If anyone has any doubts exactly how far Allstate has gone with its misclassification scheme, simply Google: “Allstate misclassified” or go to http://www.napaausa.org and learn more by reading the “Deliberately Misclassified?” article. Doubtless there are Allstate management hacks who will try to post weak rebuttals, but they probably have been recently been downsized for missing their quotas. Or rather for allowing their employee agents to miss their quotas, causing upper management to not get a bonus.
For Allstate, it is all about a multi level marketing scheme where “do nothing” managers reap bonuses off of the sweat agents pour into trying to make their agencies grow.
Every agent out there tries to build a book of business so that does three things. 1. An agent’s renewal book provides the agency the stable capital necessary to run the agency (Rent, employee expense, advertising, E and O insurance….etc) 2. It provides an agency the necessary capital to either grow or to weather economic downturns. 3. It provides the value for retirement since as independent contractors we do not have pensions or company sponsored 401k’s. The new business commissions provides an agent or his staff economic reward for doing the right job and also allows for capital to be added to number one and two. Allstate has a 90 day, any reason termination clause and relies on manipulation of the agent’s unilateral open-ended contract to fire hundreds of agents annually. If Allstate wants to misclassify its agents, then the IRS has to do its job and hold Allstate accountable. For anyone interested in the IRS’s recent motivation for looking into Allstate’s scheme, Google: “FedEx Driver Lawsuit IRS.”
Here’s hoping Allstate gets their call from John Tuzynski at the IRS…soon
The IRS should jump all over all of the captive agent companies. They all have some type of production quotas and will toss you out if you don’t produce at certain levels. Most production pressure is for life insurance sales. You get treated like an employee but without any monetary benefits other than commissions.
Bill, I think the biggest issues have to do with mandatory training and meetings. Also, having your phones rolled after hours. This all spits in the face of what an independent contractor is. I’ve never understood how the captives get away with it.
Sales and production quota are different all together. Even in the independent channels the carriers have production standards.
Allstate breaks every rule of the IRS regs. Agents are sick and tired of being treated WORSE than EE’s. As for we can’t sell Bill, we sell in spite of the highest rates around. No, we want to operate our business in ” the way we deem appropriate and at the time we choose”
When I signed on with Allstate in 1995 the IC Agreement was 8 pages. It is now over 500. Agents are sick of being treated like dogs. Corporations like Allstate are greedy and are not interested in agents, customers; only Shareholders.
Allstate agents can sell, even with the highest rates in the nation and tuff underwriting rules and only one place to write auto we still write more than 99% of the rest. We just do it for less money than a real independent agent. Plus we have to write $25,000 in collected life premiums. That 50 apps with annual premium of $500.
Hmmmm, no one is interested in the fact that they can “sell” their book of business as an independent? As an employee you were “capped” with your retirement income now you can sell to the highest bidder and that can bring a nice cashout as long as you know how to write business.I was an Allstate Agent and then a manager and it was a pretty sweet deal all and all. Every contract has its pitfalls and it is a “for profit” business so of course Allstate is out to make money. Have you checked out a Farmers, St Farm or Nationwide contract lately? All worse than Allstate in my opinion.
Sam:
Allstate has the final say to whom we can sell our Books. ALL BUYERS MUST be approved by Allstate. And now only PSA Agents can buy another agent’s book. You have no idea what you are talking about. The market for my book is 3 local agents out of 35.
Profit is one thing TOTAL control another. I’ll be happy to have a maxed out pension
When I was forced to convert, I lost my profit sharing matching, pension plan, health care, E&O, travel expenses, office supplies, and employer paid payroll taxes. Just to name a few…
However, you are right. we gained the economic interest in our agencies. An economic interest that has no guarantees. It can be taken away from us at any moment, see Canadian agents.
The only way we can sell our economic interest is to an approved buyer with Allstate’s permission. The value of most agencies is shrinking daily. That, combined with Allstate’s new trend of wanting to consume the agencies and roll the books to the CIC, will continue to de-value the agency in the future!
That being said, I think you are missing the real debate. IRS tax law specifically defines employees. If you read the definition, everything about it indicates we ARE employees and are therefore entitled to all the same benefits and protection of employees. It’s the law according to the IRS!
If Allstate wants to continue having us classified as self-employed. Then we should have all the rights associated with being self-employed and at the current time, we have none, unless you count paying for all the expenses.
This debate is not about how our contract compares with other companies. However, if the Allstate agent contract is such a good deal, then why is Allstate paying independent Allstate agents 15% commission and Captive Allstate agents only 10%?
If you are a manager and work daily with agents busting their chops trying to grow their agencies, then why would you have a problem with agents asking the IRS for a clarification on our employment status?
This debate is about one thing. We are either employees or self-employed. Either way, we are entitled to the benefits of one of them and right now, we do not have the benefits of either!
Tell me Allstate is engaging in “howm grown” employee misclassification – employer fraud on taxes and workers’ compensation that the same Allstate is complaining about.
In my opinion when a company promises one thing and delivers another, there should be some accountability. Here is the rest of my opinion:
Allstate Insurance Corporation proffers its agent program as an “Independent Contractor” style arrangement. Multiple ads for prospective agents tout: “Be your own boss.” Prospective hires are told they are free to run their agency any way they see fit. Through a Private Letter Agreement (PLR) the IRS stipulated how Allstate must interface with its “Independent Contractor” agents. The PLR goes to great lengths to stipulate that there must not be any quotas, office hour requirements, reviews, required training, or mandatory meetings.
Allstate has chosen not only to ignore these mandates, it has instituted a virtually identical work environment to the days Allstate did categorize its agents as employees. Agents then and now are heavily invested in their agencies in virtually the same manner we invest in the homes we own. Would anyone purchase a home, make improvements, live in it for many years and then just walk away? Many agents are being fired and not given the opportunity to market their agency openly and fairly. There isn’t an agent anywhere that would knowingly take this type of contract.
Tenured agents were promised a new freedom at “conversion” meetings. All were told of great things to come under their new heading of “independent contractor.” Newly hired agents are never told about the quota system. They are only told of “Expected Results.” New agents believe “Expected Results” is the bonus system whereby they can enhance their new and renewal commissions. They are not told that “Expected Results” are quotas. They are not told of the termination process. Promise one thing, deliver another.
It is not nice to disobey mother IRS.
The fact that only 10% of Allstate agents are a part of this whining “association” should tell you that the majority of the agents are ok with the arrangement, so it must be “ok”. Sounds like the whiners need to move on….
Your type of reaction is typical of someone who does not respect the law. The fact is Allstate is breaking the law and its time they were called on it, Whining has nothing to do with it.Your type of argument is status quo. I guess you’d call MLKJr a whiner too. As far as NAPAA membership goes there are always the few who fight for the rights of the many.
As an ex-allstate agent, I can say to those agents still in business, beware what you wish for and sell your book now before is too late, because if the IRS forces allstate to treat every agent as an employee, the canada experience will happen in US much sooner that we all have anticipated.
Sorry to say but the bottom line there is no value in being an Allstate Agent. The area managers are a bunch of idiots that have no idea how to run a business. All they worry about are their precious bonuses. If you want true freedom, get out and go independent.
As a Farmers agent, I’m interested is seeing how this all rolls out as we are in the same position as you all are.
When Bill claimed the Allstate contract is the best compared to Farmers, he must be talking about the new contract that new agents have to sign. In that, he’s right. This new contract actually has a clause that allows Farmers to take away your agency if you make a negative remark about the company, like, “geez our rates are awfully high?”
However, that’s the new contract. The one I signed allows me to place business outside, if Farmers declines it, and the company does not need to be approved by Farmers. The new contract says, if Farmers doesn’t want it, the agent has to send the prospect on his way. He is no longer allowed to place it outside.
I also have zero sales quotas. I haven’t sold a life policy in three years.
Don’t misunderstand me, becoming a Farmers agent was the biggest mistake I’ve ever made. If I knew then what I know now, I would be an independent agent.
Thanks Bill. Allstate has brought this all on themselves. They are the greediest most corrupt insurance company out there. If they treat we agents like dirt what does that bode for policyholders?
Quotas, hours,reviews, intimidation, threats.
This very topic is being discussed on http://www.allblueblog.com. I’m just getting clued in on this IRS topic. Interesting times we’re in. It’s truly becoming a survival of the fittest IMO.
More Evidence of State Farm Insurance Company’s Lies and Deceit
State Farm Insurance Companies have come under fire in Mississippi, Oklahoma and elsewhere recently because of denial of claims and or failure to pay what they owed. There has been documentation showing State Farm, or the engineering firm representing them, changed engineering reports in order to support State Farm’s denial of claims in Mississippi. This same pattern with State Farm and the same engineering company also took place in Oklahoma and resulted in one jury award in May 2006 of $13 Million dollars with $10 million of that being punitive damages. The jury in that case found State Farm had “recklessly disregarded its duty to deal fairly with policyholders”.
If you listen to the State Farm spin doctors they try to claim no knowledge of any changed documents and want to put blame on engineering companies. But I have information that puts the light on the real problem with what is happening at State Farm.
I am a former agent of State Farm who has proof that State Farm has breached the contracts of its own agents.
The information shows that a California Appellate Court has ruled that State Farm breached the contract and the California Supreme Court refused to hear State Farm’s appeal making the Appellate Court decision final (Case#C050591 California Third Appellate District). What does this mean to the average policyholder? Well a policyholder who has a policy (contract) with State Farm expects State Farm to honor that policy (contract) if the policyholder has a loss. Now the question is if State Farm will not even honor their own contract with their own agents what chance does the average policyholder have? In addition to this State Farm has not even notified the agents of this decision by the California Courts.
I also have documentation proving State Farm has committed perjury to the IRS. State Farm has told the IRS that its agents are independent contractors and attend meetings at their option and there are no penalties for not attending meetings. But yet my contract as an agent, as well as 3 others, was terminated specifically for not attending a “mandatory meeting”. After being terminated I filed an SS-8 (determination of employee or independent contractor) with the IRS and State Farm again told the IRS, under penalty of perjury, “attend meetings at their option” and “no penalties for not attending meetings”. Now this may not seem very important to the average citizen until one realizes what State Farm is avoiding by this perjury. Because the IRS declares the State Farm Agent to be an independent contractor (based on what State Farm has told them) State Farm avoids state and federal payroll taxes on approximately $3 billion of annual payroll.
This has been occurring since 1998 so the amount avoided thus far is approximately $30 billion!
In addition to this State Farm has also avoided workmen’s compensation and all of the other costs such as a retirement plan, vacation pay, sick leave and any other benefits employees would have.
Now the contract of the agent states that he, or she, is an independent contractor but State Farm only recognizes them as independent contractors when it suits State Farm.
State Farm uses the threat of termination at will for the agent who does not do as State Farm requires. As for State Farm telling the IRS (August of 2000) that agent’s attend meetings at their option they (State Farm) are still requiring agents to attend mandatory meetings as of today. If you know a State Farm agent ask them if they have mandatory meetings they must attend and you will find State Farm has perjured itself and that is but one example.
When I was terminated on Feb 28, 1999 I had been representing State Farm for 27 years and had been recognized by State Farm for the quality of my agency for virtually every year as an agent. State Farm terminated me for not attending a “mandatory meeting” which was at least a two and a half hour drive (one way) from my home. What State Farm knew, but didn’t care, was that I was going to physical therapy three times a week after being in a car accident and after having cancer surgery nine days before the accident. In addition to this the mandatory meeting was a self-study course which I told State Farm I would do but they insisted on the mandatory meeting and said it was not self-study. I happened to have the book for the class and it is exactly that, a self-study course.
Nineteen days after State Farm terminated my contract they sent me a letter telling me they would not be paying me my termination payments .
Termination payments are also a part of the contract (are you starting to see a pattern?) which would have amounted to approximately $250,000.
I then began selling other insurance policies to my former policyholders and offered them better prices for the same or better coverage.
Approximately one year after my termination State Farm sued me for “theft of trade secrets” and “unfair competition” claiming I had breached my contract. State Farm filed the lawsuit in Federal Court in the ninth district (Case# C99-4668MJJ) and claimed they were a national company and the federal court was the correct venue.
However I had documents showing State Farm General Insurance Company had become a “California only Company” and that State Farm was not giving the judge the correct information (see more of a pattern emerging). Eventually the judge had to dismiss the case “for lack of subject matter jurisdiction” as my information proved correct.
Now comes the interesting part, as I had been a policyholder of State Farm I filed a claim with State Farm when I was originally sued in federal Court. Apparently arrogance got the better of State Farm when they filed the federal lawsuit and they forgot their policy (contract) required them to provide a defense for the claims they made against me. After the federal judge dismissed the federal case State Farm re-filed the lawsuit in Mendocino County (Case#CV82819) and tried to plead around the coverage (altered the wording in an attempt to negate the defense coverage required by my policies).
However State Farm was not able to get away with their attempt and was forced to pay defense costs of approximately $2,000,000 in addition to State Farm’s own costs of approximately $4,000,000. These were cost up to near the end of the Mendocino County jury trial which lasted 6 weeks and ended on August 12, 2002.
The jury awarded me and my fellow agent John Wier $12,600,000 in compensatory damages and punitive damages and nothing for State Farm. After the trial many of the jurors questioned why State Farm had even brought this case to trial as the jurors thought State Farm had no case. The judge thanked the jurors for their time and hard work and released the jury on August 12, 2002.
Approximately 5 months later the Mendocino County Judge, Richard Henderson, ruled the “jurors may have been confused” and ordered a new trial.
Judge Henderson was a newly elected judge and this case was one of his very first which he took over from a retiring judge. It was also very coincidental that during the discovery process of this case, prior to trial, that the lead counsel for State Farm, Steven Brick, was appointed to the bench in Alameda County. Since both Judge Henderson and Judge Brick were newly elected/appointed they were required to attend a two week judge school prior to taking the bench (there is only one judge school each year).
The judge’s decision was appealed to the appellate court Case#A101791 where the appellate court ruled the trade secrets belonged to State Farm and quoted a portion of the State Farm contract. The problem with the quote by the Appellate Court was that they left twenty words right out of the middle of their quote and as you might imagine those twenty words were critical to the trade secret ruling.
The case was then appealed to the California Supreme Court who agreed to hear it (Case#S131445) but put it on hold until a lead case was heard. Once the lead case, which was considerably different than this one, was heard the Supreme Court took it off the docket and sent it back to the Appellate Court. The Appellate Court then sent it back to the trial court in Mendocino where it now awaits a new trial date that State Farm has requested.
During all of the appeals to the Appellate Court and Supreme Court State Farm refused to pay the defense costs for me as provided by my policy (contract) and even filed another lawsuit against me, this time in Sonoma County (Case#SCV234700) requesting the money State Farm had paid for the Mendocino County defense be reimbursed to them. State Farm filed this lawsuit while the Mendocino lawsuit was continuing and while they were refusing to abide by their own policy (contract).
State Farm filed a summary judgment motion in the Sonoma Case and provided the court a “true and correct copy” of my policy claiming they had no duty to defend.
The problem with State Farm’s “true and correct copy” was that it was neither true nor correct! State Farm left off coverage’s that did in fact show coverage (more of a pattern like the Oklahoma and Mississippi cases?).
State Farm calls themselves the “Good Neighbor” but if you had a neighbor like that you probably wouldn’t refer to them as good or really wouldn’t want them as a neighbor. The Sonoma County Judge ruled against State Farm’ summary judgment and astonishingly State Farm filed another summary judgment which was also denied.
As of this date State Farm has still refused to reimburse the defense costs I have incurred after State Farm quit paying but yet they continue to go forward with both lawsuits in Mendocino and Sonoma County.
In the meanwhile I keep asking why is the IRS ignoring the perjury committed by State Farm executives? Why is State Farm allowed to get away with this perjury when it is costing all US citizens billions in uncollected taxes?
When is someone in government going to step forward and make State Farm Executives suffer the consequences of their actions?
Why hasn’t the press brought this to the attention of the public and/or government officials? My concern is not with the State Farm agent, who would like to be the independent contractor he or she is supposed to be, but with the executives of State Farm who have lied and continue to lie to get what they want while at the same time breaching the agent’s contract.
I wanted to make sure all of State Farm’s Board of Directors were made aware of this perjury by State Farm Executives so I sent registered, receipt requested, letters to all Board members as well as most of the top Executives.
In my letter I sent documentation and told the officials I had more if they needed it. The Board hired an attorney who contacted me and asked if I was represented by legal counsel and requested more information. I forwarded the requested information to the Attorney and waited patiently for a response and when I received none I sent another registered letter advising the board they would be deemed culpable if they did nothing.
Coincidently I suddenly received a phone call from an IRS agent in New York who had been assigned to review my SS-8 filing. This agent told me she would review the file but she did not have it available. I told her the Austin Texas office should have the file but she told me they did not do that anymore and had probably destroyed it. I told her I could e-mail the information to her right away but she told me she could not accept e-mail and could only get it via fax or regular mail.
This phone call was on June 30 and the IRS agent was in New York and I am in California, a three hour time difference. I printed out and faxed approximately 90 pages on the afternoon of June 30 to the IRS agent and on the cover page advised that I would fax and mail additional pages as soon as I could. On July 6 I faxed another approximately 45 pages to the IRS agent and advised if this documentation was not enough to let me know and I could send more.
You can imagine my surprise when I received a letter from this IRS agent dated July 2 telling me she had done a “thorough review” of the documentation and found no facts or legal arguments to change the determination of independent contractor! The IRS agent placed the word “final” in bold type and highlighted it with a yellow marker.
Coincidently, again, I received a letter, dated August 5, from W.H. Knight Jr., Chair of State Farm’s Legal Affairs Committee, telling me the State Farm Board of Directors finds “no basis to recommend or direct that State Farm take any further action”.
The letter head used by Mr. Knight was that of “W. H. Gates Hall” in Seattle Washington which didn’t mean much to me until I recently found Mr. Knight has been charged with “ethics violations” at Washington for using the schools computer for State Farm business. Apparently my letter is now some proof of Mr. Knight’s use of the school computer while working at his position as a member of State Farm’s Board of Directors.
I have the documentation for all of the statements I have made above and am willing to testify to those facts. I would ask those of you reading this to ask your Congressman and Senators to look into this matter of why the IRS has allowed perjury by State Farm to go unpunished?
If it didn’t matter if State Farm had mandatory meetings for their agents why would State Farm lie about it? Do you think it is fair that State Farm, who happens to sell workmen’s compensation, should be able to lie and avoid paying their fair share? Isn’t it time someone looked into the management of State Farm and ask why the Rust family should be able to operate the company like a family business, handing it down from father to son to grandson, when they have no ownership in the company? Isn’t it time large corporations be made to tell the truth or pay the consequences?
If anyone has any doubts exactly how far Allstate has gone with its misclassification scheme, simply Google: “Allstate misclassified” or go to http://www.napaausa.org and learn more by reading the “Deliberately Misclassified?” article. Doubtless there are Allstate management hacks who will try to post weak rebuttals, but they probably have been recently been downsized for missing their quotas. Or rather for allowing their employee agents to miss their quotas, causing upper management to not get a bonus.
For Allstate, it is all about a multi level marketing scheme where “do nothing” managers reap bonuses off of the sweat agents pour into trying to make their agencies grow.
Every agent out there tries to build a book of business so that does three things. 1. An agent’s renewal book provides the agency the stable capital necessary to run the agency (Rent, employee expense, advertising, E and O insurance….etc) 2. It provides an agency the necessary capital to either grow or to weather economic downturns. 3. It provides the value for retirement since as independent contractors we do not have pensions or company sponsored 401k’s. The new business commissions provides an agent or his staff economic reward for doing the right job and also allows for capital to be added to number one and two. Allstate has a 90 day, any reason termination clause and relies on manipulation of the agent’s unilateral open-ended contract to fire hundreds of agents annually. If Allstate wants to misclassify its agents, then the IRS has to do its job and hold Allstate accountable. For anyone interested in the IRS’s recent motivation for looking into Allstate’s scheme, Google: “FedEx Driver Lawsuit IRS.”
Here’s hoping Allstate gets their call from John Tuzynski at the IRS…soon
Allstate agents are out of their mind if they think homeowners carriers pay 12% to 18% in Florida. Most companies pay between 7% and 12%.
If someone knows of an admitted property insurer paying 18% I’m all ears.
The IRS should jump all over all of the captive agent companies. They all have some type of production quotas and will toss you out if you don’t produce at certain levels. Most production pressure is for life insurance sales. You get treated like an employee but without any monetary benefits other than commissions.
So lets see, if you dont meet certain production criteria can your carrier cancel you contract? Yes!
These guys just cant sell, thats the problem.
Bill, I think the biggest issues have to do with mandatory training and meetings. Also, having your phones rolled after hours. This all spits in the face of what an independent contractor is. I’ve never understood how the captives get away with it.
Sales and production quota are different all together. Even in the independent channels the carriers have production standards.
Allstate breaks every rule of the IRS regs. Agents are sick and tired of being treated WORSE than EE’s. As for we can’t sell Bill, we sell in spite of the highest rates around. No, we want to operate our business in ” the way we deem appropriate and at the time we choose”
When I signed on with Allstate in 1995 the IC Agreement was 8 pages. It is now over 500. Agents are sick of being treated like dogs. Corporations like Allstate are greedy and are not interested in agents, customers; only Shareholders.
If it quakes like and employee, looks like and employee, smells, like and employee, ruled over as employee, it must be and employee!!
Allstate agents can sell, even with the highest rates in the nation and tuff underwriting rules and only one place to write auto we still write more than 99% of the rest. We just do it for less money than a real independent agent. Plus we have to write $25,000 in collected life premiums. That 50 apps with annual premium of $500.
From an outsider perspective have to agree. Just because the arrangement is called independent contractor on paper does not mean it is so.
Questions asked by the IRS to determine the relationship include:
–“Is the work performed a key aspect of the business” (I would think policy sales and servicing is a key aspect of Allstate’s business)
–“Does the company control or have the right to control what the worker does and how the worker does his or her job?”
–“What is the likelihood that the relationship will continue?”
IRS form SS8 “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Witholding” asks:
–What specific training and/or instruction is the worker given by the firm?
–Describe the worker’s daily routine such as schedule, hours etc
–Describe any meetings the worker is required to attend and any penalties for not attending
–Whom does the customer pay?
–Did the worker perform similar services for others during the same period?
Hmmmm, no one is interested in the fact that they can “sell” their book of business as an independent? As an employee you were “capped” with your retirement income now you can sell to the highest bidder and that can bring a nice cashout as long as you know how to write business.I was an Allstate Agent and then a manager and it was a pretty sweet deal all and all. Every contract has its pitfalls and it is a “for profit” business so of course Allstate is out to make money. Have you checked out a Farmers, St Farm or Nationwide contract lately? All worse than Allstate in my opinion.
Sam:
Allstate has the final say to whom we can sell our Books. ALL BUYERS MUST be approved by Allstate. And now only PSA Agents can buy another agent’s book. You have no idea what you are talking about. The market for my book is 3 local agents out of 35.
Profit is one thing TOTAL control another. I’ll be happy to have a maxed out pension
Sam-
What you left out of your sweet deal is THAT ALLSTATE HAS TO APPROVE THE BUYER….which can make is NOT such a great deal.
Sam,
When I was forced to convert, I lost my profit sharing matching, pension plan, health care, E&O, travel expenses, office supplies, and employer paid payroll taxes. Just to name a few…
However, you are right. we gained the economic interest in our agencies. An economic interest that has no guarantees. It can be taken away from us at any moment, see Canadian agents.
The only way we can sell our economic interest is to an approved buyer with Allstate’s permission. The value of most agencies is shrinking daily. That, combined with Allstate’s new trend of wanting to consume the agencies and roll the books to the CIC, will continue to de-value the agency in the future!
That being said, I think you are missing the real debate. IRS tax law specifically defines employees. If you read the definition, everything about it indicates we ARE employees and are therefore entitled to all the same benefits and protection of employees. It’s the law according to the IRS!
If Allstate wants to continue having us classified as self-employed. Then we should have all the rights associated with being self-employed and at the current time, we have none, unless you count paying for all the expenses.
This debate is not about how our contract compares with other companies. However, if the Allstate agent contract is such a good deal, then why is Allstate paying independent Allstate agents 15% commission and Captive Allstate agents only 10%?
If you are a manager and work daily with agents busting their chops trying to grow their agencies, then why would you have a problem with agents asking the IRS for a clarification on our employment status?
This debate is about one thing. We are either employees or self-employed. Either way, we are entitled to the benefits of one of them and right now, we do not have the benefits of either!
Although you do.
Bravo! Well said. EWOB’s – Employees Without Benefits
Tell me Allstate is engaging in “howm grown” employee misclassification – employer fraud on taxes and workers’ compensation that the same Allstate is complaining about.
OK Darwin
I didn’t get a word of that. Evolve. LOL
In my opinion when a company promises one thing and delivers another, there should be some accountability. Here is the rest of my opinion:
Allstate Insurance Corporation proffers its agent program as an “Independent Contractor” style arrangement. Multiple ads for prospective agents tout: “Be your own boss.” Prospective hires are told they are free to run their agency any way they see fit. Through a Private Letter Agreement (PLR) the IRS stipulated how Allstate must interface with its “Independent Contractor” agents. The PLR goes to great lengths to stipulate that there must not be any quotas, office hour requirements, reviews, required training, or mandatory meetings.
Allstate has chosen not only to ignore these mandates, it has instituted a virtually identical work environment to the days Allstate did categorize its agents as employees. Agents then and now are heavily invested in their agencies in virtually the same manner we invest in the homes we own. Would anyone purchase a home, make improvements, live in it for many years and then just walk away? Many agents are being fired and not given the opportunity to market their agency openly and fairly. There isn’t an agent anywhere that would knowingly take this type of contract.
Tenured agents were promised a new freedom at “conversion” meetings. All were told of great things to come under their new heading of “independent contractor.” Newly hired agents are never told about the quota system. They are only told of “Expected Results.” New agents believe “Expected Results” is the bonus system whereby they can enhance their new and renewal commissions. They are not told that “Expected Results” are quotas. They are not told of the termination process. Promise one thing, deliver another.
It is not nice to disobey mother IRS.
The fact that only 10% of Allstate agents are a part of this whining “association” should tell you that the majority of the agents are ok with the arrangement, so it must be “ok”. Sounds like the whiners need to move on….
Your type of reaction is typical of someone who does not respect the law. The fact is Allstate is breaking the law and its time they were called on it, Whining has nothing to do with it.Your type of argument is status quo. I guess you’d call MLKJr a whiner too. As far as NAPAA membership goes there are always the few who fight for the rights of the many.
As an ex-allstate agent, I can say to those agents still in business, beware what you wish for and sell your book now before is too late, because if the IRS forces allstate to treat every agent as an employee, the canada experience will happen in US much sooner that we all have anticipated.
Sorry to say but the bottom line there is no value in being an Allstate Agent. The area managers are a bunch of idiots that have no idea how to run a business. All they worry about are their precious bonuses. If you want true freedom, get out and go independent.
As a Farmers agent, I’m interested is seeing how this all rolls out as we are in the same position as you all are.
When Bill claimed the Allstate contract is the best compared to Farmers, he must be talking about the new contract that new agents have to sign. In that, he’s right. This new contract actually has a clause that allows Farmers to take away your agency if you make a negative remark about the company, like, “geez our rates are awfully high?”
However, that’s the new contract. The one I signed allows me to place business outside, if Farmers declines it, and the company does not need to be approved by Farmers. The new contract says, if Farmers doesn’t want it, the agent has to send the prospect on his way. He is no longer allowed to place it outside.
I also have zero sales quotas. I haven’t sold a life policy in three years.
Don’t misunderstand me, becoming a Farmers agent was the biggest mistake I’ve ever made. If I knew then what I know now, I would be an independent agent.
Good luck you guys. Your victory is our victory.
Thanks Bill. Allstate has brought this all on themselves. They are the greediest most corrupt insurance company out there. If they treat we agents like dirt what does that bode for policyholders?
Quotas, hours,reviews, intimidation, threats.
This very topic is being discussed on http://www.allblueblog.com. I’m just getting clued in on this IRS topic. Interesting times we’re in. It’s truly becoming a survival of the fittest IMO.
Richard Pyorre
More Evidence of State Farm Insurance Company’s Lies and Deceit
State Farm Insurance Companies have come under fire in Mississippi, Oklahoma and elsewhere recently because of denial of claims and or failure to pay what they owed. There has been documentation showing State Farm, or the engineering firm representing them, changed engineering reports in order to support State Farm’s denial of claims in Mississippi. This same pattern with State Farm and the same engineering company also took place in Oklahoma and resulted in one jury award in May 2006 of $13 Million dollars with $10 million of that being punitive damages. The jury in that case found State Farm had “recklessly disregarded its duty to deal fairly with policyholders”.
If you listen to the State Farm spin doctors they try to claim no knowledge of any changed documents and want to put blame on engineering companies. But I have information that puts the light on the real problem with what is happening at State Farm.
I am a former agent of State Farm who has proof that State Farm has breached the contracts of its own agents.
The information shows that a California Appellate Court has ruled that State Farm breached the contract and the California Supreme Court refused to hear State Farm’s appeal making the Appellate Court decision final (Case#C050591 California Third Appellate District). What does this mean to the average policyholder? Well a policyholder who has a policy (contract) with State Farm expects State Farm to honor that policy (contract) if the policyholder has a loss. Now the question is if State Farm will not even honor their own contract with their own agents what chance does the average policyholder have? In addition to this State Farm has not even notified the agents of this decision by the California Courts.
I also have documentation proving State Farm has committed perjury to the IRS. State Farm has told the IRS that its agents are independent contractors and attend meetings at their option and there are no penalties for not attending meetings. But yet my contract as an agent, as well as 3 others, was terminated specifically for not attending a “mandatory meeting”. After being terminated I filed an SS-8 (determination of employee or independent contractor) with the IRS and State Farm again told the IRS, under penalty of perjury, “attend meetings at their option” and “no penalties for not attending meetings”. Now this may not seem very important to the average citizen until one realizes what State Farm is avoiding by this perjury. Because the IRS declares the State Farm Agent to be an independent contractor (based on what State Farm has told them) State Farm avoids state and federal payroll taxes on approximately $3 billion of annual payroll.
This has been occurring since 1998 so the amount avoided thus far is approximately $30 billion!
In addition to this State Farm has also avoided workmen’s compensation and all of the other costs such as a retirement plan, vacation pay, sick leave and any other benefits employees would have.
Now the contract of the agent states that he, or she, is an independent contractor but State Farm only recognizes them as independent contractors when it suits State Farm.
State Farm uses the threat of termination at will for the agent who does not do as State Farm requires. As for State Farm telling the IRS (August of 2000) that agent’s attend meetings at their option they (State Farm) are still requiring agents to attend mandatory meetings as of today. If you know a State Farm agent ask them if they have mandatory meetings they must attend and you will find State Farm has perjured itself and that is but one example.
When I was terminated on Feb 28, 1999 I had been representing State Farm for 27 years and had been recognized by State Farm for the quality of my agency for virtually every year as an agent. State Farm terminated me for not attending a “mandatory meeting” which was at least a two and a half hour drive (one way) from my home. What State Farm knew, but didn’t care, was that I was going to physical therapy three times a week after being in a car accident and after having cancer surgery nine days before the accident. In addition to this the mandatory meeting was a self-study course which I told State Farm I would do but they insisted on the mandatory meeting and said it was not self-study. I happened to have the book for the class and it is exactly that, a self-study course.
Nineteen days after State Farm terminated my contract they sent me a letter telling me they would not be paying me my termination payments .
Termination payments are also a part of the contract (are you starting to see a pattern?) which would have amounted to approximately $250,000.
I then began selling other insurance policies to my former policyholders and offered them better prices for the same or better coverage.
Approximately one year after my termination State Farm sued me for “theft of trade secrets” and “unfair competition” claiming I had breached my contract. State Farm filed the lawsuit in Federal Court in the ninth district (Case# C99-4668MJJ) and claimed they were a national company and the federal court was the correct venue.
However I had documents showing State Farm General Insurance Company had become a “California only Company” and that State Farm was not giving the judge the correct information (see more of a pattern emerging). Eventually the judge had to dismiss the case “for lack of subject matter jurisdiction” as my information proved correct.
Now comes the interesting part, as I had been a policyholder of State Farm I filed a claim with State Farm when I was originally sued in federal Court. Apparently arrogance got the better of State Farm when they filed the federal lawsuit and they forgot their policy (contract) required them to provide a defense for the claims they made against me. After the federal judge dismissed the federal case State Farm re-filed the lawsuit in Mendocino County (Case#CV82819) and tried to plead around the coverage (altered the wording in an attempt to negate the defense coverage required by my policies).
However State Farm was not able to get away with their attempt and was forced to pay defense costs of approximately $2,000,000 in addition to State Farm’s own costs of approximately $4,000,000. These were cost up to near the end of the Mendocino County jury trial which lasted 6 weeks and ended on August 12, 2002.
The jury awarded me and my fellow agent John Wier $12,600,000 in compensatory damages and punitive damages and nothing for State Farm. After the trial many of the jurors questioned why State Farm had even brought this case to trial as the jurors thought State Farm had no case. The judge thanked the jurors for their time and hard work and released the jury on August 12, 2002.
Approximately 5 months later the Mendocino County Judge, Richard Henderson, ruled the “jurors may have been confused” and ordered a new trial.
Judge Henderson was a newly elected judge and this case was one of his very first which he took over from a retiring judge. It was also very coincidental that during the discovery process of this case, prior to trial, that the lead counsel for State Farm, Steven Brick, was appointed to the bench in Alameda County. Since both Judge Henderson and Judge Brick were newly elected/appointed they were required to attend a two week judge school prior to taking the bench (there is only one judge school each year).
The judge’s decision was appealed to the appellate court Case#A101791 where the appellate court ruled the trade secrets belonged to State Farm and quoted a portion of the State Farm contract. The problem with the quote by the Appellate Court was that they left twenty words right out of the middle of their quote and as you might imagine those twenty words were critical to the trade secret ruling.
The case was then appealed to the California Supreme Court who agreed to hear it (Case#S131445) but put it on hold until a lead case was heard. Once the lead case, which was considerably different than this one, was heard the Supreme Court took it off the docket and sent it back to the Appellate Court. The Appellate Court then sent it back to the trial court in Mendocino where it now awaits a new trial date that State Farm has requested.
During all of the appeals to the Appellate Court and Supreme Court State Farm refused to pay the defense costs for me as provided by my policy (contract) and even filed another lawsuit against me, this time in Sonoma County (Case#SCV234700) requesting the money State Farm had paid for the Mendocino County defense be reimbursed to them. State Farm filed this lawsuit while the Mendocino lawsuit was continuing and while they were refusing to abide by their own policy (contract).
State Farm filed a summary judgment motion in the Sonoma Case and provided the court a “true and correct copy” of my policy claiming they had no duty to defend.
The problem with State Farm’s “true and correct copy” was that it was neither true nor correct! State Farm left off coverage’s that did in fact show coverage (more of a pattern like the Oklahoma and Mississippi cases?).
State Farm calls themselves the “Good Neighbor” but if you had a neighbor like that you probably wouldn’t refer to them as good or really wouldn’t want them as a neighbor. The Sonoma County Judge ruled against State Farm’ summary judgment and astonishingly State Farm filed another summary judgment which was also denied.
As of this date State Farm has still refused to reimburse the defense costs I have incurred after State Farm quit paying but yet they continue to go forward with both lawsuits in Mendocino and Sonoma County.
In the meanwhile I keep asking why is the IRS ignoring the perjury committed by State Farm executives? Why is State Farm allowed to get away with this perjury when it is costing all US citizens billions in uncollected taxes?
When is someone in government going to step forward and make State Farm Executives suffer the consequences of their actions?
Why hasn’t the press brought this to the attention of the public and/or government officials? My concern is not with the State Farm agent, who would like to be the independent contractor he or she is supposed to be, but with the executives of State Farm who have lied and continue to lie to get what they want while at the same time breaching the agent’s contract.
I wanted to make sure all of State Farm’s Board of Directors were made aware of this perjury by State Farm Executives so I sent registered, receipt requested, letters to all Board members as well as most of the top Executives.
In my letter I sent documentation and told the officials I had more if they needed it. The Board hired an attorney who contacted me and asked if I was represented by legal counsel and requested more information. I forwarded the requested information to the Attorney and waited patiently for a response and when I received none I sent another registered letter advising the board they would be deemed culpable if they did nothing.
Coincidently I suddenly received a phone call from an IRS agent in New York who had been assigned to review my SS-8 filing. This agent told me she would review the file but she did not have it available. I told her the Austin Texas office should have the file but she told me they did not do that anymore and had probably destroyed it. I told her I could e-mail the information to her right away but she told me she could not accept e-mail and could only get it via fax or regular mail.
This phone call was on June 30 and the IRS agent was in New York and I am in California, a three hour time difference. I printed out and faxed approximately 90 pages on the afternoon of June 30 to the IRS agent and on the cover page advised that I would fax and mail additional pages as soon as I could. On July 6 I faxed another approximately 45 pages to the IRS agent and advised if this documentation was not enough to let me know and I could send more.
You can imagine my surprise when I received a letter from this IRS agent dated July 2 telling me she had done a “thorough review” of the documentation and found no facts or legal arguments to change the determination of independent contractor! The IRS agent placed the word “final” in bold type and highlighted it with a yellow marker.
Coincidently, again, I received a letter, dated August 5, from W.H. Knight Jr., Chair of State Farm’s Legal Affairs Committee, telling me the State Farm Board of Directors finds “no basis to recommend or direct that State Farm take any further action”.
The letter head used by Mr. Knight was that of “W. H. Gates Hall” in Seattle Washington which didn’t mean much to me until I recently found Mr. Knight has been charged with “ethics violations” at Washington for using the schools computer for State Farm business. Apparently my letter is now some proof of Mr. Knight’s use of the school computer while working at his position as a member of State Farm’s Board of Directors.
I have the documentation for all of the statements I have made above and am willing to testify to those facts. I would ask those of you reading this to ask your Congressman and Senators to look into this matter of why the IRS has allowed perjury by State Farm to go unpunished?
If it didn’t matter if State Farm had mandatory meetings for their agents why would State Farm lie about it? Do you think it is fair that State Farm, who happens to sell workmen’s compensation, should be able to lie and avoid paying their fair share? Isn’t it time someone looked into the management of State Farm and ask why the Rust family should be able to operate the company like a family business, handing it down from father to son to grandson, when they have no ownership in the company? Isn’t it time large corporations be made to tell the truth or pay the consequences?
http://www.tortdeform.com/archives/2007/05/more_evidence_of_state_farm_in.html