Agent was an independent contractor, not an employee, court rules

In the case of Hennighan v. Insphere Insurance Solutions, Inc., a federal district court in California ruled that a sales agent was an independent contractor, not an employee. As a result, the court summarily denied the agent's suit for wrongful termination and other employment-related claims.

Background and procedural history

The plaintiff began working for the company, a business which sells insurance policies, in 2010. The agreement provided that the plaintiff would receive a commission whenever he successfully sold a policy. The company terminated the contract in 2012.

In 2013, the plaintiff filed a lawsuit against the company, asserting claims under the California Labor Code for discrimination, retaliation, wrongful discharge, failure to immediately pay wages upon discharge, to make pay vacation benefits, to provide itemized wage statements, to provide meal and break periods, to pay overtime wages, and to indemnify work-related expenditures. The suit also asserted other claims for unlawful, unfair and fraudulent business practices under the state's Business and Professions Code and an alleged violation of California's Private Attorneys General Act.

The company requested a summary ruling denying the claims on the basis that the plaintiff was an independent contractor, not an employee.

The district court's ruling

The district court summarily ruled for the company, deciding that the plaintiff was an independent contractor as a matter of law. The plaintiff commenced working for the company after signing a contract entitled "Independent Insurance Agent Commission-Only Contract." The agreement provided that it was terminable at will by either party. The plaintiff's agreement stated that he was an "independent contractor" and no employer/employee relationship was created between him and the company.

In addition, there was evidence submitted in the case indicating that the plaintiff, not the company, controlled the means by which he performed his work. The plaintiff could set his own schedule and he was not required to work a certain number of hours. He could decide which insurance policies he wished or did not wish to sell. There was no evidence that the plaintiff was obligated to sell a minimum number of policies within a given period of time or to generate a minimum quota of sales. He was free to schedule his own appointments and could choose not to work at all. The company did not regulate the means and methods which the plaintiff interacted with clients, whether by phone or in person, nor how he obtained sales leads.

Also, the company did not monitor or supervise the work of the sales agents. There were no formal reviews or informal reviews overseeing the manner in which agents sold company products. Agents were not required to maintain any specific hours of attendance at the office. Most training seminars were voluntary, except those dealing with insurance rules and regulations.

The plaintiff had to furnish his own equipment, including his car, cell phone and laptop. He worked out of his own home and was not given an office. He paid for his own licensing fees and for the cost of sales leads. He claimed tax deductions for his business expenses.

The evidence also established that the plaintiff held himself out as a separate business. He sold insurance products for other companies. He declared on his tax returns that he was self-employed.

Contact an attorney

Individuals and owners or operators of businesses facing legal disputes involving business and commercial law matters should consult the legal advice of an attorney experienced in these fields to ensure the protection of their legal rights.