EEOC Obtains $4.5M Settlement Based on ADEA Disparate Impact Claim When Insurance Company Adopted Year-Long Hiring Freeze

On Friday, the EEOC announced “a major settlement of an age discrimination class lawsuit against Allstate Insurance Company, one of the nation’s largest insurers, for $4,500,000 to be paid to approximately 90 older former employees, in addition to significant remedial relief.”

The EEOC filed a lawsuit under the ADEA against Allstate in October 2004alleging “that in the year 2000 Allstate 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 was part of Allstate’s reorganization from employee agents to what the company considered independent contractors. The EEOC 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.” Disparate impact claims were recognized by the Supreme Court’s 2005 decision in Smith v. City of Jackson.

The terms of the settlement, which is “pending approval by U.S. District Judge E. Richard Webber in U.S. District Court for the Eastern District of Missouri (Civil Action No. 4:04CV01359 ERW), 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.” A 2007 settlement for $250,000 of disparate treatment claims under ADEA brought by two individual employees is not part of this larger settlement agreement.

Insomniacs can read the full press release at http://www.eeoc.gov/press/9-11-09a.html.

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