EEOC Takes up Sexual Harassment Cases Against Globe Life Subsidiary

Now, the Equal Employment Opportunity Commission has taken the rare step of revoking its dismissal of two sexual-harassment claims against American Income Life Insurance Co. and its star agency, the Arias Organization — complaints first reported by BI. Meanwhile, three current and former agents have filed fresh charges with the EEOC alleging sexual harassment, the use of racial slurs, and customer fraud at Arias. And multiple agents told BI about a dangerous, previously unreported hazing technique they say a former Arias manager used while at the firm: zapping agents with a dog’s shock collar.

Separately, a Pennsylvania insurance regulator has fined American Income Life $130,000 for engaging in deceptive consumer practices. Half of AIL offices in Pennsylvania are operated by Arias, but a consent decree signed by the state’s insurance commissioner does not specify which offices were engaged in the violations.

AIL is a wholly owned subsidiary of Globe Life, an $11.5 billion insurance company based in McKinney, Texas, and traded on the New York Stock Exchange. Warren Buffett’s Berkshire Hathaway owned 6.35 million shares of Globe when BI published its first investigation of Arias in late February. As of September 30, Berkshire owned only about 831,000 shares. Arias, which exclusively sells policies packaged by AIL, shuttered eight of its 21 offices during the same period and now operates 13 offices in eight states.

Trina Orlando, a spokesperson for the Arias Organization and its founder, Simon Arias, said Arias “does not condone or tolerate any fraudulent business practices.” She blamed “a group of ex independent contractors aiming to manipulate public opinion for financial gain” for the reports of consumer fraud.

A spokesperson for AIL and Globe Life did not respond to queries.

A rare EEOC reversal

Employment lawyers say it is highly unusual for the EEOC to restart a case it has dismissed. Nancy Erika Smith, the veteran employment lawyer who represented the former news anchor Gretchen Carlson in her sexual-harassment lawsuit against Fox CEO Roger Ailes, said she had never seen the agency revoke a dismissal. The agency takes on very few of the cases it receives, typically issuing “Right to Sue” letters to complainants rather than undertaking its own investigation. The EEOC’s decision last month to reopen the cases comes more than a year after the agency dismissed the charges of Renee Zinsky, a former agent in Arias’ Wexford, Pennsylvania, headquarters, and Abeni Mayfield, who had worked in Arias’ office in Columbia, Maryland, who each told Insider they were assaulted on the job while they were working as agents at Arias.

In letters to lawyers for Zinsky, Mayfield, Arias, and AIL last month, the EEOC’s Pittsburgh-area director, Deborah A. Kane, said the agency would be continuing its investigations of the two women’s charges. Amy Williamson, a Pittsburgh lawyer who represents Mayfield and Zinsky, said the EEOC recently interviewed Mayfield, asking her questions about her pay, training, meal breaks, and whether she was compensated as a 1099 contractor or an employee. (Kane said by email that she couldn’t confirm or deny the existence of charges filed with the agency.)

That line of questioning may signal that the agency is preparing to show that Arias misclassified its workers as contractors even as Arias set their job duties and schedules, Williamson said.

Orlando said the agency had no comment on the EEOC’s action “at this time.”

The distinction between a contractor and an employee is critical to whether the EEOC can pursue charges against Arias and AIL. The agency is authorized to act only on behalf of employees — people who typically receive benefits such as overtime and paid vacations and who file a W2 with their taxes. AIL and Arias contend that their agents are contractors — something that Zinsky, Mayfield, and the three women who recently filed cases with the EEOC dispute.

If the agency finds that Arias had an employer-employee relationship with its agents, it would then have authority to act on behalf of the Arias agents, opening the possibility of bringing a sexual-harassment lawsuit against Arias and AIL.

Williamson said that 29 former AIL agents, including 25 from Arias, had joined a lawsuit she first filed in June 2022 in which they seek to be reclassified as employees. AIL successfully moved the case into private arbitration, where legal filings are not available to the public.

Zinsky’s and Mayfield’s cases against Arias and AIL alleging gender discrimination and sexual assault were also moved to arbitration.

New allegations: shock collars, racial slurs

In the new EEOC charges, filed last month, three women made allegations as varied as sexual assault, consumer fraud, and discrimination against agents on the basis of disability and race. Sarah Reay, who works in the Morgantown, West Virginia, office, said in her EEOC charge that use of the N-word was “common” at Arias and that management said it would be “bad for culture” to post an anti-sexual-harassment policy in the workplace.

Orlando, the Arias spokeswoman, said that Arias had “no knowledge” of allegations the N-word was used and that “at no point” had the agency said awareness of policies would be bad for culture. Each office is required to “prominently display” a sexual-harassment policy, she said.

Meanwhile, BI has learned of fresh allegations about Arias’s toxic culture. Three former agents who worked under Mike Russin, the manager Zinsky has accused of sexually assaulting her, said he sometimes punished agents who did not meet their goals by shocking them with a dog shock collar. One former agent said he had seen about 10 of his colleagues shocked at various times in the Wexford office and at an offsite meeting at another colleague’s home. Ten former agents had previously described Russin and other managers engaging in violent or humiliating hazing activities.

“They screamed at first and then their whole body shook,” he said. “Some fell to the ground.”

Another former agent said a dozen or more agents once gathered in Russin’s office to watch a fellow agent shocked to the point “where he was almost ready to cry.” Many of her colleagues laughed, she recalled: “It was like torturing a person. It was sickening.”

A third described seeing Russin shock people in a large open office where agents made their customer calls. She said colleagues who’d had low sales numbers were sprawled on the floor, “convulsing like they were being electrocuted.”

“It still bothers me to think about it,” she said.

Russin’s lawyer, Benjamin Webb, did not respond to email inquiries.

Orlando said Arias had never received complaints about the use of a shock collar and “would never tolerate” such behavior. “It is somewhat incredible to us to imagine that this type of conduct would not have been reported previously to the Organization or law enforcement,” she said.

The third agent said Russin administered the shocks “in an open area where anyone walking through the Wexford office could see.

“It was just part of the culture at the office,” the agent said.

Fined over deceptive practices

In October, the Pennsylvania Insurance Department took action against AIL, fining the company $130,000 for violations that included submitting false documents, failing to properly handle claims, and using deceptive practices such as inducing clients to let their policies lapse — a practice known as “churning” that allows agents to sign clients up for a more expensive replacement policy and earn a fresh commission. In an October 12 consent decree, AIL agreed to comply with a series of recommendations, which included requiring agents to get customers’ written consent before altering an application.

The consent decree does not name the individual agencies in Pennsylvania whose files were examined, and Orlando says Arias has not received any violations or fines associated with the October action. The consent decree “has nothing to do with Simon Arias or the Arias Organization and to try to insinuate otherwise is false and misleading to the public,” she said.

But Arias has a large presence in Pennsylvania, running four of AIL’s eight offices in the state.

Diego Sandino, a spokesperson at the Pennsylvania Insurance Department, said he could not provide details about which AIL agencies were involved in the violations described in the report, citing a state confidentiality law.

Sandino said that the review, conducted by the department’s market-conduct group, was “targeted” and that marketing data suggested AIL was an outlier among similar lines of insurance in the state.

Before signing the decree, AIL told regulators it had not been properly credited for discovering and fixing certain issues on its own and that the coronavirus pandemic had affected claims-processing procedures. AIL also disputed some findings, including that it had acted improperly in its handling of policies that lapsed.

Diego Sandino, a spokesperson at the Pennsylvania Insurance Department, said he could not provide details about which AIL agencies were involved in the violations described in the report, citing a state confidentiality law.

Sandino said that the review, conducted by the Department’s Market Conduct group, was “targeted,” and that marketing data suggested AIL was an outlier among similar lines of insurance in the state.

Before signing the decree, AIL told regulators it had not been properly credited for discovering and fixing certain issues on its own and that the pandemic had impacted claims-processing procedures. AIL also disputed some findings, including that it had acted improperly in its handling of policies that lapsed.