NLRB: Allstate Exclusive Agents Can't Unionize

December 2, 2002 ( - An effort to unionize Allstate Corp.'s exclusive agents ran aground when a regional director of the National Labor Relations Board (NLRB) ruled that the agents couldn't join a union because they are independent contractors.

Elizabeth Kinney, NLRB’s regional director in Chicago, decided that the exclusive agents (EA) would be considered independent contractors under the National Labor Relations Act, but couldn’t be classified as supervisors under the act, according to a Dow Jones news report.

“In particular, EAs have substantial entrepreneurial opportunity for gain or loss and have a proprietary interest in their work,” Kinney said in the ruling. “EAs hire their own employees, determine their own advertising strategies and decide the amount and type of work they will engage in on behalf of their agencies.”

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

She noted exclusive agents are compensated solely on commission, with no guaranteed minimum compensation and are permitted to engage in noncompeting businesses in addition to their Allstate sales, Dow Jones said.

Kinney’s decision came as the Office & Professional Employees International Union, (OPEIU), asked Allstate to recognize it as the sole collective-bargaining representative for its exclusive agents — an offer the insurer rejected, according to Dow Jones. The union also petitioned the NLRB for an election among Allstate’s agency force.

Union: Appeal is Likely

Kevin Kistler, OPEIU’s director of organization and field services in New York, said the union would likely appeal Kinney’s decision.

“We’re going to read it and then we’re going to decide whether to appeal,” Kistler told Dow Jones. “I suspect we will.”

In its filing with the NLRB, Allstate had argued its exclusive agents were independent contractors and, in many cases, supervisors.

Three years ago, Allstate reworked its in-house agent force, offering nearly 6,500 exclusive agents the option of becoming independent contractors or leaving Allstate.   The company hoped the move would boost sales of Allstate products and improve its profitability as more insurers moved to independent distribution networks.

About 4,000 exclusive agents stayed on as independent contractors. The insurer now has about 12,500 agents, all of whom are independent contractors, Dow Jones said.

However, some agents have objected to the way the reorganization was carried out and challenged it in court. Among their challenges was a requirement that they sign a release preventing them from suing the company over  their employment in exchange for additional benefits.

The US Equal Employment Opportunity Commission (EEOC) also has objected to  the release, saying its tie to certain financial benefits is retaliatory under federal employment laws.

Allstate has denied wrongdoing.