Exclusivefocus - National Association of Professional Allstate Agents ...

negotiation is not part of an adhesioncontract, it is the sales pitch behind thecontract that entices new hires to becomeone of the “Good Hands” people. Whilepromising independence, prospectivenew hires are routinely misinformed anddeprived of critical career-deciding informationby many managers. Typically,the first time they see the EA contractis when they are asked to sign it. Worseyet, the most important document of all,the 300 page EA Supplement, is rarely,if ever, furnished before the contract issigned. And from the company’s pointof view, for good reason. Imagine howmany prospective agents would run forthe hills after realizing the extent of thecompany’s controls.New agents often have already visitedthe Allstate.com/careers Web sitewhere they are promised the ability to“run their own business.” Managers dolittle if anything to correct the misperceptionof independence. While it iscertainly the responsibility of the personsigning a contract to have full knowledgeof its contents, it is the misdirection of apromise of independence that softens theharshness of the Allstate “take it or leaveit” contract.It is this promise of “delivery,” therefore,that is a key element of adhesioncontracts. Software users will rememberthe acceptance screen that must be acknowledgedbefore a program is activated.And it is doubtful any of us have readthe Hertz rental contract while a herdof angry travelers awaits its turn behindus. We want the software, so we checkthe box; we want the car, so we sign thecontract. No negotiation allowed: takeit or leave it. There are many other examplesof adhesion contracts that affectour daily lives. It just takes an educatedeye to spot one. The preceding exampleshave been provided to give you a basicunderstanding of the concept. However,it is important to understand if a contractis truly an adhesion contract, it will befound unenforceable when challenged,or at least those parts that are deemedunfair or unreasonable.It is easy to see how this type of contractcan be used to enforce a high degreeof control with employees. Performanceexpectations are specified, as are workschedules and required hours of employment.But equally important to this typeof control is the ability of the employerto modify the contract thereby exerting awhole different level of control. Becauseit is disadvantageous for an employer toconstantly swap contracts, a reference toan addendum or supplement allowingfor change is incorporated into the bodyof the contract. Therefore, an employerneeds only needs to announce a revisionto its supplement to reassert control andremind workers of the tenuous “take it orleave it” nature of their jobs.When adhesion contracts are usedin conjunction with independent contractors,the all important threshold ofcontrol must be avoided. In the case ofthe Allstate contract, the goodwill valueaccrued after years of sweat equity aswell as the actual monetary value, areheld in abeyance unless and until all ofthe terms of the contract are agreed to,which amounts to control. Once executed,the constantly changing terms ofthe contract via the Supplement are usedto manipulate performance outcomesand/or to terminate the agent/companyrelationship, yet another example of theunbridled control exerted by the company.Remember the rich landlord and thepoor tenant described in the opening ofthe article? Is there any doubt as to therole the Allstate agent plays?Independent contractors, by IRSstandards, have to be treateddifferently than employees.Adhesion contracts fit easily into theemployer/employee relationship becausethe employer can rightfully exert employeecontrols. Employers can changework descriptions, work products, andeven require higher or more sophisticatedskill levels for employees to keeptheir jobs. The “take it or leave it” aspectof the adhesion contract must be employedjudiciously to keep employee moralein check, but is overwhelmingly thecontract of choice by many corporationswho use employees. But this level of controlcomes at a price: employer responsibilityfor payroll taxes and liability undervarious statutes aimed at regulating theworkplace are among the trade-offs.Independent contractors who signadhesion contracts are not intentionallytrying to convert themselves to employeestatus. Neither are all employers who useadhesion contracts trying to convert theirindependent contractors to employees. Agood example of this is Allstate’s closestcompetitor, State Farm. Their agentshave signed an adhesion contract, thebody of which contains a mere 6 pages.But that contract cannot be modifiedwithout the consent of both the agentand State Farm. It is this bilateral elementthat eliminates the possibility foreither side to exert an unchecked impositionof will. Said another way; State Farmcannot exert control over its agents. StateFarm agents have no quotas, no set officehour requirements, do not have to callforward office phones, are not required toattend mandatory meetings, and are notgrouped into teams required to achievecorporate goals. The State Farm contractrepresents only a gateway for the agentsto perform their duties, whereas the Allstatecontract embodies every aspect ofcontrol found where corporations useemployees.The better, State Farm way.Every “Good Hands” agent is awareof the severity of the employee controlsthat Allstate utilizes. Allstate imposesrequired office hours, annual employeestylereviews, quotas, mandated meetingsand more. After operating under Allstate’semployee-style contract for nearlyten years, many agents are beginning toexpress their frustration, as evidenced bythe recent Agency Relationship Survey.But, few, if any, of the Allstate sales forcerealize there is an alternative to the unilateral,employee agent Allstate contract.After reading this article, every agent willknow that there is another contract thatnot only conforms to IRS standards, butis readily used by its closest competitor,State Farm. Printed below are completesections as well as direct excerpted quotesfrom the State Farm Agent Agreement.“PreambleThe purpose of this Agreement is to reduceto writing the objectives, obligationsand responsibilities essential to the relationshipbetween the Agent, operating as an independentcontractor, and State Farm. It isSpring 2009 Exclusivefocus — 29