Circuit Court Rules Insurance Agents Are Not “Employees” Under ERISA
The Sixth Circuit’s decision turned on its analysis of the Darden factors for determining who qualifies as an employee under ERISA, as set forth in the Supreme Court’s Nationwide Mutual Insurance Co. v. Darden opinion, and the court’s review of those factors as conclusions of law rather than fact. The court found that the district court incorrectly applied the standards relating to:
- the skill required of an agent; and
- the hiring and paying of assistants.
According to the court, the correct application of the Darden standards weighed in favor of independent-contractor status. The Sixth Circuit also found that the district court failed to give sufficient weight to the parties’ written agreement, which expressly stated the parties’ intent to establish an independent-contractor relationship, and the factors relating to the “financial structure of the company-agent relationship,” including the source of the instrumentalities and tools, method of payment, provision of employee benefits, and agents’ tax treatment. The Sixth Circuit explained that, had the district court “properly weighed those factors in accordance with their significance, it would have determined that the entire mix of Darden factors favored independent-contractor status.”