Anne Bucher  |  July 22, 2020

Category: Insurance

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Allstate Insurance Company logo regarding the Allstate Insurance class action lawsuit filed

Allstate Insurance Company of Canada has been hit with an $80 million class action lawsuit accusing the insurer of failing to pay commission-based employees overtime, public holiday and vacation pay. Allstate is an insurance company that sells property and automobile insurance.

Sung Taek Lee of Ontario filed the Allstate Insurance agent class action lawsuit in May 2020. He says he worked as an Allstate Business Development Agent from April through Oct. 2019.

As an Allstate Insurance agent, Sung’s pay reportedly consisted of a base salary, plus commissions and a performance bonus. According to the Allstate Insurance class action lawsuit, the base salary “was characterized as an advance against future commissions.” The commissions and performance bonus were earned based on his ability to sell Allstate Insurance auto and home insurance policies.

Sung claims in the Allstate Insurance class action lawsuit that the vacation and public holiday pay that he received was based on his base salary and not his total compensation as required by the Employment Standards Act. He also says that he did not receive overtime pay as required by the ESA when he worked more than 44 hours in a week.

According to Sung, he is not alone. He filed the Allstate Insurance class action lawsuit on behalf of himself and a proposed Class of all commissioned Allstate Insurance employees who were paid for vacation and public holiday pay based on their base salary instead of their total earnings, and who were not paid overtime (and were not exempt from overtime pay) when they worked more than 44 hours in a week.

Under the Employment Standards Act, an employee with variable compensation is to receive an average of what they earned in the preceding 20 days for public holiday pay. For vacation pay, an employee must receive at least 4% of the wages earned by an employee with less than five years seniority and 6% for employees with greater than five years seniority.

Sung reportedly received a base salary of $45,000, which allegedly consisted as an advance against his future commissions. When his sales were high enough, he would earn commissions or a bonus in addition to his base salary.

According to the Allstate Insurance agent class action lawsuit, Sung was entitled to 1.25 days of vacation for each month he worked. However, he says that when he was on vacation, he was paid his daily rate based on his $45,000 base salary without consideration for the money he earned through commissions and bonuses.

Sung claims he was also underpaid for statutory holidays when the Allstate Insurance Company office was closed. His holiday pay was reportedly calculated based on his $45,000 base salary instead of the total amount of his earnings as an Allstate insurance agent.

Allstate Insurance Company also systematically denied its employees overtime pay, Sung alleges. Although Allstate insurance agents were required to work 37.5 hours each week in the office, they could only earn a performance bonus if they met very high sales targets, which could only be attained by following up with clients after business hours.Man wearing Allstate Insurance shirt regarding the Allstate Insurance Company class action lawsuit filed

“Allstate has a systemic policy of recruiting employees by telling them about the possibility of high bonus incomes, while knowing that it could only be achieved by working in excess of 44 hours per week,” the Allstate insurance agent class action lawsuit alleges.

Even though Allstate knew that many of its employees were working overtime, the company allegedly had no written policies regarding overtime and no centralized system for record keeping.

“Allstate had a systemic policy of never paying overtime premium pay to its employees,” Sung alleges in the Allstate Insurance class action lawsuit. “There was never any information provided by Allstate to its employees suggesting that they could ask for overtime pay.”

Further, Allstate fails to mention overtime pay at all in the Compensation Package document it provides to employees, Sung claims in the Allstate Insurance Company class action lawsuit.

The ESA required employers to pay 1.5 times an employee’s regular rate for each hour worked in excess of 44 hours in a work week, according to the Allstate Insurance agent class action lawsuit. The amount of overtime pay is to be calculated by taking the total earnings per week (including base salary and incentive pay) and dividing it by 44 hours, Sung says.

Sung has asked the court to order Allstate Insurance Company to pay Class Members for the overtime, public holiday and vacation pay they should have received while employed with the insurer.

In addition to seeking $80 million in general damages on behalf of the Class Members, Sung is seeking an additional $80 million in punitive, aggravated and/or moral damages.

What do you think about this Allstate Insurance class action lawsuit? Do you think commission-based Allstate Insurance employees should be compensated for overtime, public holiday and vacation pay? Tell us your thoughts in the comment section below! 

Sung is represented by Andrew Monkhouse and Alexandra Monkhouse of Monkhouse Law.

The Allstate Insurance Company Class Action Lawsuit is Sung Taek Lee v. Allstate Insurance Company of Canada, Case No. CV-20-00641242-00CP, in the Ontario Superior Court of Justice, Canada.

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2 thoughts onAllstate Insurance Company Accused of Shortchanging Salespeople

  1. Mr/Wayne Jenkins says:

    Add me to

  2. Mr/Wayne Jenkins says:

    Add me to the class action

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