United States: Washington Federal Court Decertifies Class Of Insurance Agents Alleging Entitlement To Overtime

Challenging the classification of workers as independent contractors continues to be a growing area of focus for plaintiffs' attorneys. However, as a recent federal case from Washington demonstrates, the fact-intensive inquiry that is the hallmark of the independent contractor inquiry is not compatible with classwide resolution – particular post-Dukes.

In Rodney v. Bankers Life and Casualty Co., Case No. C14-766RSL (W.D. Wash. June 30, 2015), the plaintiffs were insurance agents who worked for and were classified by Bankers Life as independent contractors. The plaintiffs alleged that they were actually common law employees and, thus, entitled to overtime under Washington's Minimum Wage Act. The case was originally brought in Washington state court and certified as a class before Bankers successfully removed the case to federal court under the Class Action Fairness Act. Bankers then moved to decertify the class.

On decertification, the court found that the proper test of whether the plaintiffs were properly classified as independent contractors was the "economic reality" test. As we have previously written, this test looks primarily at six non-exclusive factors, none of which are dispositive. In general, this test is meant to examine whether a worker is dependent on the business to which he or she renders service or is in business for himself.

Plaintiffs presented largely undisputed evidence of Bankers' alleged control over the agents' business, which they argued allowed the economic-dependence test to be resolved through common evidence. This included the fact that the agents invested little in their agencies, were not required to have experience prior to becoming agents, were "career" agents with Bankers and were a critical part of Bankers' business model, and that Bankers dictated agent work hours, sales methods, and schedules.

In response, Bankers provided declaration testimony showing differences among the class. This included testimony from agents which showed that some agents were not required to attend weekly meetings and had control over their schedules, and that differing managerial styles of the various Bankers district managers led to different working experiences among the agents.

After examining the evidence, the court concluded that the plaintiffs had failed to meet the predominance and superiority requirements for class treatment under Fed. Rule 23. The court acknowledged that the plaintiffs presented common issues and common evidence suggesting a common answer as to several factors of the economic-dependence test. However, the court astutely recognized that individual experiences will differ even if they are all under completely uniform policies. This fact, combined with Bankers' evidence of varying experiences among agents, compelled the court to conclude that the determination of agent status would require an individualized inquiry into each agent's employment experience. Thus, individualized fact questions predominated over common ones and the class was decertified.

Bottom Line

Determining whether workers are properly classified as independent contractors often requires a fact-intensive analysis that cannot be properly resolved on a classwide basis.

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