Two former employees of State Farm are suing the major insurance company over fraudulent corporate practices that negatively affected them and many others working under the brand.
Jason Sheldon and Steven Hunsberger filed the class action lawsuit back on March 8. The lawsuit claimed that the two worked for State Farm as Term Independent Contractor Agents (TICA). The lawsuit claimed that all TICAs were “misclassified as independent contractors and not provided 401(k), retirement and pension benefits.”
“By not providing TICAs the same employment benefits as full time employees, Defendant State Farm has violated ERISA,” the lawsuit states.
ERISA is the Employee Retirement Income Security Act. This act ensures that companies must provide at least the minimum standard regarding retirement and health plans for individuals working under them.
The plaintiffs also brought forward claims of fraud and deceit. The two reportedly were persuaded by the company to leave their high-earning careers based on false statements from State Farm. The lawsuit also claims that State Farm encouraged the employees to “create business proposals that set them up for failure.” It also says that the company persuaded the employees to invest their own funds into the business practice through oral statements, emails and written documentation.
“Ultimately, Defendant State Farm caused Plaintiffs significant economic harm by creating a fraudulent employment system,” the lawsuit reads.
By misclassifying the two employees as independent contractors, the plaintiffs (among other TICAs) were wrongfully denied the same benefits that full-time employees enjoy.
Sheldon was fired back in 2017 while Hunsberger closed his office in 2016.
The lawsuit explained that each State Farm TICA must sign the State Farm Agent Agreement as a mandatory condition for employment. The agreement, the lawsuit continues, is “a contract of adhesion, drafted exclusively by State Farm, who gives the TICAs no opportunity to negotiate or change any terms and who requires the TICAs to sign the Agreement as presented by State Farm as a condition of employment.”
The contract not only gives TICAs no path toward negotiation, but also allows State Farm to essentially treat TICAs as “independent contractors” and has the right to totally control the business of all TICAs.
Moreover, when TICAs tried to challenge the notion that they are more than independent contractors of the company, State Farm continued to misidentify them and deny them the benefits of full-time employees.
State Farm holds strong to its defense that the plaintiffs and the hundreds of TICAs are not full-time employees and are owed no benefits.
“We are confident that Mr. Sheldon and Mr. Hunsberger were independent contractors,” the company said in a statement.
The case seeks the legal declaration that TICAs are considered State Farm employees and would receive the benefits of a full-time employee, as well as payment for deceiving and misleading TICAs, causing an unspecified amount of financial burden.