American Family Insurance agent class action certified in misclassification case

Posted on: April 1st, 2016 by Steve Larson
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employeesA federal judge in Ohio granted class certification to insurance agents who claim that the company who hired them, American Family, mislabeled its sales force as “independent contractors” to avoid compliance with the requirements of the Employee Retirement Income Security Act (“ERISA”).

The lawsuit was filed in February 2013.  The complaint alleges that American Family hired insurance agents as independent contractors to sell retirement products, as well as home, auto, life, umbrella, business, health and other policies. Despite American Family’s classification of the agents as independent contractors, the plaintiffs contend the agents, in fact, qualify as employees under ERISA because American Family “retained the right to exercise control over the manner and means by which they conducted every material aspect of their business.” Consequently, the plaintiffs argue they should have received retirement benefits and health, life, disability and dental plans like other employees of the company.

The plaintiffs proposed three classes in the case—two relating to termination benefits and one relating to health, dental and disability benefits. American Family opposed them all, arguing that the plaintiffs “failed to demonstrate commonality for any of the proposed classes,” and that the named plaintiffs did not satisfy the typicality requirement under Fed. R. Civ. Pro. 23(a)(3).  In finding in favor of certifying the class, the judge held American Family’s arguments as to issues of commonality among the class members was not supported by applicable case law. Further, the judge ruled that the plaintiffs satisfied the typicality requirement since the named plaintiffs had the same claims that will be determined by a common question: “were the agents misclassified as independent contractors rather than employees.” As such, Judge Nugent determined class certification in this case was appropriate.

The case is: Jammal v. American Family Ins. Group, No. 1:13-cv-00437, N.D. Ohio.