Ferguson vs. Texas Farm Bureau Et Al

Case Background

On April 20, 2017, Plaintiff Christopher Ferguson filed an  FLSA Overtime Lawsuit in the Texas State, District Court of Waco Division (Case number: 6:17cv111). Judge Derek T. Gilliland presided over the case.

Cause

Christopher Ferguson worked as an Agency Manager for the Texas Farm Bureau and several affiliated insurance companies from June 2009 to December 2017. The defendants, including Texas Farm Bureau Business Corporation, Texas Farm Bureau Casualty Insurance Company, Texas Farm Bureau Mutual Insurance Company, and others, classified Ferguson and 120 to 160 other Agency Managers as independent contractors. Agency Managers were paid solely on commission with no base salary or overtime pay, despite regularly working over 40 hours per week. Their overtime hours typically ranged from 5 to 20 hours weekly.

District Sales Managers employed by the defendants closely supervised Agency Managers. They required Agency Managers to provide weekly and monthly reports and evaluated their performance. The defendants issued company email accounts (e.g., cferguson@txfb-ins.com) and official business cards to Agency Managers. Agency Managers were contractually required to work exclusively for Texas Farm Bureau and prohibited from subcontracting their duties without prior written approval.

The defendants forced Agency Managers to enter separate “Memorandums of Understanding” with County Farm Bureaus, requiring them to obtain office space, furniture, supplies, and clerical staff from the County Boards at designated costs. The defendants deducted these expenses from Agency Managers’ commission earnings. Additional deductions were made for advertising, equipment leases, and even “buyouts” to former Agency Managers that Ferguson and others replaced.

Agency Managers primarily recruited and supervised insurance agents, who were also classified as independent contractors. The defendants’ contracts with Agency Managers included provisions for tenure-based benefits after 5 to 10 years of service, as well as non-compete and non-solicitation clauses, indicating an employment relationship rather than true independent contractor status.

Injuries

Ferguson and other Agency Managers were misclassified as independent contractors, violating the Fair Labor Standards Act (FLSA). This misclassification resulted in several injuries:

  • Deprivation of overtime pay for hours worked beyond 40 per week, as required by the FLSA for non-exempt employees.
  • Failure by the defendants to make proper payroll tax withholdings and payments to the IRS on behalf of the misclassified workers.
  • Improper shifting of business expenses onto Agency Managers through forced contracts with County Farm Bureaus and payroll deductions.
  • Denial of other potential employee benefits and protections due to the misclassification.

Damages

The Plaintiff and other similarly situated Agency Managers seek the following damages:

  • Unpaid overtime wages for all hours worked over 40 per week during the past three years.
  • Liquidated damages equal to the amount of unpaid overtime, as provided for by the FLSA for willful violations.
  • Interest on all unpaid wages.
  • Payment of all required federal withholdings and taxes to the IRS that should have been made if they were properly classified as employees.
  • Costs and attorneys’ fees incurred in bringing the lawsuit.

Key Arguments and Proceedings

Legal representation

  • Plaintiff(s): Christopher Ferguson, Individually and on Behalf of All Others Similarly Situated
    • Counsel for Plaintiff: April L. Walter | Megan M. Mitchell  | Avi Moshenberg | Brian Alan Abramson | Emil Sadykhov | John Eddie Williams , Jr. | Nicholas Robert Lawson | Sean H. McCarthy | Warren A. Berlanga | William Benjamin Thomas | Kelly E. Cook
  • Defendant(s):Texas Farm Bureau Business Corporation | Texas Farm Bureau Casualty Insurance Company | Texas Farm Bureau Mutual Insurance Company | Texas Farm Bureau Underwriters |  Farm Bureau County Mutual Insurance Company of Texas | Southern Farm Bureau Life Insurance Company | Texas Farm Bureau.
    • Counsel for Defendants: Aaron Stenzler Weiss| Barry A. Moscowitz | Cathleen Bell Bremmer | Irma Reboso Solares | Julie A. Springer | Sara E. Janes | Stephanie A. Fichera | Cassie J. Dallas | Chantel Loren Cheatham | Daniel J. Graves | Laura Alaniz | Leslie Wong Richardson | Markham R. Leventhal | Stephanie Simons Rojo

Claims

The complaint alleged multiple violations of the Fair Labor Standards Act in a FLSA Overtime Lawsuit:

  • Failure to pay required overtime wages at 1.5 times the regular pay rate for hours worked over 40 per week.
  • Willful misclassification of Agency Managers as independent contractors to avoid paying overtime and other employee benefits.
  • Failure to maintain proper payroll records as required by the FLSA.

The Plaintiff filed both individual and collective action claims on behalf of all similarly situated current and former Agency Managers employed by the defendants in the past three years. The complaint sought class certification under Section 216(b) of the FLSA and court-authorized notice to potential collective action members.

The lawsuit requested that the Court:

  • Certify the case as a collective action and authorize notice to all potential class members.
  • Order the defendants to pay all unpaid overtime wages, liquidated damages, and interest.
  • Require the defendants to make proper payments of all federal withholdings and taxes to the IRS.
  • Award costs and attorneys’ fees to the Plaintiffs.
  • Grant any other relief deemed necessary and proper by the Court.

Defense

Southern Farm Bureau Life Insurance Company (SFB Life) denied the allegations in Christopher Ferguson’s complaint and asserted several defenses against his FLSA claims.

SFB Life denied Ferguson was an employee and claimed it did not misclassify him as an independent contractor. The company argued that Ferguson did not personally contract with SFB Life as an Agency Manager but did so through his corporation. SFB Life claimed Agency Managers were independent contractors under the FLSA as a matter of law and denied owing any overtime pay.

SFB Life also raised several defenses. It argued the lawsuit was barred by the statute of limitations, waiver, estoppel, unclean hands, and laches. The company claimed Ferguson was not similarly situated to other potential collective action members and was not an adequate class representative. SFB Life asserted that any FLSA violations, if found, were not willful and were made in good faith. The company claimed allowing the case to proceed as a collective action would violate its constitutional due process rights. SFB Life also argued it was entitled to offsets for any termination payments made to former Agency Managers. Overall, SFB Life denied Ferguson was entitled to any relief and requested judgment in its favor.

Jury Verdict

On September 6, 2024, the jury determined that the Plaintiffs did not prove they worked more than 40 hours in any workweek. This was while they were under contracts with the Defendant. Consequently, the jury returned a verdict in favor of the defendants in a FLSA Overtime Lawsuit.

Court Documents:

Available Upon Request