Three Californian Plaintiffs have sued Premier Financial Alliance for alleged violations of Californian Labor Law.

Plaintiffs Aneela Rafique, Haidee Collado and John Soo-Hoo are former PFA distributors (Associates).

  • Aneela Rafique joined PFA in November 2013

  • Haidee Collado joined PFT in November 2010

  • John Soo-Hoo joined PFA in April 2014

Named defendants in the February 17th filed case are Premier Financial Alliance, founder and CEO David Carroll, and Executive Chairman David Wu.

Rafique, Collado and Soo-Hoo (Plaintiffs) argue that PFA has failed to provide them with benefits they are legally entitled to under Californian law.

PFA touts the fact that its Associates, such as Plaintiffs, are independent contractors that own their respective businesses.

PFA provides its Associates with virtually none of the benefits employees are legally entitled to.

Associates are required to pay their own taxes, pay their own expenses, and pay for their own insurance.

Plaintiffs also contend that, despite the representation PFA distributors are independent contracts, PFA exerts control over so-called “independent” business owners.

Although PFA labels their Associates as independent contractors, PFA’s treatment of and control over the Associates reveal otherwise.

PFA precludes Associates like Plaintiffs from being involved with any other business opportunity, despite the fact Associates are supposed to be treated like independent contractors.

Furthermore, when Associates achieve the rank of “Qualified Field Director”, PFA’s requirements augment, requiring Associates to:

  1. attend all company conventions, meeting and training events;
  2. 2. supervise, police, and train everyone in the Associate’s downline to comply with the company’s Associate Marketing Agreement and Compliance Manuel [sic];
  3. 3. not recruit or speak of other business opportunities to Associates even if the opportunity has nothing to do with life insurance; and
  4. work his/her business full time.

If Associates fail or refuse to comply with these demands, then the Associate’s business will be confiscated by PFA and the Associate will be subject to termination without any opportunity to appeal.

Moreover, the Associate’s commission will be withheld and, in some instances, such as this case, the Associate will be fined thousands of dollars.

Plaintiffs assert that due to the control PFA exerts over its distributors, they aren’t so much “independent contractors” as they are employees.

Problems for the Plaintiffs began in 2021, when PFA

announced that the thresholds required to advance to the higher director positions (i.e. Area Field Director, National Field Director, and Executive Field Director) had changed.

After joining PFA, Plaintiffs climbed to the ranks of “Regional Field Director and/or National Field Director”.

For context on PFA’s ranks within its MLM opportunity, refer to BehindMLM Premier Financial Alliance review.

If an Associate reached (the new thresholds) by January 1, 2022, the Associate would be promoted to a higher ank.

However, after making that announcement, PFA’s officer, Jack Wu, communicated with Rafique’s upline, Hermie Bacus, and informed him that the deadline to meet the threshold would be extended for Rafique to January 31, 2022.

While others were required to satisfy the January 1st deadline, PFA, through Wu, made an exception for Rafique and extended the deadline by thirty days.

Rafique claims she met the new threshold requirements by the January 31st deadline, but

PFA refused to promote Rafique to her rightful Executive Field Director position … keeping Rafique at the National Field Director Level, which earns 2% less in commissions than the Executive Field Director position.

As such, Rafique was economically damaged in an amount to be determined at trial.

Plaintiffs allege they were in Hermie Baccus’ “inner circle” (Plaintiff Collado was Bacus’ upline). They further allege PFA began investigating Hermie Bacus on or around April 2022.

This investigation is alleged to have been retaliatory in nature, following Bacus questioning

his status as as an independent contractor due to PFA’s excessive control over his business.

PFA investigation into Bacus resulted in

the irrational decision to demote Bacus, suspend his activity with the company, and fine him $25,000 a month for twelve months simply because he was involved with another business opportunity with his inner circle.

On LinkedIn Bacus cites himself as a Field Chairman with FinFit Life.

Rafique, Collado and Soo-Hoo (right) are also FinFit Life distributors.

After receiving these sanctions, Bacus resigned from PFA (treating the sanctions as a constructive termination) and filed suit against PFA and its owner, Carroll. That matter is currently in arbitration.

Plaintiffs assert that they were approached by David Carroll and Jack Wu to provide “manufactured evidence” against Bacus.

Knowing that it was facing a potential lawsuit, PFA, through Carroll and Wu, manufactured evidence against Bacus to support its decision for sanctions.

In doing this, Carroll and Wu went to Bacus’ inner circle (i.e. specifically Rafique and Soo-Hoo) and requested them to essentially provide damning information about Bacus to retroactively support their decision to reprimand Bacus.

Plaintiffs refused to cooperate, allegedly prompting PFA to send

Plaintiffs an associate disciplinary action form, alleging violations of the PFA promotion guidelines set forth in the Compliance Manual.

Specifically, PFA reprimanded Plaintiffs for participating in outside business activities.

The disciplinary action form set forth the “Company Judgment”, stating that Plaintiffs, effective immediately, would be demoted, fined thousands of dollars for twelve months, and be ineligible fro bonuses, deferred compensation, or public recognition.

Plaintiffs content that had they actually of been independent contractors, PFA wouldn’t have been able to prevent them “seeking business opportunities elsewhere”.

Furthermore, according to California law, the restrictive covenants that served as the basis for the above-mentioned penalties are legally unenforceable.

Rafique, Collado and Soo-Hoo resigned as PFA distributors across April 29th and April 30th.

As a result of Defendant’s actions, Plaintiffs have been damaged in an amount to be determined at trial.

Fifteen claims in Plaintiff’s lawsuit against PFA pertain to:

  • a declaratory judgment that the non-compete clauses in PFA’s distributor agreements are unenforceable;
  • a declaratory judgment that the requirement distributors “supervise, police, and train” their downlines in PFA’s distributor agreements are unenforceable;
  • a declaratory judgment that PFA misclassified Plaintiffs as independent contractors when they are in fact employees;
  • breach of written contract;
  • violation of California’s Fair Labor Standards Act;
  • failure to pay wages upon termination, in violation of California’s Labor Code;
  • failure to pay wages upon resignation, in violation of California’s Labor Code;
  • willful misclassification, in violation of California’s Labor Code;
  • waiting time penalties, in violation of California’s Labor Code;
  • failure to pay meal and rest periods, in violation of California’s Labor Code;
  • failure to pay minimum wage and overtime, in violation of California’s Labor Code;
  • failure to reimburse for expenses, in violation of California’s Labor Code;
  • fraudulent misrepresentation;
  • wrongful discharge in violation of public policy; and
  • violation of of Business & Professions Code

Plaintiffs seek an injunction against PFA, Carroll and Wu, as well as damages and legal costs.

Looking at the case docket, PFA filed a Motion to Compel Arbitration and stay the case on April 10th. Plaintiffs filed an opposition response on April 19th, with a decision on PFA’s motion pending at time of publication.

My personal thoughts whenever the subject of whether MLM distributors are employees is if you treat your distributors like employees, they’re employees.

MLM companies can’t claim distributors are independent contractors and then exert conditions such that they govern distributor’s business to the extent the distributors only have superficial control.

Either distributors are independent contractors, in which case MLM companies need to be “hands off”, or they’re employees subject to the legal requirements that brings with it.

That said, I’m not sure how illegal conduct by distributors would be handled if distributors are reclassified as employees. As it stands if a distributor does something illegal (unsubstantiated medical claims, income claim marketing etc.), the distributor and MLM company is held liable.

It’d be interesting to see, if distributors are truly independent contractors, whether MLM companies would continue to be held liable for distributor conduct.

First things first though, we need a definitive ruling on the matter.

This isn’t the first time California’s labor laws have been used to reclassify MLM distributors as employees. The other two cases I’m aware of were filed against Nerium (now Neora) and Amway.

The Nerium case was filed in 2018 and dismissed in 2019 on jurisdictional grounds.

The Amway case was filed in Alameda County Superior Court in 2020. Due to it not being a federal lawsuit and restricted access to case files, I’m unclear on the status of the case.

Having just settled a potential $50 million class-action alleging pyramid fraud, I’d be surprised if PFA didn’t settle this case too (via arbitration or otherwise).

I did go looking for the Bacus v. PFA lawsuit cited  but couldn’t find it. I’m assuming it’s another state-level lawsuit I won’t be able to track.

In any event, I’ve added Rafique, Collado & Soo-Hoo v. PFA lawsuit to BehindMLM’s calendar. Stay tuned for updates as we continue to track the case.


Update 5th March 2024 – A February 5th order has granted PFA’s Motion to Compel Arbitration.

The court’s order has stayed the case pending the outcome of arbitration proceedings.