Three former Northwestern Mutual Life Insurance Company employees who filed a $200-million class-action lawsuit against the company claim they were deprived of minimum wages and overtime pay. The plaintiffs filed the lawsuit in federal court in San Diego, alleging Northwest Mutual misclassified them and hundreds of other employees as independent contractors to save money.
Milwaukee-based Northwestern Mutual denies the allegations, pointing to a similar trial it was involved in last year. In that case, a federal judge in Pennsylvania ruled in favor of Northwestern Mutual, saying it had the right to retain certain employees as independent contractors.
The plaintiffs named in the San Diego lawsuit contend that they had little to no autonomy and decision making capabilities. They also allege that they had to work more than eight hours per day and more than 40 hours per week without overtime. All three plaintiffs were employed as financial representatives of Northwestern Mutual, two of them in California and the other in Georgia.
In addition to financial compensation, the plaintiffs also seek the reclassification of hundreds of former and current Northwestern Mutual representatives from independent contractors to full-time employees.
Because the Fair Labor Standards Act extends only to company employees, some corporations will classify employees as independent contractors to avoid FLSA rules and save money. Corporations that classify employees as independent contractors not only avoid paying minimum wage and overtime, they also avoid paying state and federal taxes on those “exempt” employees.
Through its independently owned agencies, Northwestern Mutual employs approximately 7,000 financial representatives in the U.S. The company provides insurance, annuities, mutual funds, and, ironically, employee benefit services.