Three Allstate agents in Canada have filed a prospective class-action suit against the Northbrook, Ill.-based carrier claiming changes the company made in their contracts stripped them and other agents of their business and closed half its Canadian offices.
The suit, filed in Ontario Superior Court of Justice in Toronto back in May, is claiming damages for breach of contract and breach of the nation's Employment Standards Act for at least $58 million in damages ($60 million Canadian).
An Allstate spokesman said the company is reviewing the matter.
The suit claims that in July of last year Allstate “unilaterally announced substantive material changes to the employment contract terms with all of its sales agents, numbering approximately 450, across Canada.”
The changes altered the compensation system for the agents, robbed them of their renewal books of business and closed 256 agent locations throughout the country to consolidate locations, the suit alleges.
The suit accuses the insurer of failing to pay termination and severance payments to former employees. It also alleges the new agreement “reduced the wage rate and/or altered other terms and conditions of employment of” the Allstate agents.
The lawsuit was filed by Esther Kafka, Ketal “Ken” Patel and Mark Cassells. Plaintiffs' attorney David Thompson, with the law firm Scarfone Hawkins in Hamilton, Ontario, said Mr. Patel is the only one of the three who is presently an Allstate agent.
Mr. Thompson said by e-mail that the suit has not yet been certified as a class-action suit, but “the case is meritorious” and the “proposed class proceeding presents the only reasonable and practical avenue for redress.”
Mr. Thompson went on to say that the Allstate agents believe they were not independent contractors but employees of the company. He could not say if the nature of the relationship between agents and the company was similar to that in United States.
Allstate made a change in the U.S. producer contract eight years ago affecting some 6,200 agents. That action eventually resulted in several suits and action by the U.S. Equal Employment Opportunity Commission, which said the company's policies purposely affected a huge percentage of agents over the age of 40.
The suit has attracted the attention of many agents, Mr. Thompson said, adding, “We have been contacted by many agents expressing interest in and support for the action.”
Mr. Thompson said Allstate has replied to the suit, indicating it plans to defend against it.
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