vs. ) CASE NO. 89-5711
CHARLES W. CROWELL, )
Respondent. )
Respondent Charles W. Crowell's motion to dismiss and respondent State Farm Mutual Automobile Insurance Company's (State Farm's) motion in opposition to petition for relief from unlawful employment practices and to dismiss came on for hearing in Pensacola, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on April 24, 1990. The parties filed proposed orders on June 4 and June 11, 1990.
For Respondent Kathryn E. Errington and Crowell: C. Miner Harrell
Harrell, Wiltshire, Swearingen, Wilson and Harrell, P.A.
For Respondent Mary W. Jarrett
Whether respondent State Farm employed petitioner at the time respondent Crowell allegedly subjected her to sexual harassment or otherwise discriminated against her on account of her gender?
These proceedings arise on Donna Clark's petition for relief from unlawful employment practices, in which she alleges that Charles W. Crowell subjected her to a "series of unwanted sexual harassment . . . in violation of Fla. Stat.
760.10(3)," that he acted "in his capacity as agent for State Farm" and that "the respondents can be considered a single employer."
Petitioner filed her petition for relief from unlawful employment practice in the wake of the "DETERMINATION: NO JURISDICTION" entered by the Florida Commission on Human Relations on September 14, 1989. Respondent Crowell has moved to dismiss the petition on grounds he did not employ 15 persons at any time Ms. Clark was in his employ, and State Farm seeks dismissal on grounds Crowell, not State Farm, was Ms. Clark's employer.
Before the motions came on for hearing, the parties entered into a prehearing stipulation which, together with evidence adduced at the motion hearing, is the basis for the following
Respondent Charles W. Crowell, a State Farm agent under the terms of an agency agreement declaring him an independent contractor, has never employed 15 or more employees at any one time. During the 20 weeks next before petitioner Donna Clark left his employ, he had no more than three full-time and two part- time employees.
As a State Farm agent, Mr. Crowell is contractually bound not to represent other insurance companies. State Farm, which has employed more than
15 persons at all pertinent times, prescribes policy forms, premiums, fees and charges for insurance, and prescribes underwriting rules its agents (and so their employees) must follow.
Most premiums reach State Farm in the form of checks drawn by insured persons. But, as required by state law and his agreement with State Farm alike, Mr. Crowell maintains a separate premium fund account, into which customers' cash premium payments are deposited.
Moneys are disbursed directly from this account to State Farm, which has the right to audit the account. State Farm determines Crowell's compensation based on the amount of premiums it receives on policies he has written, and writes him checks accordingly. At year's end, State Farm reports these payments to the IRS on a form 1099, not on a W-2 form. Mr. Crowell receives no compensation directly from the premium fund account.
When an agent retires and in certain other instances, State Farm allocates policies among remaining agents, while honoring preferences policyholders express for particular agents. But it does not restrict agents to a particular territory or otherwise dictate where its agents conduct business.
State Farm reserves the right to approve any advertising by an agency using State Farm's name or logo. But certain business cards bearing the logo are "pre-approved," except for the name of the agent or other employee in the agent's office which is to appear on the card.
Mr. Crowell sets his own hours and it was he who decided the office would open at nine and close at five. Some days he does not open his office for business, even though State Farm offices are open.
If he closes his office on days State Farm is closed, it may well be because he cannot do business with State Farm. But he is free to keep office hours on such days if he chooses. His compensation does not depend directly on
the amount of time his office is open, or on the amount of time he spends at work.
Mr. Crowell, not State Farm, decides whom to employ in his office, and sets hours, salaries and benefits for these employees. He, not State Farm, personally pays wages and benefits (if any), along with employment taxes for which employers are liable on account of their employees. But, on unemployment compensation tax forms, gives as the employer's name "CHARLES W. CROWELL STATE FARM INSURANCE COS" and signs as Charles W. Crowell Agent." Respondent's Exhibit No. 2.
Mr. Crowell drew salary checks in favor of Ms. Clark and other employees in his office on his own business checking account, which is not subject to audit by State Farm. These salary checks did not bear State Farm's name or logo.
The parties have stipulated, as follows:
"5. Crowell's office is located at 908 Michigan Avenue in Pensacola, Florida, and he personally owns the property and building where his office is located. State Farm has no interest or property rights in this facility.
The only forms, manuals, and other documents located in Crowell's office which are the property of State Farm are insurance product information, including names of policyholders. The equipment, furniture and other supplies located at or used in Crowell's office are owned or leased by Crowell, and not State Farm.
Crowell personally hired Donna M. Clark, and State Farm took no part in, exercised no control over, and had no input regarding Crowell's decision to hire Ms. Clark.
Crowell sets the work hours, wages and benefits of his employees, including the number of employees employed by his business, without consultation with or the approval of State Farm.
Crowell personally pays the salaries or wages and employment taxes, including Florida Workers' Compensation, Unemployment Compensation, Social Security (FICA) and federal tax withholding, on all of his employees, including Ms. Clark, and State Farm pays no salaries to or taxes on behalf of any of Crowell's employees.
State Farm provides no benefits to the employees of its State Farm agents, and Crowell decides whether employment benefits such as health or life insurance are provided to Crowell's employees, including whether there is any cost to the employee. Such policies can be purchased by the State Farm Agent from State Farm, if he chooses to do so.
Crowell, not State Farm, maintains all personnel records on his employees, including Ms. Clark. State Farm does not have any personnel records as to petitioner Donna Clark.
Crowell's business is to sell State Farm policies and service State Farm policyholders.
State Farm prescribes policy forms, premiums, fees and charges for insurance, and prescribes underwriting rules pertaining to writing State Farm insurance.
Employees of State Farm Agents such as Mr. Crowell are not required to attend State Farm meetings or training sessions. State Farm offers training on topics selected by State Farm Agents, to which the State Farm Agents, such as Mr. Crowell, may choose to send their employees, for a fee payable to State Farm.
State Farm requires Crowell to maintain a premium fund account, which is a trust account for the deposit of insurance premiums which are the property of State Farm.
All cash premiums from policyholders are deposited to the premium fund account, and premium funds are promptly forwarded to State Farm. Premiums paid by check are sent directly to State Farm, and the large majority of premiums received by Crowell are by check. The premium fund account is subject to auditing by State Farm.
As part of the audit of the premium fund account, State Farm develops a profit and loss statement which compares the claims experience of policies serviced by the Agent to the premiums generated by those policies and thus reflects the profit or loss to State Farm. Such profit and loss statement is for State Farm's own use in determining its own profitability and does not show or indicate the success of Mr. Crowell in his personal business as an insurance agent.
Crowell maintains separate accounts for his personal and business funds which are not subject to any auditing by State Farm.
Crowell is not paid for his sales activities out of the premium fund account, but is paid on a commission basis after all premium funds have been deposited with State Farm.
Crowell personally directed Clark to attend certain training courses conducted by the local district manager of State Farm on underwriting insurance and product knowledge only.
State farm does not require State Farm Agents to send their employees to training courses conducted by State Farm.
State Farm does not allow employees of State Farm Agents to attend training courses concerning financial management or conduct of the agency, and Clark did not attend any such courses."
Although not stipulated by the parties, evidence showed that, at one of the training courses Ms. Clark attended, a speaker told employees in attendance that they comprised State Farm's "front line." State Farm decides, with input from its agents, which courses and seminars to offer, but it is up to individual agents to decide who, if anybody, attends from their offices.
State Farm employees known as agency managers coordinate operations of agents in their assigned area. When the agency manager decides another agent is needed, he recruits a trainee, who works for State Farm for two years or so (unless discharged earlier.) After this period of training, State Farm offers most trainees the opportunity to terminate employment and become agents. With
State Farm's permission, an agent may incorporate. Even as independent contractors, agents receive contributions from State Farm toward personal insurance premiums, which are treated as part of the agents' income.
The State Farm manager for the Pensacola area while Ms. Clark worked in Mr. Crowell's office offered bonuses to agents' employees who won contests, although this violated company policy. Ms. Clark did not, however, participate in any contest or receive a bonus.
A number of unlicensed people in Mr. Crowell's office sign policies when he is unavailable. Because this practice is widespread, Insurance Commissioner Gallagher has insisted that insurance agents see that more office staff are licensed. Accordingly, State Farm's agency manager has asked State Farm agents to identify office personnel for licensure.
Employees of a State Farm agency must be approved by State Farm, in order to obtain licenses. After an agent identifies an employee and the employee sits for an examination, State Farm does a background check and makes its decision about sponsorship.
Ms. Clark did not seek licensure as an insurance agent, although she was among those who signed policies. In the course or her work, she spoke directly with underwriting personnel in Jacksonville, on Mr. Crowell's behalf or with his acquiescance.
CONCLUSIONS OF LAW
Florida law forbids any employer, defined as any corporation or other "person employing 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year, and any agent of such a person," Section 760.02(6), Florida Statutes (1985), see Regency Towers Owners Ass'n, Inc. v. Pettigrew, 436 So.2d 266 (1st DCA 1983) pet. den. 444 So.2d 417 (Fla. 1984) to "discharge . . . or to otherwise discriminate against any individual with respect to compensation, terms, conditions or privileges of employment, because of such individual's . . . sex." Section 760.10(1)(a), Florida Statutes (1989).
Ever since the decision in School Board of Leon County v. Hargis, 400 So.2d 103 (Fla. 1st DCA 1981), federal cases have been looked to for guidance in this area. See Anderson v. Lykes Pasco Packing Co., 503 So.2d 1269 (Fla. 2d DCA 1986). In their prehearing stipulation the parties agreed: "For State Farm to be considered Clark's employer, State Farm must have interrelated operations, management, centralized control with or over Crowell (FCHR Determination of September 14, 1989; [See Radio & T.V. Local 1264 v. Broadcast Services of Mobile, 380 U.S. 255, 256 (1965)]) see also Baker v. Stuart Broadcasting Co.,
560 F. 2d 389 (8th Cir. 1977); Childs v. Int'l Bhd. of Electrical Workers, 719
F. 2d 1379 (9th Cir. 1983); York v. Tennessee Crushed Stone Ass'n, 684 F. 2d 360 (6th Cir. 1982); Owen v. Western Electric Co., 21 Fair Empl. Prac. Cas. (BNA) 979 (M.D. N.C. 1979); Carter v. Shop Rite Foods, [Inc.] 47[0] F. Supp. 1150 (N.D. Tex. 1979); Kathleen M. Konieczny v. D.L. Derrickson, a[nd] State Farm Mutual Automobile Insurance Co. Agent, Case No. 86-5083, 43 Fair Empl. Prac, Cas. (BNA) 251 (S.D. Ill. 1987)."
Respondent's motions raise the question whether State Farm or Charles Crowell or both (on the theory that their existence as separate business entities is a sham) were Ms. Clark's employer for purposes of the Florida Human Rights Act of 1977. Mr. Crowell clearly acted as State Farm's agent for
purposes of selling insurance. The narrow issue here is whether he acted as State Farm's agent in employing Ms. Clark. The rule is that:
only an agency relationship which establishes an "employment nexus" will suffice. In other words, one . . . must have been the agent of the other with respect to employment practices.
Fike v. Gold Kist Inc., 514 F. Supp. 722, 728 (N.D. Ala.) aff'd 664 F. 2d 295 (11th Cir. 1981); Carter v. Shop Rite Foods, Inc., 470 F. Supp. 1150 (N.D. Tex. 1979). The evidence showed that State Farm was far enough removed from the employment relationship between Mr. Crowell and Ms. Clark to escape responsibility for Mr. Crowell's acts or omissions as an employer. This result is fully consonant with all the authorities that have come to the hearing officer's attention. E.g., Kathleen M. Konieczny v. D. L. Derickson and State Farm Mutual Automobile Insurance Co., No. 86 5083, 43 F.E.P.C. 251 (S.D. Ill.; Jan. 16, 1987). Respondents cite the following:
Debora Ann Locanti v. State Farm Insurance Co., Case No. 7/1070287 (20436) 092987, 22A870608, (Ohio Civil Rights Commission) dismissed November 25, 1987 on the basis of lack of jurisdiction; Kathryn K. Davis v. State Farm Insurance Co., Docket No. E-44242X (Pa. Human Relations Commission), dismissed December 15, 1988 based on lack of employer/employee relationship; Marcia L. Williams v. State Farm Insurance Co., Docket No. E-46452-D (Pa. Human Relations Commission), dismissed December 15, 1988 for lack of employer/employee relationship; Nancy M. Dowd v. State Farm Insurance Co., EEOC Charge No. 36C-88- 0421, dismissed by EEOC on October 31, 1988 because State Farm is not the respondent. Charging Party's employer is an independent agent employing less than 15 employees.
Although State Farm "did have [significant] control over the independent [agents], the control did not extend into one area - the area of personnel - which is indispensable to the imposition of liability." Carter v. Shop Rite Foods, Inc., 470 F. Supp. at 1161. Indeed, insurance agents in circumstances comparable to Mr. Crowell's have been unable to persuade the courts that they themselves should be deemed employees of the insurance companies they represent, Mary Ann Dake v. Mutual of Omaha Insurance Co., No. C84-808 (N.D. Ohio; Nov. 29, 1984); see Jenkins v. Travelers Insurance, Co., 436
F. Supp. 950 (D. Or. 1977), for employment discrimination purposes.
That the Florida Commission on Human Relations enter a final order dismissing the petition.
DONE and ENTERED this 3rd day of August, 1990, in Tallahassee, Florida.
ROBERT T. BENTON, II
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of August, 1990.
Donald A. Griffin, Executive Director Florida Commission on Human Relations
WILSON & HARRELL, P.A.
P.O. Drawer 1832 Pensacola, FL 32501
P.O. Box 40089 Jacksonville, FL 32203
