A class action lawsuit alleges Geico misclassifies captive insurance agents as independent contractors; a hotel management company was found to have misclassified employees, pays $113,613 in back wages and damages.

Geico agents. A class action lawsuit alleges insurance company Geico misclassifies captive insurance agents as independent contractors and wrongfully denies them employee benefits, according to media reports.

Captive insurance agents are defined as agents who agree to sell insurance products on behalf of one insurance company, which contrasts with independent insurance agents who are authorized to sell on behalf of multiple insurance companies, according to Top Class Action.

According to the lawsuit filed on Feb. 9 in Ohio federal court, plaintiff James Moyer was hired as a Geico insurance agent in 2007 but is classified as an independent contractor who is not entitled to benefits provided to other Geico employees. He alleges Geico hired him as an independent contractor along with “hundreds of captive insurance agents” to sell insurance products, according to Top Class Action.

The insurance company exercises significant control over the roles and duties they perform, according to the lawsuit. For example, Geico allegedly controls the list of potential customers, sets performance goals and can impose disciplinary measures on Geico agents who are classified as independent contractors. Further, the Geico class action says captive insurance agents are offered the opportunity to opt in to Geico’s employee health and life insurance benefits.

“Together, these factors and others support the conclusion that defendants’ insurance agents are employees,” the lawsuit against Geico asserts.

The lawsuit seeks reimbursement for employment benefits that Geico allegedly unlawfully withheld from Moyer and other putative class members. It also seeks an injunction to prohibit Geico from continuing to classify captive insurance agents as independent contractors.

The lawsuit is Moyer v. Government Employees Insurance Company, et al., case No. 2:23-cv-00578, in the US District Court for the Southern District of Ohio.

Hotel workers. A federal investigation has recovered $113,613 in back wages and liquidated damages for 71 employees of a New York City hotel management company that denied them their proper wages, including overtime, by misclassifying many of the affected workers as independent contractors.

The US Department of Labor’s Wage and Hour Division determined that Greenparc Hospitality NY LLC — which provides hospitality staff to about 20 hotels in Manhattan and at John F. Kennedy International Airport —misclassified 69 of the affected employees, paying the bell staff, housekeepers and room attendants straight pay for all hours worked, even those above 40 in a workweek.

Greenparc also did not include incentive pay such as shift pay for overnight work, quarterly bonuses, and performance bonuses when calculating the amount of overtime due to 28 of the 71 employees. The violations led the division to recover $56,806 in back wages owed and assess an equal amount in liquidated damages.

“Misclassifying workers as independent contractors is a serious concern for the US Department of Labor. It denies employees minimum wages, proper overtime pay and other benefits such as unemployment insurance and workers compensation. It can decrease social security contributions and benefits and shift the tax burden from the employer to the employee. Misclassification of workers also undercuts competitors who obey the law,” explained Wage and Hour Division District Director Jorge Alvarez in New York City.