In a big win for insurance companies, the US Court of Appeals for the Sixth Circuit in Ohio has ruled that insurance agents of American Family Insurance (AmFam) are independent contractors and not employees.
The ruling reversed an earlier lower court decision that classified agents as employees, making them eligible for pensions and other benefits under the Employee Retirement Income Security Act (ERISA). If the appeals court had upheld that ruling, American Family could have potentially been on the hook for more than $1 billion in retirement liabilities.
“We are pleased the court – like other courts before it – recognized our agents for who they are, independent business owners who decide how to run their agencies and serve their customers,” said Dave Holman, chief strategy officer at AmFam.
“How we work with our agents is customary in the insurance industry and of company-independent contractor relationships across the country. They are paid by commission, hire and pay their staff, set their work hours, and create and execute plans to run their businesses. They file taxes as independent contractors with the Internal Revenue Service and take tax deductions for their business expenses.
“Today’s ruling is now the sixth time a federal court has confirmed our agents are properly classified as independent contractors.
“We are grateful and proud of the positive, collaborative relationships we have with our agents. They are trusted advisers to customers, and trusted partners with our company. And, we will continue to support them and celebrate their success.”
