This story was written and paid for by Gwilliam, Ivary, Chiosso, Cavalli and Brewer, an Oakland-based employment law and personal injury law firm.
Farmers Insurance has famously marketed itself as a company worth trusting with the advertising slogan, “We know a thing or two because we’ve seen a thing or two.”
But scores of former veteran Farmers agents in California say the giant insurer cruelly got rid of them because of their age, replacing them with younger agents. Seventy-nine people, including a man who sold insurance for Farmers in Stockton for 57 years, have filed an age discrimination lawsuit against the Woodland Hills company, alleging that they were harassed and wrongfully terminated between June 2018 and April 2020. In addition, the former agents say Farmers misclassified them as independent contractors, for tax and legal benefits.
“When these people started with Farmers, they were told they could start their own agencies, build up their businesses, live off the renewal commissions, then pass the agencies on to their families,” said Rob Schwartz, a Partner with the Oakland-based law firm Gwilliam, Ivary, Chiosso, Cavalli and Brewer, which is representing the plaintiffs.
“Then, Farmers changed direction and literally took these older agents’ businesses and handed them to younger agents,” said attorney Schwartz. “Farmers never even bothered to thank the agents for their years of service with the company.”
Chuck Nielsen of San Jose said that when he signed on with Farmers in 1982, he was told he could work until he chose to retire, but instead, he was terminated in June of 2018. “Because of my age alone, I was forced to give up my extensive book of business and was shut out after 35-plus years as a top regional Farmers agent,” Nielsen said.
After years of telling agents that they were independent contractors who could run their businesses as they saw fit, Farmers began “micromanaging” agents in recent years, down to the smallest details, including the color of paint used in their offices.
Farmers then systematically moved against their older agents, threatening them with termination for failure to meet “business results,” though what those results were supposed to be was neither specified by managers nor contained in the agents’ contracts, Schwartz said.
Farmers’ claim about “business results” was a pretext for age discrimination, said Schwartz, since the company had been losing market share for years, largely due to their non-competitive rates.
After the agents were terminated, they were forced to appeal to Farmers’ “sham” termination review board, where they were denied any semblance of due process, Schwartz said. “The process was set up to rubberstamp the terminations.”
The health and financial impacts on the plaintiffs have been severe. After spending years building up their agencies, they were forced to start over late in their careers. Farmers kept everything, from the insurance policies they had written for friends and families to the phone numbers used for their businesses, said Schwartz.
“I relied upon my contract with Farmers Insurance and renewed my office lease thinking that my new and residual business was solid,” said Thomas Mortensen, a former Farmers Insurance agent in Concord who sold policies for three decades before he was terminated in June of 2018. “Out of nowhere, I am notified that I am no longer meeting goals imposed on me by Farmers and that my 30-plus year established book of clients is going to be moved to a younger agent and that my clients will be told that I retired,” Mortensen said. Like other agents, Mortensen was told he could not contact his clients for a full year.
In recent years, attention has been drawn to the issue of whether workers are properly classified as independent contractors as opposed to employees. “The issue is about money,” said Schwartz. “Companies like Farmers want the tax and legal benefits of independent contractors but the ability to control workers as if they were employees.” Another class-action lawsuit is pending against Farmers in Los Angeles over the misclassification of its agents as independent contractors.
“This is classic age discrimination,” said Schwartz. “Farmers got what they wanted out of these agents—years of dedicated service building up their agencies and generating profits for the company. When the agents began approaching retirement, Farmers used vague and shifting ‘business results’ as an excuse to take their businesses and give them to younger agents.