from the agents was classified as a class action suit by US district judge Donald Nugent.

“The jury apparently agreed that (American Family) cannot have it both ways,” Erin Dickinson, a Milwaukee attorney who worked on the case, said in a Cleveland.com report.

“A company cannot just call its agents ‘independent contractors’ to avoid following the federal law protecting retirement benefits and then insist on controlling how those agents do their work,” she added.

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Judge Nugent will then have to issue his own ruling on the matter. He could either agree or disagree with the jury. If he agrees with the jury, the court will have to decide on a course of action through which the major insurer can correct the situation.

Meanwhile, American Family spokesman Ken Muth issued an emailed statement which said: “We value our agents and the important roles they play in the lives of our customers and success of our company.

“We strongly disagree with the advisory verdict and believe it is contrary to the facts that American Family treats our agents as the independent contractors that they are.”

“The classification of insurance agents as independent contractors is common in our industry and has been affirmed by the courts in the past. Not only does our agents’ independent-contractor designation comply with the law, it benefits our agents by providing them great independence to make their businesses successful,” Muth also explained.


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18 Comments
  • 4/21/2017 3:46:22 PM
    Allstate agents have been fighting this fight for years, controlled like employees, but paid as independent agents. I would love to see our fight resolved and receive the benefits withheld by Allstate.
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  • Bizarre 4/21/2017 4:51:46 PM
    I disagree. How about working for a W2 salary then? I have seen similar lawsuits in the past, and they were started by agents that made over $500k per year for a job that would have had a $100k base plus bonuses. What is ironic in these cases, is when the agents get the payout, they are issued a 1099 for the payment. Then they go off to another company as a 1099 contractor. I would want to see how the agents were "controlled" before I made up my mind though. If they were required to come in to an office, only sell their products, and do things one way under direct supervision, then I get it. But if that was not the case, well then I would not agree.
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  • 4/21/2017 4:53:38 PM
    I agree that Allstate and most insurance companies run independent agents as if they were employees... I'm constantly told by the company about hours that I must keep, badgered to attend company meetings, maintaining life insurance quotas, and being financially punished by for not meeting company imposed quotas. They definitely walk a fine line by telling us "what will be done and how" which falls under the definition of an employee according to the IRS.
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