PHILADELPHIA (AP) _ The federal government is suing Allstate Insurance Co., accusing it of forcing thousands of agents to give up their right to sue the company for age discrimination or other issues.
After a year of failed negotiations with the nation's second-largest insurer, the U.S. Equal Employment Opportunity Commission accused the company of illegally converting the agents to private contractors.
To continue working as independent contractors, the agents had to sign a waiver giving up their right to sue Allstate over job issues.
The EEOC, in the lawsuit filed in federal court in Philadelphia on Thursday, said the waiver violates non-retaliation clauses of federal labor law, including the Age Discrimination in Employment Act.
``The unlawful employment practices complained of ... above were done with malice or reckless indifference to the federally protected rights of Allstate employees employed as insurance agents,'' the lawsuit charged.
In August, a group of former Allstate agents nationwide filed a federal lawsuit alleging that more than 6,400 agents were fired in June 2000 as part of a ``mass termination program'' to save money and push out older workers.
Allstate spokesman Bill Mellander said Friday the company was disappointed to learn about the EEOC lawsuit.
``Allstate had certainly hoped to reach a resolution without litigation,'' he said.
He said the company believes the waivers will be found to be fair and legal.
``The issue here in Allstate's reorganization is not age discrimination,'' Mellander said. ``The purpose of Allstate's reorganization program was to jump start the corporation's growth and position Allstate and its agents for the 21st century.''
Allstate, based in Northbrook, Ill., has about 40,000 employees and about 13,000 agents, most of whom are now independent contractors, Mellander said.
Under the reorganization plan, the agents receive a higher commission rate but do not receive pensions and benefits.
The EEOC said it was seeking back pay for the 19 agents who refused to sign the waivers and were fired.
The lawsuit seeks a permanent injunction blocking Allstate from enforcing the waivers, as well as payment for lost wages, job search expenses, attorneys' fees, and pain and suffering.
``We exhausted all those options and litigation was a last resort to remedy the claims,'' said David Grinberg, an EEOC spokesman in Washington, D.C.
According to the agents' lawsuit, Allstate fired the employee agents in an attempt to save hundreds of millions of dollars annually in benefits and to get rid of agents over age 40.