NU Online News Service, Oct. 21, 11:42 a.m. EDT
A leader of an Allstate agents group said the insurer, after converting agents to independent contractor status, is treating them like employees, prompting the producers to ask for an Internal Revenue Service probe.
Jim Fish, executive director of the National Association of Professional Allstate Agents, said that in addition to petitioning the federal agency for an investigation, many of the company's 13,000 agents are filing an IRS SS-8 form that seeks "Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding."
Allstate said the issue had previously been raised with the IRS with a ruling in the company's favor.
But, Mr. Fish said that in 2000, when the company converted its producers to an independent contractor classification, "the agents were promised certain freedoms…freedom to run agencies as they saw fit, with no mandatory hours or quotas."
But, according to Mr. Fish, "the company has reneged" and has instituted office hours and quotas for agents.
The thought behind seeking classification as employees, he explained, is that as long as they are treated as such, agents should have access to company 401k plans, pensions, health benefits and unemployment insurance, as well as having the employer handle payroll, Social Security and Medicare taxes
He said as a result of the SS-8 form and the petition requesting the IRS to revoke Allstate's preferential tax status, he believes the IRS is "going to take a hard look" at the company's actions.
According to NAPAA, the IRS petition drive was started by "an unidentified Allstate agent." NAPAA published for members a hypothetical example of the IRS Form SS-8, "based on the information we gathered from Allstate agents over a period of several years," noted Mr. Fish.
"We anticipate the IRS and President Obama will receive thousands of petitions," according to Mr. Fish. "When the SS-8 forms are filed, we expect that Allstate's behavior will be heavily scrutinized by the IRS. If nothing else, this intense scrutiny may change Allstate's behavior for the better."
NAPAA noted that in 2007, former FedEx independent contractor drivers filed for parity with employees and were certified for class-action status by a federal court in Indiana. NAPAA said the FedEx dispute "opened the door to similar cases involving independent contractors who are treated like employees."
"It was reported that the IRS plans to audit more than 6,000 companies for employment tax issues," Mr. Fish noted in a statement. "We're hoping the volume of Allstate agents filing SS-8 forms and the simmering discontent among agents over the misclassification issue will help push Allstate to the top of the IRS list, so we can finally resolve this long-standing problem."
NAPAA, based in Gulfport, Miss., can be reached online at www.napaausa.org or by calling 877-269-3474.
Laura Strykowski, a company spokesperson said she was aware of the petition. She said the agents status as independent contractors had previously been upheld several times by numerous courts across the country, administrative agencies, the National Labor Relations Board and the Internal Revenue Service.
She said she did not have dates when the last ruling on the issue had occurred.
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