02:25 AM

U.S. Court of Appeals to review ruling against classification of American Family Insurance agents as independent contractors

Court’s decision could be first step to overturning questionable verdict


The U.S. Court of Appeals for the 6th Circuit today granted an immediate appeal by American Family Insurance of a questionable lower-court ruling.

The U.S. Court of Appeals for the 6th Circuit today granted an immediate appeal by American Family Insurance of a questionable lower-court ruling that American Family agents were improperly classified as independent contractors, which could potentially entitle them to certain employee benefits. The date for the court to hear the appeal is still to be determined.

“We believe this is the first step to overturning an incorrect ruling that is contrary to five previous federal court decisions and the opinion of the Internal Revenue Service,” said Mark Afable, American Family’s chief legal officer.

“We value our agents tremendously,” Afable said. “Their classification as independent contractors reflects the independence and flexibility they have to meet customer needs and to be successful. We look forward to presenting our case during the appeal process.”

American Family Insurance sought the appeal following an Aug. 1, 2017 ruling by U.S. District Court Judge Donald Nugent (Northern District of Ohio, Cleveland) in the first phase of a lawsuit (Jammal et al. v. American Family Insurance Company, et al.) initially brought in 2013 by four former American Family agents. The court later certified the suit as a class action, automatically adding approximately 7,000 former and current American Family agents as unnamed plaintiffs.

While Judge Nugent’s ruling affirmed an earlier advisory jury verdict that American Family agents were misclassified as independent contractors, he took the unusual step of granting American Family permission to seek an immediate appeal to the U.S. 6th Circuit and stayed any further proceedings in the case pending that court’s review.

In fast-tracking the appeal, Judge Nugent stated there was evidence supporting both sides in the case and acknowledged past court decisions had been nearly unanimous in ruling that insurance agents are properly classified as independent contractors.

American Family agents are business owners, solely responsible for the manner and means by which they run their agencies and sell insurance. Paid through commission sales, they set their office hours; select, pay and determine responsibilities for their staff; and create and execute their own business plans. They declare themselves as self-employed independent contractors with the IRS and take tax deductions for their business expenses.

About American Family Insurance
Madison, Wisconsin - based American Family Insurance is the nation's thirteenth-largest property/casualty insurance group and is No. 315 on the Fortune 500 list. The company sells American Family-brand products, including auto, homeowners, life, business and farm/ranch insurance, primarily through its exclusive agents in 19 states. American Family affiliates (The General, Homesite and AssureStart) also provide options for consumers who want to manage their insurance matters directly over the Internet or by phone. Web; Facebook; Twitter