In a class-action lawsuit filed in Illinois Federal court, African-American State Farm agents claim they are discriminated against because of “firm-wide policies and practices” which subject the agents to lower pay on a systemic basis as well as a high turnover rate. State Farm sought to have this case dismissed, but a federal judge in Illinois ruled in favor of the agents on July 1, 2022.
The lawsuit, claims that through the Term Independent Contractor Agents (TICA) program, State Farm requires that agents invest “substantial sums of their own money in rent, offices, marketing, sales leads, and hiring a team.”, after taking a 17-week course ran by State Farm. In return, State Farm made promises of “lucrative business opportunities and careers”, which the lawsuit argues does not happen very often for African-American agents because of policies and practices that State Farm allegedly employs.
One of these policies and practices is what the lawsuit refers to as “Race Matching”. In Race Matching, State Farm will try and assign customers to agents of the same race. Along with Race Matching, State Farm often puts “non-African American agents to territories and agency locations in more affluent areas”.
Another is when an agent leaves State Farm, whether that is for retirement or other reasons, State Farm will reassign these customers, allegedly to more non-African American agents.
On top of these, State Farm will give out bonuses based on performance. Because African-American agents are typically placed in lower-income areas for Race Matching, the lawsuit claims they are at a disadvantage since these potential clients in these areas will not have enough money to purchase financial products.
This rolls into the claim that State Farm subjects African-American agents to heightened scrutiny and allegedly “holds them to higher compliance standards.” than their non-African American counterparts.
While State Farm tried to have this case dismissed, the judge ruled in favor of the State Farm agents and ordered that State Farm must respond by July 25, 2022.
The case no. is 1:20-cv-01121 and is filed in the Northern District of Illinois of United States District Court.