09:27 AM

U.S. Supreme Court will not review ruling that agency owners are independent contractors


The U.S. Supreme Court today denied plaintiffs’ petition asking the court to review an appellate court ruling.

The U.S. Supreme Court today denied plaintiffs’ petition asking the court to review an appellate court ruling that found American Family Insurance agency owners are independent contractors. The decision essentially ends the litigation, pending final proceedings in the district court where the case started six years ago.

This is the sixth case to conclude that American Family’s agency owners are independent contractors. The Internal Revenue Service (IRS) has also affirmed the classification.

“American Family’s respect and support for our agency owners is as strong as it has ever been,” said Jeff Swalve, American Family chief sales officer.

“Our model of agency owners as independent contractors is focused on serving customers and helping our agents succeed,” he said. “The model gives agency owners the freedom, flexibility and support from American Family to run their businesses in ways they feel are best for their local customers, which results in strong and growing agencies.”

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

“The U.S. Court of Appeals for the Sixth Circuit correctly applied the law to the facts of our case and concluded that our agency owners are independent contractors,” said Dave Endres, American Family legal vice president. “We are grateful that the Supreme Court left in place the well-reasoned opinion from the Sixth Circuit. Our agency owners are independent business owners, and we partner with them to serve the many customers that value our agency owners and American Family.”

Litigation was initiated by former agents

Today’s ruling addressed a federal class action (Jammal et al. v. American Family Insurance Company, et al.), challenging the independent-contractor classification of American Family agency owners.

The case started in 2013, filed by four former American Family agents in an Ohio U.S. District Court. The court subsequently made a procedural decision to certify the case as a class action, adding approximately 7,000 current and former agency owners as plaintiffs and precluding them from withdrawing from the case.

In August 2017, U.S. District Judge Donald Nugent issued a decision in the liability phase of the case, ruling that members of the class should have been classified as employees. However, he granted an immediate appeal of that decision, acknowledging past court decisions had been nearly unanimous in ruling that insurance agents are independent contractors.

In January 2019, a panel of the U.S. Court of Appeals for the Sixth Circuit determined that American Family agency owners are independent contractors, overturning the district court ruling. Plaintiffs’ appealed the case to the U.S. Supreme Court, which today declined to review the case.

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About American Family Insurance
Madison, Wisconsin-based American Family Insurance group is the nation's 13th-largest property/casualty insurance group and ranks No. 306 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 independent contractor agents in 19 states. American Family affiliates (The General and Homesite) also provide options for consumers who want to manage their insurance matters directly over the internet or by phone. Affiliate Main Street America sells insurance products through independent agents and affiliate Ameriprise Auto & Home sells through partners. Web; Facebook; Twitter