Allstate To Fight EEOC Age Suit

NU Online News Service, Jan. 2, 1:51 p.m. EST?The Allstate Corp. said it will strongly contest an age discrimination suit lodged against its subsidiary, Allstate Insurance Co., by the federal Equal Employment Opportunity Commission.

The company said it plans "to vigorously defend the lawsuit" and that it is "disappointed" with the EEOC decision, announced last week, to file a lawsuit in Philadelphia U.S. District Court alleging age discrimination against the firm's agents.

The suit follows a company reorganization that eliminated the pension system for the workforce of 15,000 employee-agents. Under the restructuring employees became independent-contractors without health or pension benefits.

The EEOC action questions the use of a release form, or waiver, as part of the reorganization program.

The complaint filed by more than 300 current and former Allstate agents charged that it was illegal to require the agents to sign the waiver of their right to sue Allstate in order to remain with the company as independent contractors.

According to Bill Mellander, spokesman for the Northbrook, Ill.-based Allstate Corp., the releases "are used routinely in the American workplace in connection with business reorganizations and have been consistently upheld in court."

The company said that all of its employee agents had the opportunity to become Allstate exclusive agent independent contractors and that most of those agents seized that opportunity. Allstate also noted that most of its agents already were independent contractors at the time of the reorganization.

In fact, all but 6,400 of the agents had become contractors by June. Allstate then give those agents, 90 percent of whom were older than 40, the option of becoming independent contractors or of being dismissed with a severance package.

In September 2000, the EEOC determined that the waiver was a type of pre-emptive retaliation in violation of several laws against discrimination Allstate has denied any retaliation.

The EEOC urged Allstate to compensate the 6,400 agents and to change its policies. But talks between the company and the EEOC broke down in February after more than a year of effort.

Allstate has claimed that its new business model strategy and agency program reorganization were designed to meet the increasing demands of its customers, to jump-start growth and "to make it possible for every agent to share in the success of the company."

The company also said that its Allstate Exclusive Agency program is consistent with the structures of many of its major competitors.

According to Rick Cohen, president of Allstate Property and Casualty, the Allstate Exclusive Agency program provides agents with economic advantages through:

? An increased-commission structure,

? Commission opportunities from direct-channel sales,

? The ability to purchase agencies,

? A stock bonus plan,

? The ability to grow a transferable equity in their business,

? The ability to run satellite offices,

? Local agency extensions and

? The ability to run other businesses.

Special Reports /

Allstate To Fight EEOC Age Suit

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