Class Action Alleges GEICO Unlawfully Withheld Employee Benefits from Captive Insurance Agents

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A proposed class action claims Government Employees Insurance Company (GEICO) owes its captive insurance agents reimbursement for all employee benefits it has improperly withheld from them.

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The 26-page case argues that GECIO has systematically excluded its captive insurance agents, i.e., those who agree to sell only GEICO products instead of working for multiple insurance companies, from participating in some employee benefits plans by misclassifying them as independent contractors, even though they are treated as employees. The lawsuit claims that under the Employee Retirement Income Security Act (ERISA), agents are entitled to all the same retirement, health, and other benefits GEICO provides its other employees.

According to GEICO’s field representative agreement, the hundreds of captive insurance agents the company employs to sell its insurance products are independent contractors, each of whom may “exercise[] his or her own judgment as to the manner in which she or he may provide services under the terms of this Agreement,” the case relays. However, the lawsuit alleges that agents cannot be considered independent contractors—and are instead employees—because GEICO “seldom (if ever)” allows them to control how they provide services. 

More specifically, the plaintiff, a captive insurance agent for the company since 2007, says GEICO controls the location and appearance of his office, who his clients are and how he obtains new clients, and determines what telephones, telephone numbers, telephone scripts, computer operating systems and marketing materials he and his staff can use to conduct business.

Per the complaint, GEICO has the power to assign agents additional duties outside of any contractual agreement, determine the precise hours of their offices, play a significant role in hiring an agent’s office staff and require agents to attend mandatory meetings with supervisors, who are full-time GEICO employees.

“Defendants also set performance goals for each agent’s business and monitor these goals,” the case states. “In instances when these performance goals are not met, Defendants impose discipline on the agents, including warnings and even termination of the agents.”

Moreover, the case says that although GEICO allows agents to opt into its employee health and life insurance benefits, they must cover 100 percent of the insurance premiums, unlike GEICO’s corporate employees, who receive a subsidy for their health and life insurance premiums. The plaintiff says he has been denied participation in other benefits plans that employees are entitled to, such as GEICO’s traditional and Roth 401(k) and profit-sharing plans.

“[I]f an individual is treated like an employee for one employee benefit plan—i.e. health or life insurance—then that individual is also an employee for any other plan offered by the employer,” the lawsuit reads, stating that GEICO was required under state and federal laws to extend all ERISA-protected benefits to their agents.

Additionally, the case claims that GEICO has failed to pay the plaintiff commission on sales for which he should have received credit.

The lawsuit looks to cover any captive insurance agents who sell and have sold insurance products for or on behalf of GEICO.

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