What happened: A class action alleges Macy's let its insurance broker extract $13.2 million in commissions from employee-paid premiums over six years
Who's involved: Macy's and three affiliated Aon brokerage entities, with Allstate and Aflac subsidiaries as non-party carriers
What's at stake: Approximately $9.6 million in alleged excess broker compensation, plus injunctive relief
Why it matters: The filing benchmarks broker commissions across 16,000+ employers and names what Aon charged Macy's rivals for identical products
Where it stands: Filed October 3, 2026, in the Southern District of New York
Aon collected $214 brokering Target's supplemental health insurance in 2019, the complaint says. That same year, the filing alleges the same Aon entity collected commissions and fees worth 50.8% of premiums on the same products, through the same carrier, at Macy's.
That comparison anchors a new class action filed in the US District Court for the Southern District of New York on October 3. A former operations supervisor at Macy's West Virginia location alleges that between 2019 and 2024, Aon entities extracted approximately $13.2 million in commissions and fees from the premiums Macy's employees paid out of their own wages for voluntary benefits coverage - accident, critical illness, and hospital indemnity insurance offered through the Macy's, Inc. Enhanced Benefits Program.
The suit is brought under ERISA, the federal law that governs employer-sponsored benefit plans and requires plan sponsors to act in the best interests of their workers. The filing alleges those commissions averaged 36.7% of every premium dollar. For every dollar deducted from a Macy's paycheck, the complaint says, roughly 37 cents went to the broker.
The complaint traces what it calls "churning" - switching carriers to grab a fresh first-year commission windfall. According to the filing, the commission rate declined from 50.8% in the 2019 plan year to 22.8% by 2021 as renewal rates kicked in. Then, the complaint alleges, Macy's and Aon switched carriers - from an Allstate subsidiary to an Aflac subsidiary - and the rate immediately spiked to 62.8%. Nearly triple the prior year.
Three things changed at once in that 2022 transition, according to the filing: the carrier, the product structure (from three separate contracts to a single bundled contract, which the complaint says eliminated product-level rate visibility), and the commission rate. The filing alleges none of these changes were disclosed to employees.
The complaint calls this the "hallmark of a heaped commission arrangement," where the broker allegedly extracts the maximum possible first-year payout knowing the cost gets baked into the rates employees pay for years afterward. It points to a near-identical trajectory at another Aon placement - BlueTriton Brands - through the same carrier in the same years: 65.1%, 37.9%, 21.8%, compared to the Plan's 62.8%, 37.9%, 22.8%.
Two unrelated employers do not arrive independently at the same first-year spike, the same step-down, and the same renewal rate, the filing argues.
The complaint takes particular aim at Macy's enrollment materials. According to the filing, Macy's "Benefits at a Glance" guides told seasonal, part-time, and hourly workers that these insurance products were offered "at discounted group rates." The complaint alleges the identical language appeared in guides issued to multiple workforce groups for the 2025-2026 plan year.
Rates inflated by broker compensation averaging 36.7% of premiums, the filing argues, are not "discounted" in any sense a reasonable employee would understand. The complaint describes the workers receiving these materials as "the hourly, seasonal, and part-time retail workers least equipped to investigate the commission economics behind their premium rates."
The complaint goes beyond the Target comparison. It cites publicly filed Form 5500 data - the annual reports employers must lodge with the Department of Labor for benefit plans - from HCA (broker compensation averaging approximately 3.2%), Home Depot (approximately 4.8% through the same carrier Macy's used), and Dollar Tree (approximately 9.0%). The filing also claims to have examined filings from more than 16,000 employers, placing the Plan's six-year average above the 75th percentile of that dataset, and its 2019 critical illness commission rate of 65.1% above approximately 98% of all critical illness contracts.
The filing seeks approximately $9.6 million in losses - the difference between the $13.2 million Aon allegedly received and what the complaint says would have been paid at a 10% compensation rate consistent with market benchmarks. It also seeks to have Aon hand back all commissions, the appointment of an independent fiduciary, a competitive bidding requirement going forward, and correction of the "discounted group rates" language in Macy's enrollment materials.
Any broker earning commissions on voluntary benefits placements will want to watch whether this case's benchmarking approach - cross-referencing public filing data across thousands of employers to establish a market rate for broker compensation - survives early motions, because the same dataset is available to every plaintiff's firm in the country.
None of the allegations have been tested, and no court has ruled on the merits.
