Allstate Settles Alleged Discrimination Lawsuit for $4.5 Million

Allstate Corp. has agreed to pay former employees $4.5 million to end a 5-year-old age discrimination class-action lawsuit against it, said the U.S. Equal Employment Opportunity Commission.

Allstate continues to deny that a hiring moratorium it adopted in 2000 as part of its reorganization from employee agents to independent contractors violated the Age Discrimination in Employment Act. The insurer said it chose to agree to the settlement to avoid further litigation costs.

Mike Siemienas, Allstate spokesman, said the company continues to believe it's "position is correct" and that it "ultimately would have prevailed in a court of law." Siemienas added that the dispute was "centered on a point of law which has substantial grounds for differences of opinion."

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 that policy stipulated 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. In court filings, the EEOC said it "attempted to eliminate the unlawful employment practices ... and to effect voluntary compliance with the ADEA through informal methods of conciliation, conference, and persuasion," before filing the lawsuit (BestWire, Oct. 27, 2006).

In 2005 the U.S. Supreme Court ruled in a separate case that a policy such as Allstate's hiring moratorium violated the Age Discrimination in Employment Act unless the policy was based on factors other than age, the EEOC said.

"Corporate America must be more vigilant in guarding against job bias affecting older workers, or risk action by the EEOC," said Stuart J. Ishimaru, acting chairman of the EEOC, in a statement. "This settlement shows there is a high price to pay for discriminatory policies and practices that adversely impact older workers."

Siemienas said Allstate has always been committed to diversity and inclusion in the workplace and that the company has been recognized for its efforts.

The settlement, which still needs approval from U.S. District Court Judge E. Richard Webber in U.S. District Court for the Eastern District of Missouri, Allstate will pay former employees who sought employment or would have sought employment without the company. The order will be in effect for three years and also provides discrimination training for Allstate managers.

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