Wallace Miller is pursuing a class action alleging that Allstate Insurance Company misclassified the “exclusive agents” selling its insurance products as independent contractors, but treated them as employees under the law. These agents were required to pay business expenses that Allstate, as their employer, should have handled.
Have you worked as an exclusive agent at Allstate? You may be able to participate in a potential litigation. Reach out to Wallace Miller at (312) 261-6193 to see if we can help.
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Meet the Allstate Insurance Company
Allstate Insurance Company is a Fortune 500 property and casualty company that sells insurance across the U.S. and around the world. With its main offices in Northbrook, Illinois, it is one of the five largest insurance companies in the U.S. Between 2020 and 2022, Allstate paid more than $11 billion in dividends to its parent company, the Allstate Corporation.
The auto and property insurance company operates a system of agents that sell insurance through agencies, the internet, and call centers.
The system of “exclusive agents”
Many of the individuals selling insurance through this system are hired by Allstate as “exclusive agents.” The company classifies them as independent contractors and requires them to sell exclusively for Allstate.
As a result of the independent contractor designation, these exclusive agents are expected to bear all or most of the business expenses of the agency locations that they operate. These expenses often include renting office space, advertising and marketing costs, hiring and paying staff, setting up phone lines and internet, buying required Allstate-approved computers and Allstate software, and other costs associated with operating an agency.
Employees or independent contractors?
Plaintiffs in the pending class action lawsuit against Allstate allege that the insurance corporation is abusing the independent contractor designation by requiring exclusive agents to pay business expenses.
Independent contractors are common in the insurance industry. These individuals typically own their own agencies and client lists, sell insurance for multiple competing insurance companies, and retain their client information and intellectual property if they stop working for a given insurance provider. In fact, Allstate also sells its products through these types of agents—which they refer to as “Independent Agents” (as opposed to the “exclusive agents” at issue in this case).
Unlike Allstate’s Independent Agents, the exclusive agents hired by Allstate operate like at-will sales employees while bearing the costs of independent contractors.
These exclusive agents:
- Don’t own or operate their own business independent of Allstate’s network. Allstate maintains financial and administrative control—down to owning the agencies’ phone numbers and website—and controls client and policy information.
- Don’t own their own book of business. In the insurance industry, a “book of business” refers to a directory of a company or agent’s accounts, including past and present client information and all insurance policies the agent has written. Books of business are the primary asset through which agents make money and keep track of their customer relationships, renewals, and expirations. Exclusive agents are required to build their books of business at their own expense, but the information they acquire and the customer relationships they build legally belong to Allstate.
- Can be fired “at will” (or for any legal reason). If this occurs, the agent loses everything they’ve invested in the agency and all business expenses, while their book of business, agency, and customers remain Allstate property.
- Don’t control what they sell. Allstate determines the products agents can offer, the terms of their agreements, and their prices. Exclusive agents are only permitted to sell Allstate products.
- Don’t control their compensation. Allstate determines what the agents are paid, from commission percentages to bonuses, and can change their compensation at will.
- Don’t control the details of their agency’s operation. Allstate dictates their online presence, agency location, agency size, and what they can sell.
- Are required to sign noncompete provisions that limit their ability to continue working in insurance if they quit or are fired.
In short, the exclusive agents are economically dependent on Allstate and operate as employees of the insurance company—but are required to pay expenses as though they run independent businesses. This has put many exclusive agents in positions of significant financial hardship.
Allstate recently cut the commissions on auto policies sold by exclusive agents by 84 percent while restricting the variety of products they could sell. But there was no change in the expenses that agents were expected to bear. As a result, many agents—including the plaintiffs involved in our lawsuit—suffered significant losses. Many have had to close their agencies, but still have unpaid debts due to expenses they incurred working for Allstate, including paying for office leases.
The Allstate insurance class action lawsuit
Section 2802 of the California Labor Code prohibits employers from passing on the expense of running a business to their workers. This provision doesn’t apply to independent contractors—but while Allstate classifies their exclusive agents as such, California state law has a specific definition governing the distinction between employees and independent contractors. Plaintiffs allege that due to the structure and requirements of the exclusive agent job, and the nature of the agents’ relationships with Allstate, the agents have been treated as employees of Allstate, rather than as true independent contractors.
These exclusive agents are therefore owed reimbursement for all of the expenses they paid on behalf of Allstate’s business. Plaintiffs are also calling for an end to the corporation’s unlawful and unfair practices regarding independent contractors.
Plaintiffs are fighting to certify a class action lawsuit in the United States District Court in the Central District of California representing at least 900 individuals impacted by the unfair exclusive agent policies. A class action will make it possible for these plaintiffs to pool financial and legal resources to stand up against the significant resources of Allstate and hold them financially accountable for violating Section 2802.
Left to right: Nicholas P. Kelly, Edward A. Wallace, Molly Condon Wells, Mark R. Miller, Jessica Wieczorkiewicz, Timothy E. Jackson.
Contact Wallace Miller
If you’ve worked as an exclusive agent with Allstate and had to pay business expenses on behalf of the company, you may be able to join us in the fight for a class action settlement in the United States District Court. Wallace Miller is working to get these cases certified in the state of California, which will enable plaintiffs to join forces against Allstate for a settlement agreement.
If you believe you may be eligible or have questions about your case, reach out to our legal team at (312) 261-6193. We can provide you with more information about the current status of a possible class action settlement and your legal rights.