SAN FRANCISCO (Legal Newsline) - A California appeals court, in a ruling Friday, held that a company's insurance agent was properly classified as an independent contractor in a putative class action.
The state's First District Court of Appeals wrote in its 12-page opinion that it had "little difficulty" concluding that the Contra Costa County Superior Court was correct in finding in favor of Mutual of Omaha Insurance Company.
Plaintiff Kimbly Arnold had worked as a nonexclusive insurance agent for Mutual. After she ended her contractual relationship with the company, she filed a lawsuit claiming unpaid employee entitlements under the state's Labor Code.
The superior court determined Arnold's causes of action depended on her being a former "employee" of Mutual, and the undisputed facts established she was not an employee but rather an independent contractor.
Arnold, in appealing the superior court's summary judgment in favor of Mutual, claimed it erred in concluding the common law test for employment was applicable to determine whether she was an "employee."
Mutual, on the other hand, argued the provisions of the code in question were not subject to a statutory definition of "employee," but were subject to the common law test.
The company contended that undisputed material facts established Arnold as an independent contractor rather than a former employee under the common law test, and she was not entitled to relief.
The appeals court sided with Mutual, saying the evidence had "telling characteristics."
"It shows, for example, that Mutual managers make themselves available to assist agents, as distinguished from supervising them. Training is generally not mandatory and is offered chiefly for the guidance of 'new' agents. Training is required only with respect to compliance with state law directives. Managers provide assistance with sales or clients when an agent 'wants them to assist.' Software is provided by Mutual as a 'best practice[e]' to enable agents to sell its products more successfully. Conference rooms, if available, are provided as a courtesy to agents seeking to set up a meeting and have no other space in the office," Presiding Justice James J. Marchiano wrote for the court.
Also, Marchiano noted, while Mutual pays its agents in two-week periods, payments are comprised of commissions and bonuses established by policy, and there is no guaranteed compensation.
"The salient evidentiary points established Arnold used her own judgment in determining whom she would solicit for applications for Mutual's products, the time, place and manner in which she would solicit, and the amount of time she spent soliciting for Mutual's products. Her appointment with Mutual was nonexclusive, and she in fact solicited for other insurance companies during her appointment with Mutual," the justice wrote.
Arnold's assistant general manager at Mutual's Concord office also did not evaluate her performance and did not monitor or supervise her work, Marchiano noted.
In addition, agents who chose to use the Concord office were required to pay a fee for their workspace and telephone service, he added.
"Arnold's minimal performance requirement to avoid automatic termination of her appointment was to submit one application for Mutual's products within each 180-day period. Thus, under the principal test for employment under common law principles, Mutual had no significant right to control the manner and means by which Arnold accomplished the results of the services she performed as one of Mutual's soliciting agents," the appeals court wrote.
Attorneys for Mutual said the ruling serves as an important precedent for similar insurance workplace disputes, especially in light of new penalties in California for willful misclassification of independent contractors.
Francis J. "Tripper" Ortman III, Eden Anderson and Robb D. McFadden of the San Francisco office of Seyfarth Shaw LLP represented Mutual in the matter.
"We're extremely pleased with the appellate court's ruling, which is very important in articulating California law with regard to independent contractors in the insurance agent context," Ortman said in a statement.
"The opinion provides a recipe for deposition preparation and should prove useful as a roadmap for both plaintiff and defense practitioners involved in independent contractor cases."
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.