Wait, company established business objectives are quotas by any other name. How can independent contractors be fired for not meeting quotas? Only employees can be held accountable for not meeting quotas, and independent contractors do not receive the same benefits as employees. It seems like Allstate is trying to have it both ways, they get a huge tax advantage of paying agents as independent contractors yet control them as employees at the same time. Somebody call the IRS as something isn’t right here.
In a carefully-worded and highly detailed opinion, Judge Robert P. Contillo of the New Jersey Superior Court dismissed the case brought by Mario DeLuca, Richard Sorge and Doug Young to hold that their agency agreements were franchises under New Jersey law and that Allstate New Jersey’s termination of them for failure to meet Expected Results was wrongful. The agents have announced, with NAPAA’s support, that they intend to appeal.
The Court’s rejection of the franchise argument turned on a highly technical and unusual proposition: That Allstate agents do not sell insurance. The New Jersey Franchise Law requires that a “franchisee” have a place of business where it “sells” insurance. The agents pointed to the Agent Agreement and its several provisions in which they are not only authorized to, but in fact required, to “sell” insurance and to have a “sales location.” Judge Contillo brushed this aside, and relied on the proposition that because Allstate, as the insurer, is the only party that can technically sell the policy to the customer, the agent is not engaged in “sales.”
The Court also relied upon the view of the Department of Banking and Insurance, which had advised that, in its view, the Insurance Code and Franchise Act were in conflict, and that the Insurance Code would prevail. The only conflict that could be identified, however, had to do with termination, and the Court passed over the agents’ argument that the Insurance Code exempts from its termination provisions exclusive agency arrangements such as Allstate’s.
Having determined that the franchise Act did not apply, the Court went on to hold that Allstate could terminate without good cause, and relied upon that provision of the Agency Agreement to uphold the termination.
Significantly, the Court side-stepped the question whether an agent’s failure to meet Expected Results constituted good cause for termination. “The Court declines to making findings as to whether or not performance standards were effectively imposed by ANJ, whether those standards were reasonable, whether or to what extent the Plaintiff agents failed to meet those standards or whether agent performance constituted sufficient statutory ‘good cause’ for termination.”
The appeal will focus not only on reversal of the franchise finding but also upon whether the Court properly applied the “no cause” provision of the Agent Agreement to terminate.
W. Michael Garner, attorney for the agents, noted that “No appellate court has ruled definitively on the issues that the Court’s decision focused upon. There is good law and good grounds for a reversal of the decision, and we are looking forward to vindicating the agents’ rights moving forward.”
Lady Liberty – As an IA I am truly an independent contractor, and I can hvae much contracts terminated and have had them terminated by carriers for lack of production. It doesn’t matter whether you are an employee, a franchisee or an independent contractor. The terms are agreed upon in advance, and if you don’t cut it they cut you. That’s America.
OK, MM, but when one of your companies has a product where rates are too high, you can roll your customers into another company. Captive agents have one company, one product, so if the cost of the product is uncompetitive and no matter how hard the captive tries to sell it he is unable meet unattainable company imposed quotas, in your America it’s okay for the company to take his agency away?
BTW, would you consider company imposed expected levels of production quotas?
There are plenty of people out there that want Allstate. If rate was the only thing that mattered, there would be no need to have ‘salespeople’. The quotas are not unattainable – it just takes very hard work and an effective sales process.
But if the rates are too high with Allstate in your area, and you are not selling anyway, why would you want to stay with them vs. ending the contract and going independent, for instance?
Wait, company established business objectives are quotas by any other name. How can independent contractors be fired for not meeting quotas? Only employees can be held accountable for not meeting quotas, and independent contractors do not receive the same benefits as employees. It seems like Allstate is trying to have it both ways, they get a huge tax advantage of paying agents as independent contractors yet control them as employees at the same time. Somebody call the IRS as something isn’t right here.
Here is what the insurance journal did not say:
January 4, 2012, NAPAA HQ, Gulfport, MS
In a carefully-worded and highly detailed opinion, Judge Robert P. Contillo of the New Jersey Superior Court dismissed the case brought by Mario DeLuca, Richard Sorge and Doug Young to hold that their agency agreements were franchises under New Jersey law and that Allstate New Jersey’s termination of them for failure to meet Expected Results was wrongful. The agents have announced, with NAPAA’s support, that they intend to appeal.
The Court’s rejection of the franchise argument turned on a highly technical and unusual proposition: That Allstate agents do not sell insurance. The New Jersey Franchise Law requires that a “franchisee” have a place of business where it “sells” insurance. The agents pointed to the Agent Agreement and its several provisions in which they are not only authorized to, but in fact required, to “sell” insurance and to have a “sales location.” Judge Contillo brushed this aside, and relied on the proposition that because Allstate, as the insurer, is the only party that can technically sell the policy to the customer, the agent is not engaged in “sales.”
The Court also relied upon the view of the Department of Banking and Insurance, which had advised that, in its view, the Insurance Code and Franchise Act were in conflict, and that the Insurance Code would prevail. The only conflict that could be identified, however, had to do with termination, and the Court passed over the agents’ argument that the Insurance Code exempts from its termination provisions exclusive agency arrangements such as Allstate’s.
Having determined that the franchise Act did not apply, the Court went on to hold that Allstate could terminate without good cause, and relied upon that provision of the Agency Agreement to uphold the termination.
Significantly, the Court side-stepped the question whether an agent’s failure to meet Expected Results constituted good cause for termination. “The Court declines to making findings as to whether or not performance standards were effectively imposed by ANJ, whether those standards were reasonable, whether or to what extent the Plaintiff agents failed to meet those standards or whether agent performance constituted sufficient statutory ‘good cause’ for termination.”
The appeal will focus not only on reversal of the franchise finding but also upon whether the Court properly applied the “no cause” provision of the Agent Agreement to terminate.
W. Michael Garner, attorney for the agents, noted that “No appellate court has ruled definitively on the issues that the Court’s decision focused upon. There is good law and good grounds for a reversal of the decision, and we are looking forward to vindicating the agents’ rights moving forward.”
Lady Liberty – As an IA I am truly an independent contractor, and I can hvae much contracts terminated and have had them terminated by carriers for lack of production. It doesn’t matter whether you are an employee, a franchisee or an independent contractor. The terms are agreed upon in advance, and if you don’t cut it they cut you. That’s America.
OK, MM, but when one of your companies has a product where rates are too high, you can roll your customers into another company. Captive agents have one company, one product, so if the cost of the product is uncompetitive and no matter how hard the captive tries to sell it he is unable meet unattainable company imposed quotas, in your America it’s okay for the company to take his agency away?
BTW, would you consider company imposed expected levels of production quotas?
There are plenty of people out there that want Allstate. If rate was the only thing that mattered, there would be no need to have ‘salespeople’. The quotas are not unattainable – it just takes very hard work and an effective sales process.
Looks like the Judge needs to go back to school to lean and understand Agency law.
A TRULY INDEPENDENT AGENT CAN REPRESENT MANY COMPANIES.
But if the rates are too high with Allstate in your area, and you are not selling anyway, why would you want to stay with them vs. ending the contract and going independent, for instance?