GULFPORT, MS….
People go into business on their own for a number of reasons, but the ability to “be your own boss” tops the list. So when Allstate Insurance converted the majority of its sales force from employee to independent contractor status in 2000, many of those agents anticipated liberation from the requirements of being an Allstate employee. Eight years later, 11,000+ Allstate agents are still waiting for their independence.
What Allstate agents have found as “independent contractors” are:
● Mandatory office hours.
● Sales quotas.
● Verbal and written warnings threatening loss of contract for not meeting company expectations.
● A requirement to forward office telephone calls to company service centers after hours.
● Subjection to several employee-like controls, including annual performance reviews.
● Mandatory meetings and training sessions.
● Restrictions on certain inbound e-mails, some blocked.
In fact, many agents feel they’re treated more like employees today, than when they were actual employees. Said one agent, “Back then, we had a pension plan and, if the company wanted to fire you, there was an agent review board in place. Now, they can fire you with or without reason.”
Allstate agents certainly aren’t the first independent contractors to be treated like employees without the accompanying benefits. In 2007, after filing a class action lawsuit demanding parity with employee drivers, current and former FedEx independent contractor drivers were elated when Judge Robert Miller of the U.S. District Court in Northern Indiana certified them as a class. Not only has this action allowed their case to proceed, but it opened the door to similar cases involving independent contractors who are treated like employees.
Two months following the U.S. District Court in Northern Indiana’s decision, the Internal Revenue Service levied $319 million in fines and penalties levied against Federal Express. The fines and penalties were later withdrawn, but the IRS has continued to audit Federal Express for the years 2004 through 2006.
So why hasn’t the IRS gone after Allstate?
“That’s a good question,” said Jim Fish, executive director of the National Association of Professional Allstate Agents, a non-profit representing the rights of Allstate agents. “Agents bear all of the expenses and risks associated with operating an independent business, but are controlled as employees. Meanwhile Allstate enjoys a huge competitive cost advantage by avoiding expenses associated with pensions, health insurance, 401k’s, Social Security, and, most importantly, federal taxes. You would think that alone would rate the IRS’s attention, but that’s not been the case.”
The long-term goal for most insurance agents is to build their book of business and then, when they retire, sell it to the highest bidder. At Allstate, this is not always possible because the company controls who buys these books of business. Said one agent, “Our books of business were supposed to replace our pensions, but [Allstate] managers have started to interfere in the sales process, which has lowered the value of our agencies. This isn’t fair because for many of us, our book of business is the most important retirement asset we have.”
For more information on the National Association of Professional Allstate Agents, you can visit their Web site at www.napaausa.org or call (877) 269-3474.
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