$65M Settlement in WFG Insurance Misclassification Case
Table of Contents
Case Background
Tricia Yeomans and several other Plaintiffs filed a class-action lawsuit against World Financial Group Insurance Agency, Inc. and World Financial Group, Inc. in December 2018. The Plaintiffs, who worked as associates for the insurance giant, claimed the company had systematically misclassified them as independent contractors rather than employees. This legal battle, which spanned nearly seven years, centered on the company's business model and its treatment of thousands of workers across California. By labeling these associates as independent contractors, the Plaintiffs argued that World Financial Group avoided its legal obligations under the California Labor Code, saving millions in labor costs at the expense of its workforce.
Cause
The heart of the dispute lay in the degree of control World Financial Group exercised over its associates. The Plaintiffs alleged that while the company called them independent contractors, it treated them like employees. They contended that the company dictated their work methods, required adherence to strict corporate policies, and integrated them fully into the company’s primary business of selling insurance and financial products. Under California’s strict legal standards, specifically the "ABC test" established in the Dynamex case, the Plaintiffs argued they were legally employees because their work was central to the company’s business and performed under its direction.
Injury
The misclassification led to significant financial harm for the associates. Because they were not recognized as employees, they missed out on basic labor protections guaranteed by California law. This included the company’s failure to pay minimum wages for all hours worked and the lack of overtime pay when they worked more than eight hours a day or forty hours a week. Furthermore, the workers had to pay for their own business expenses, such as travel and equipment, which the law typically requires employers to reimburse.
Damages Sought
The Plaintiffs sought massive financial recovery for a class of approximately 25,000 current and former associates. Their demands included back pay for unpaid minimum wages and overtime, reimbursement for business expenses, and interest on all unpaid amounts. They also sought heavy penalties under the Private Attorneys General Act (PAGA), which allows employees to sue on behalf of the state for labor law violations. Additionally, the lawsuit asked for compensation for inaccurate wage statements and "waiting time" penalties for workers who did not receive their final pay promptly upon leaving the company.
Key Arguments and Proceedings
The case moved through various stages of the legal system, including a period in federal Court before returning to the San Francisco County Superior Court in July 2024. The proceedings involved extensive discovery, where both sides reviewed thousands of documents and conducted numerous depositions to build their cases.
Legal Representation
Plaintiff(s): Tricia Yeomans | Ismail Chraibi | Adrian Rodriguez | Robert Jenkins | Dorothy Jenkins | Cameron Bradford | Fatemeh Abtahi.
· Counsel for Plaintiff(s): Alan S. Lazar | Cody R. Kennedy | David Rosenberg | Chad F. Edwards | Malte Farnaes | Christina Lucio | Mitchell Murray
Defendant(s): World Financial Group Insurance Agency, Inc. | World Financial Group, Inc.
· Counsel for Defendant(s): Spencer C. Skeen | Marlene M. Moffitt | Tim L. Johnson
Key Arguments or Remarks by Counsel
The legal teams fought over the very nature of the associates' roles. The Plaintiffs' attorneys argued that the company’s business model was designed to exploit workers by shifting business risks and costs onto them while maintaining total control over their activities. They emphasized that the associates were the "boots on the ground" for the company’s revenue stream.
Claims
The lawsuit featured fourteen separate causes of action. These included failure to pay minimum wage and overtime, failure to provide meal and rest breaks, and failure to reimburse necessary business expenditures. They also claimed the company issued "worthless" wage statements that didn't show actual hours worked or applicable hourly rates, making it impossible for workers to track their earnings.
Defense
World Financial Group denied all wrongdoing. Their defense team argued that the associates were true independent contractors who enjoyed the freedom to set their own schedules and run their own businesses. They contended that many associates were actually "exempt" from overtime laws because they were outside salespersons. The company also raised several affirmative defenses, claiming that the lawsuit was barred by the statute of limitations and that the PAGA penalties sought were unconstitutionally excessive.
Settlement
Instead of proceeding to a risky and lengthy jury trial, the parties reached a massive $65,000,000 settlement. Judge Christine Van Aken of the San Francisco County Superior Court granted final approval of this "gross settlement amount" in early 2025.
The settlement provided a significant payout to the class members and settled the PAGA claims with the State of California. In the end, the Court’s final judgment resolved all claims, and the case was officially closed.
Court documents are available upon request at jurimatic@exlitem.com