State Farm Hit with Class Action Over Alleged Racial Discrimination

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State Farm Mutual Automobile Insurance Co. faces a proposed class action lawsuit wherein a former employee alleges she was subjected to racial discrimination and retaliation for challenging the company’s “discriminatory practices.” 

The 21-page lawsuit out of Illinois was filed by an African American woman who worked for State Farm as a term independent contractor from June 2019 until she was “unlawfully terminated” around July 2020. The plaintiff alleges State Farm provides “wildly divergent compensation and opportunities” to African America agents, who the case says are paid “substantially less” than their non-African American counterparts. 

“These racial disparities result from State Farm’s systemic, intentional race discrimination and company-wide discriminatory policies and practice, which have a disparate impact on African Americans,” the complaint alleges, noting that State Farm faces at least two other class actions brought by employees over the allegedly “entrenched discrimination” at the company. 

The plaintiff describes the corporate culture at State Farm as “racially biased” and “replete with harmful stereotypes” concerning not only African American employees but customers. Per the case, these stereotypes have “infect[ed]” the insurer’s policies and decision-making, resulting in “racial steering and race-matching of Agents, territories, and clients.” 

According to the complaint, African American State Farm agents are subjected to “heightened scrutiny and differential discipline,” as well as “higher compliance standards,” amid a “racially hostile culture and environment” in which there is no accountability for “racist conduct and statements.” 

“For example, a prominent white Agent in the midwest engaged in a racist rant on a public social media platform, claiming an African American man wanted ‘to rely on the government’ and told him to ‘Go get another my[sic] babies mama’ and ‘go back to Africa.’ Despite complaints, the agent remains at State Farm.” 

The filing says State Farm has no meaningful avenue by which African American agents can complain or seek redress for the disparate opportunities and resources they’re afforded. State Farm, the lawsuit claims, is “ineffective” at resolving complaints of discrimination, which “are typically ignored” or set up the complaining employee for retaliation. 

“Most African Americans recognize the futility of lodging internal complaints of race discrimination,” the complaint states. “Those brave enough to come forward suffer retaliation.” 

The plaintiff claims State Farm provides African American agents with “less lucrative” and/or “more problematic” agencies and territories, and those who sign on to the firm’s term independent contract agent (TICA) program are “steered to less lucrative agency locations” and deprived of robust books of business, or given substantially smaller books than their non-African American peers, the lawsuit says. 

The filing alleges State Farm’s TICA training program applies criteria “intentionally designed” to discriminate against African Americans. 

“State Farm disproportionately gives non-African American Agents a head start in their careers by allowing them to take over existing agencies with substantial books of business from Agents who have moved or who no longer work for the Firm. By contrast, State Farm generally requires African American Agents to start new agencies with substantially less lucrative books of business or from ‘scratch’ and without existing insurance policies or financial products.” 

In addition, the suit says, State Farm disproportionately assigns non-African American agents to territories and locations with more affluent populations, while relegating African American agents to areas with “considerably less wealth.” The insurer also “race matches” agents by assigning African American agents to areas with higher African American and minority populations, the lawsuit says. 

With regard to bonuses, the suit alleges State Farm, among other “discriminatory practices,” intentionally selects and relies on factors that disadvantage African Americans to calculate eligibility for and the amount of their bonuses. 

According to the complaint, nearly 1,600 State Farm employees of color signed a petition in the wake of the killing of George Floyd and the subsequent racial justice movement attesting they or someone they knew had been let go “unfairly,” forced to start without or with a smaller book of business, experienced or seen racism at work, been given fewer resources, or were afraid to speak up for fear of retaliation. 

The lawsuit looks to cover African American individuals who work or worked for State Farm as agents and term independent contractor agents. 

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