Court Approves $4.5 Million Settlement Between Allstate, EEOC

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December 22, 2009 Tuesday 11:46 AM EST

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Court Approves $4.5 Million Settlement Between Allstate, EEOC

Chad Hemenway

ST. LOUIS

A federal judge has approved a $4.5 million settlement between the Equal Employment Opportunity Commission and Allstate Corp. to officially end a lawsuit filed more than five years ago.

A class of 90 older former employees of Allstate will share the award, said the EEOC in a statement. Its lawsuit, filed in October 2004, alleged Allstate Insurance Co. violated the Age Discrimination in Employment Act when older employees were adversely impacted by a company-wide reorganization.

Allstate spokesman Mike Siemienas said the company's position on the settlement is the same as it was in September when the settlement was announced. At the time, Allstate said it chose to agree to the settlement to avoid further litigation costs but continued to believe its position was correct and that it would have prevailed in court (BestWire, Sept. 15, 2009).

The EEOC alleged Allstate in 2000 began what it called its "Preparing for the Future Group Reorganization Plan," in which it fired all of its sales agents and offered to make them independent contractors. Part of the policy said that former Allstate sales agents could not be rehired in other, nonagent positions for one year. In the lawsuit, the EEOC said that more than 90% of those agents were older than 40, making the hiring policy in violation of the federal ADEA (BestWire, Oct. 27, 2009).

"Regardless of age, these sales agents would have made good employees in other positions for Allstate had it not been for the company's no-rehire policy, which we believe had an adverse impact on older workers," said Barbara A. Seely, EEOC regional attorney for the St. Louis District Office, in a statement. She said that even though a company may not intentionally violate the ADEA, it can if it has a policy "that has a disproportionate impact on employees age 40 and over."

The settlement approved by U.S. District Court Judge E. Richard Webber in the U.S. District Court for the Eastern District of Missouri states the insurer will pay employees who sought employment or would have sought employment within the company in the absence of its policy. The order is in effect for three years and provides discrimination training for Allstate managers.

Allstate Insurance Group currently has a Best's Financial Strength Rating of A+ (Superior).

In morning trading on Dec. 22, shares of Allstate Corp. (NYSE: ALL) stock were selling at $29.58, up 0.72% from the previous close.

(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)

December 23, 2009

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