The Allstate Class Action Lawsuit

Reviewed by Matthew J. Goldstein.

Wallace Miller is pursuing a class action lawsuit against Allstate Insurance Company in the U.S. District Court for the Central District of California. Plaintiffs allege that Allstate illegally misclassified its “exclusive agent” workforce in California as independent contractors—rather than as employees—causing the agents to incur business expenses that should have been paid by Allstate. As a result, the plaintiffs allege that Allstate violated California Labor Code § 2802, which requires employers to reimburse employees for all necessary job-related expenses.

On March 28, 2025, the District Judge granted the plaintiffs’ Motion for Class Certification and certified the lawsuit as a class action. Class members will be contacted in the coming weeks with more information.

Allstate lawsuit updates

April 2025 — We are excited to announce that a federal district judge granted Wallace Miller’s clients’ motion for class certification. In its order of March 28th, the district court appointed Wallace Miller’s clients—the plaintiffs—as class representatives and Wallace Miller attorneys Edward A. Wallace, Mark R. Miller, and Matthew J. Goldstein as well as their co-counsel at Crueger Dickinson LLC and Nelson & Fraenkel LLP were appointed as class counsel. 

We are honored to be appointed as class counsel on this lawsuit and look forward to continuing to fight for justice and compensation for our clients and the class. 

November 19, 2024 — Wallace Miller and its co-counsel at Crueger Dickinson have asked a federal district judge in the U.S. District Court for the Central District of California to grant their clients’ Motion for Class Certification. They are requesting that the action be certified as a class action, that the plaintiffs be appointed as class representatives, and that Wallace Miller attorneys be appointed as class counsel.  

November 7, 2024 — At the November 7, 2024 hearing in Santa Ana, CA, Wallace Miller partner Edward A. Wallace argued that the opinions of an expert called by Allstate should be excluded as irrelevant. 

October 2024 — Plaintiffs claim that Allstate misclassified them as independent contractors rather than employees in violation of California law and failed to reimburse them for the business expenses they incurred in running Allstate’s business.  

Meet the Allstate Insurance Company

Allstate Insurance Company is a Fortune 500 property and casualty company that sells insurance across the U.S. and around the world. With its main offices in Northbrook, Illinois, it is one of the five largest insurance companies in the U.S. Between 2020 and 2022, Allstate paid more than $11 billion in dividends to its parent company, the Allstate Corporation. 

The auto and property insurance company operates a system of agents that sell insurance through agencies, the internet, and call centers.  

The system of “exclusive agents”

Many of the individuals selling insurance through this system are hired by Allstate as “exclusive agents.” The company classifies them as independent contractors and requires them to sell exclusively for Allstate. 

As a result of the independent contractor designation, these exclusive agents are expected to bear all or most of the business expenses of the agency locations that they operate. These expenses often include renting office space, advertising and marketing costs, hiring and paying staff, setting up phone lines and internet, buying required Allstate-approved computers and Allstate software, and other costs associated with operating an agency. 

Employees or independent contractors?

Plaintiffs in the pending class action lawsuit against Allstate allege that the insurance corporation is abusing the independent contractor designation by requiring exclusive agents to pay business expenses. 

Independent contractors are common in the insurance industry. These individuals typically own their own agencies and client lists, sell insurance for multiple competing insurance companies, and retain their client information and intellectual property if they stop working for a given insurance provider. In fact, Allstate also sells its products through these types of agents—which they refer to as “Independent Agents” (as opposed to the “exclusive agents” at issue in this case). 

Unlike Allstate’s Independent Agents, the exclusive agents hired by Allstate operate like at-will sales employees while bearing the costs of independent contractors. 

These exclusive agents: 

• Don’t own or operate their own business independent of Allstate’s network. Allstate maintains financial and administrative control—down to owning the agencies’ phone numbers and website—and controls client and policy information. 
• Don’t own their own book of business. In the insurance industry, a “book of business” refers to a directory of a company or agent’s accounts, including past and present client information and all insurance policies the agent has written. Books of business are the primary asset through which agents make money and keep track of their customer relationships, renewals, and expirations. Exclusive agents are required to build their books of business at their own expense, but the information they acquire and the customer relationships they build legally belong to Allstate. 
• Can be fired “at will” (or for any legal reason). If this occurs, the agent loses everything they’ve invested in the agency and all business expenses, while their book of business, agency, and customers remain Allstate property. 
• Don’t control what they sell. Allstate determines the products agents can offer, the terms of their agreements, and their prices. Exclusive agents are only permitted to sell Allstate products. 
• Don’t control their compensation. Allstate determines what the agents are paid, from commission percentages to bonuses, and can change their compensation at will. 

• Don’t control the details of their agency’s operation. Allstate dictates their online presence, agency location, agency size, and what they can sell. 
• Are required to sign noncompete provisions that limit their ability to continue working in insurance if they quit or are fired. 

In short, the exclusive agents are economically dependent on Allstate and operate as employees of the insurance company—but are required to pay expenses as though they run independent businesses. This has put many exclusive agents in positions of significant financial hardship.  

Allstate recently cut the commissions on auto policies sold by exclusive agents by 84 percent while restricting the variety of products they could sell. But there was no change in the expenses that agents were expected to bear. As a result, many agents—including the plaintiffs involved in our lawsuit—suffered significant losses. Many have had to close their agencies, but still have unpaid debts due to expenses they incurred working for Allstate, including paying for office leases. 

The Allstate insurance class action lawsuit

Section 2802 of the California Labor Code prohibits employers from passing on the expense of running a business to their workers. This provision doesn’t apply to independent contractors—but while Allstate classifies their exclusive agents as such, California state law has a specific definition governing the distinction between employees and independent contractors. Plaintiffs allege that due to the structure and requirements of the exclusive agent job, and the nature of the agents’ relationships with Allstate, the agents have been treated as employees of Allstate, rather than as true independent contractors. 

These exclusive agents are therefore owed reimbursement for all of the expenses they paid on behalf of Allstate’s business. Plaintiffs are also calling for an end to the corporation’s unlawful and unfair practices regarding independent contractors. 

Plaintiffs are fighting to certify a class action lawsuit in the United States District Court in the Central District of California representing at least 900 individuals impacted by the unfair exclusive agent policies. A class action will make it possible for these plaintiffs to pool financial and legal resources to stand up against the significant resources of Allstate and hold them financially accountable for violating Section 2802. 

Contact Wallace Miller

Individuals who have worked as exclusive agents with Allstate and had to pay business expenses on behalf of the company may be eligible to participate in the class action lawsuit. Following the class certification in March 2025, Wallace Miller and other plaintiffs’ law firms are reaching out to those who are able to join the lawsuit as potential plaintiffs.

We are no longer accepting new Allstate class action cases. Eligible individuals will be contacted for participation. If you have any questions, you can reach out to our office at (331) 425-802.