Allstate Rehire Policy Defies ADEA

October 20, 2006 ( - The US District Court for the Eastern District of Missouri ruled in a summary judgment that Allstate Insurance Company's one-year moratorium on rehiring its former sales agents has a greater impact on those workers aged 40 and older.

The ruling by US District Judge E. Richard Webber, in a suit filed by the Equal Employment Opportunity Commission (EEOC), found that Allstate’s policy violates the Age Discrimination in Employment Act (ADEA). But Allstate is still awaiting a jury decision on whether its rehire policy meets an exception to the act, which says any action based on a “reasonable factor other than age” is not unlawful.

The EEOC claimed in its lawsuit that Allstate fired its agents and then offered them jobs as independent contractors, but refused to hire them in other positions as employees for one year. Some 90% of the agents were 40 years old or older.  The workplace anti-discrimination agency says this violates the ADEA, because a disproportionate number were aged 40 or older.

Weber agreed that the EEOC presented “sufficient evidence to show a disparate impact on the protected group” of workers 40 and over, making the decision one of the first instances putting into practice a Supreme Court ruling last year that ADEA does apply to “disparate impact” cases.

The Supreme Court turned away an appeal request by former Allstate agents in March to review the decision of the 7th US Circuit Court of Appeals (See Judge: Allstate Innocent of Age Discrimination Claims ) that said the insurance company’s decision to discharge 6,400 employee agents was legitimate and nondiscriminatory. The plan had called for Allstate to no longer sell insurance through employees, but instead through a network of independent contractors (See US Supreme Court Turns Away Allstate ADEA Case ).