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Allstate Insurance Company has agreed to settle a government age discrimination suit by paying $4.5 million to 90 older agents impacted by a company reorganization, it was announced.

The settlement with the U.S. Equal Employment Opportunity Commission was disclosed by the agency on Friday, which said it would also include "significant remedial relief," including anti-discrimination training of management.

Allstate said they settled because of the legal costs involved and an arguable point of law was involved. An agent group representative called the amount "paltry."

EEOC filed its lawsuit in October 2004 under the Age Discrimination in Employment Act, charging that Allstate in 2000 adopted a hiring moratorium for a period of one year, or while severance benefits were being received, that applied to all its employee-sales agents who were part of its "Preparing For The Future Reorganization Program."

The program, the EEOC said, was part of Allstate's reorganization from employee-agents to what the company considered independent contractors.

EEOC's complaint alleged that the policy had a disproportionate impact on Allstate's employees over the age of 40 because more than 90 percent of the agents subjected to the hiring moratorium were 40 years of age or older.

Allstate denies that its hiring moratorium violated the ADEA.

In the wake of the settlement, EEOC Acting Chairman Stuart J. Ishimaru issued a statement: "Discrimination against older workers is counterproductive and wrong, and the EEOC has been taking a close look at ways to increase our law enforcement efforts in this area."

He warned that "Corporate America must be more vigilant in guarding against job bias affecting older workers, or risk action by the EEOC. This settlement shows there is a high price to pay for discriminatory employment policies and practices that adversely impact older workers."

EEOC noted that in 2005, the U.S. Supreme Court held in Smith vs. City of Jackson that a facially neutral policy, such as Allstate's hiring moratorium, which disproportionately affected those aged 40 and over violated the ADEA unless the policy was based on a reasonable factor other than age.

Under the order resolving the litigation--which is pending approval by U.S. District Judge E. Richard Webber in St Louis--Allstate will pay former employees who sought employment (or would have sought employment with the company in the absence of its policy) a total of $4.5 million to be divided among the class via a settlement fund.

The order, in effect for three years, also provides for discrimination prevention training, posting of notices, reporting and monitoring, and other relief designed to educate Allstate managers in order to prevent future violations of the ADEA.

In 2007, claims of disparate treatment by two agents were settled for $250,000 and are not covered by this settlement, the EEOC said.

EEOC Regional Attorney Barbara A. Seely of the agency's St. Louis District Office, which handled the litigation, said "this settlement should go far in educating Allstate's managers about their responsibilities under the Age Discrimination in Employment Act."

She noted that "the training and other injunctive remedies provided will reinforce these prohibitions and help the company effectively prevent inadvertent violations of the ADEA going forward."

Northbrook, Ill.-based Allstate is the largest publicly-held U.S. personal lines insurer. The company says it encompasses more than 70,000 professionals.

Mike Siemienas, an Allstate spokesman said that "while confident that we acted appropriately, Allstate agreed to settle a longstanding dispute with the EEOC to avoid the burden and considerable expense of continued litigation for everyone involved. Allstate believes that its position is correct and that it would have ultimately prevailed in this case."

He added that "the court has indicated and the EEOC acknowledged that the dispute is centered on a point of law over which there is substantial ground for difference of opinion. Allstate is an employer committed to diversity and inclusion and has been widely recognized for this by several groups and publications."

Jim Fish, executive director of the National Association of Professional Allstate Agents, said he thought the settlement is "fairly paltry considering the number of years it has been winding through the courts."

He noted that "it averages out to about $50,000 per agent. It doesn't seem like enough money for an age discrimination settlement."

Both sides, said Fish, must have wanted to settle because of legal issues that meant "it could have been settled either way."

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Allstate Settles Agent Age Discrimination Case For $4.5M

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