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State Farm Denies Allegations In Agents-In-Training Lawsuit

State Farm HQ building
Ralph Weisheit
In a 60-page response (with 1,000+ pages of exhibits) filed Friday, State Farm denies most of the allegations in a federal lawsuit.

State Farm has denied the allegations of a federal lawsuit filed by two New York men who say they were fraudulently recruited into an agent training program and improperly denied employee benefits.

Plaintiffs Jason Sheldon and Steven Hunsberger are seeking class action status for hundreds—if not thousands—of other people who were taking their first steps toward becoming a State Farm agent. Their lawsuit focuses on term independent contractor agents (TICAs), who after a 12-month TICA period can become full-fledged State Farm agents. State Farm has around 19,000 agents.

Sheldon and Hunsberger claim State Farm intentionally misclassifies TICAs as independent contractors. They say that violates federal law by robbing them of the benefits provided to full-time employees. The lawsuit seeks a legal declaration that agents are considered State Farm employees and eligible for benefits, plus other unspecified monetary damages.

In a 60-page response (with 1,000+ pages of exhibits) filed Friday, State Farm denies most of the allegations made by Sheldon and Hunsberger. The Bloomington-based company said previously it was “confident that Mr. Sheldon and Mr. Hunsberger were independent contractors.”

State Farm denies that Sheldon and Hunsberger were fraudulently “induced” and recruited to leave high-earning careers to become agents. The company also denied that its policies and procedures permit it to exercise almost total control over the TICAs’ businesses.

State Farm also attacks Hunsberger’s ability to even file his lawsuit; it says he was “bound to arbitrate any such claims” by an “applicable arbitration agreement.”

State Farm agents remain a central part of the company’s business strategy, even as it’s built out digital product offerings and invested in online sales platforms like HiRoad in Rhode Island. State Farm considers agents its differentiator as it markets itself to customers, company executives say. Indeed, its agents are prominently featured in many State Farm TV commercials.

One reason is customer loyalty. The average State Farm customer has been with the company for 14 years, well above the average for competitors. Experts say agents are a big part of that.

State Farm is represented by Chicago-based outside counsel Winston & Strawn.

The case is set for a schedule conference June 11.

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