Is a captive agent of an insurance company an employee or an independent contractor? Insurers tend to view them as contractors, and that has implications for things like entitlement to benefits. In other cases, though, it has implications for protections against workplace harassment.
Megan Britt was an agent for a Mississippi-based life insurance company and worked out of the company’s office. Two male employees of the company allegedly engaged in a pattern of harassing behavior toward her, including:
- Making inappropriate sexual comments to her
- Treating her differently from the way they treated men in the office
- Denying her employment benefits
- Retaliating against her after she complained about their behavior
- Covering up their behavior
- Firing her and replacing her with a man
- Telling another agent that she threatened one of the men with a gun, was emotionally unstable, and was sleeping with her client
She sued the company, the two men, two other employees, and the other agent. Among other things, she argued that:
- She was an employee of the company
- As an employee, she was entitled to protection under the law against sexual harassment
- If the court determined that she was not an employee, the company did not treat her fairly or in good faith
- The four employees interfered with her business relationships and deliberately caused her emotional distress
- The company illegally terminated her employment and retaliated against her
- The employee who spread rumors about her defamed her
During court proceedings, she agreed to drop her complaint against the individuals but persisted in the suit against the company.
The company argued that she was an independent contractor and not an employee, for purposes of the law protecting employees. However, the court found their argument to be weak. Rather, the judge concluded that the company had rights to:
- Hire and fire her
- Supervise her
- Set her work schedule
In addition, the company set her salary, made benefits determinations, and withheld taxes from her pay. The company did not challenge the accuracy of any of these claims. Instead, they simply asserted that she was an independent contractor.
Based on all these factors, the judge disagreed. He concluded that she was not actually independent, and was therefore an employee of the company. Because the parties disagreed about what actually happened between Britt and the two employees, he ruled that a jury must sort out what the facts were, and he remanded the case for further proceedings. However, the jury will hear the case from the standpoint of the company’s treatment of an employee, not an independent contractor.
Insurers’ legal relationships with captive agents can be unclear. Most insurers consider their agents to be independent contractors, but as the judge quoted from another case, “The right to control an employee’s conduct is the most important component” of an analysis of the relationship. This insurer evidently had a very high degree of control over Britt’s day-to-day activities. When that level of control exists, courts are apt to decide the individual is an employee.
Captive agents should be aware of these questions before deciding to represent an insurer. The question of employee versus independent contractor status determines much of the rest of the working relationship. Agents should know what they are getting into and be comfortable with the relationship before agreeing to work for the insurer.