Insurance Company Ordered to Pay 4.5 Million in EEOC Case

Note: Workers’ Compenstion Insurance is a type of “property and casualty” business insurance required in all states, except Texas where an employer may opt out. It is referred to as a “line” of insurance coverage and is purchased from an insurance agent or broker.

Major Insurance Company Ordered to Pay $4.5 Million in Age Bias Suit

The U.S. Equal  Employment Opportunity Commission (EEOC) announced a major settlement of an age discrimination class lawsuit against a major insurance company for $4,500,000 to be paid to approximately 90 older former employees, in addition to significant remedial relief.

“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,” said EEOC Acting Chairman Stuart Ishimaru. “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.”

In its lawsuit,  filed in October 2004 under the Age Discrimination in Employment Act (ADEA), the EEOC charged in 2000 the company 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 Allstate’s reorganization from employee agents to what the company considered independent contractors.

The EEOC  alleged the policy had a disproportionate impact on the company’s employees over the age of 40 because more than 90% of the agents subjected to the hiring moratorium were 40 years of age or older. The employer denies its hiring moratorium violated the ADEA.

In 2005,  the U.S. Supreme Court held in Smith v. City of Jackson that a facially neutral policy, such as the one used by the insurance company’s hiring moratorium, which disproportionately affected those age 40 and over violated the ADEA unless the policy was based on a reasonable factor other than age.

As provided  in the Stipulated Order resolving the litigation, 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), the employer 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, effective for three years, also provides for discrimination prevention training, posting of notices, reporting and monitoring, and other relief designed to educate all company managers in order to prevent future violations of the ADEA.  (workersxzcompxzkit)

In 2007,  the parties settled claims of disparate treatment which were asserted for two individuals. Those claims were settled for $250,000 and are not covered by the 2005 settlement.

In July, the Commission held a public hearing on age discrimination and barriers to the employment of older workers. Additional information about the hearing can be found on the EEOC’s Web site at

Author Robert Elliott, executive vice president, Amaxx Risks Solutions, Inc. has worked successfully for 20 years with many industries to reduce Workers’ Compensation costs, including airlines, health care, manufacturing, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing. He can be contacted at: or 860-786-8286.

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