The Age Discrimination Act of 1975

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The Age Discrimination Act of 1975
Article 13 Too Old to Work? By Adam Cohen Article
date March 2, 2003 Discussion lead by Alicia
Basinger
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Article Summary

• Allstate recruited new insurance agents in the
  1980s with a brochure that essentially offered
  the American Dream unlimited income potential,
  job security, etc.
• Ron Harper
• Worked his way up in the supermarket business
  (currently district sales manager)
• Allstate commissions were less than he could earn
  as an independent broker, but Allstate had a
  generous benefits package including a pension
• Harper was told he could only be terminated for
  dishonesty
• Harper signed on with Allstate and moved his
  family to a new town.

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Article Summary

• In 1999, just after Harpers 10 year anniversary
  with Allstate, he and 17 other agents were called
  in to headquarters.
• They were handed a box of documents they later
  coined as job in a box
• They were told they would now be independent
  contractors
• Their benefits and pensions would end
• The box also contained a release which guaranteed
  that the agents would not sue
• Did not have to sign, but if they didnt they
  would be fired!
• What happened to the job security they were
  promised?

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Article Summary

• Managers would discuss the changes, they just
  kept repeating what was in the paperwork
• The company did this to 6,400 agents concurrently
  - all the longest serving agents and those with
  the best benefits
• They could keep their jobs by forfeiting benefits
  that, in some cases were worth hundreds of
  thousands of dollars, or they could give up their
  jobs AND their benefits
• Harper did what most agents did, signed the
  release, then sued for age discrimination

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The Complaint

• Workers claim that Allstate executives singled
  out one category of workers, employee agents,
  because more than 90 percent of them were over 40
• The Plaintiffs allege that Allstate was trying
  to cut costs by taking away their health
  insurance and freezing their pensions
• They allege that Allstate thought young workers
  were key Managers are quoted as saying We have
  these young people and they really go out and
  work and they think the older workers just want
  to sit on their policies and collect commissions.

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Allstates Defense

• There was no discrimination, it was simply a
  business decision
• We re-organized out agency force for a lot of
  very good business reasons
• Their new model cut costs by 600M, but that
  almost all the savings came through closing
  regional offices and eliminating 4,000 non agent
  positions
• Employee agents were asked to become independence
  contractors to streamline operations

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The Defendant - Allstate Corporation

• The Allstate Corporation is a holding company
  which owns several insurance companies, including
  Allstate Insurance Company.
• Through its subsidiaries, Allstate is the
  nations largest publicly held personal lines
  insurer, providing insurance products to more
  than 14 million households.
• Founded in 1931 as part of Sears, Roebuck Co.,
  Allstate, based in Northbrook, Illinois, became a
  publicly traded company in 1993.
• At the time, its initial public offering was the
  largest in U.S. history.
• On June 30, 1995, it became a totally independent
  company after Sears divested its remaining shares
  to Sears stockholders.

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The Defendant - Allstate Corporation

• As of the end of 2000, Allstate had assets of
  about 105 billion. During that year, its
  revenues exceeded 29 billion and its net income
  was about 2.2 billion
• The late 90s was an intense time of competition
  in the insurance business
• Insurance companies like Geico were eliminating
  agents and selling directly to the consumer
• Insurance services also began to move online

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At Will Employment

• Employment at will
• The general rule in American law is that
  employees hold their jobs at the whim of their
  bosses.
• Employers are free to fire workers for good
  cause, for no cause or even for cause morally
  wrong.
• Exceptions
• Cant be fired for whistle blowing
• Discrimination

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Age Discrimination

• Workplace culture has, for the most part, stuck
  to old ways of thinking about older workers
• The oldest workers are the fastest growing
  segment
• Workers over 65 increased by 20 in the 1990s
• Workers 75 were up more than 80 from 1980 to
  2000
• When hard times hit, the axe often falls on the
  older workers because they are the most highly
  paid and often stereotyped as less efficient
• These days, age discrimination is more often the
  product of broad-based company policies, like
  decisions to phase out entire job categories
  mostly held by older workers

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ADEA

• The Age Discrimination in Employment Act of 1967
  (ADEA) protects individuals who are 40 years of
  age or older from employment discrimination based
  on age.
• The ADEA's protections apply to both employees
  and job applicants.
• it is unlawful to discriminate against a person
  because of his/her age with respect to any term,
  condition, or privilege of employment, including
  hiring, firing, promotion, layoff, compensation,
  benefits, job assignments, and training.
• It is also unlawful to retaliate against an
  individual for opposing employment practices that
  discriminate based on age or for filing an age
  discrimination charge, testifying, or
  participating in any way in an investigation,
  proceeding, or litigation under the ADEA.

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ADEA

• The ADEA applies to employers with 20 or more
  employees, including state and local governments.
  It also applies to employment agencies and labor
  organizations, as well as to the federal
  government.
• ADEA protections include
• Apprenticeship Programs Job Notices and
  Advertisements Pre-Employment Inquiries
  Benefits Waivers of ADEA Rights
• The ADEA is enforced by the Equal Employment
  Opportunity Commission (EEOC).

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The Problems with Age Discrimination Legislature

• It is almost always harder for older workers to
  win a bias claim than it is for Title VII due to
  disparate impact
• Title VII - prohibits employment discrimination
  individual's race, color, religion, sex, or
  national origin."
• Title VII's prohibition includes "not only overt
  discrimination commonly referred to as
  disparate-treatment discrimination but also
  practices that are fair in form, but
  discriminatory in operation commonly referred to
  as disparate-impact discrimination
• Disparate-treatment - scenario of employment
  discrimination, which is the most easily
  understood form of discrimination, a plaintiff
  must demonstrate that the "employer . . . treats
  some people less favorably than others because of
  their race, color, religion, sex, or national
  origin
• Disparate impact - an unnecessary discriminatory
  effect on a protected class caused by an
  employment practice or policy that appears to be
  nondiscriminatory

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The Problems with Age Discrimination Legislature

• The Supreme Court has held since 1971 that
  plaintiffs suing under the Title VII do no need
  to show that they were intentionally
  discriminated against , it is enough to show that
  a supposedly neutral policy disproportionately
  hurt a preselected group.
• Disparate impact is a powerful tool since it is
  often hard for workers to prove intentional
  discrimination. Many of the biggest race- and
  sex-discrimination lawsuits could not have been
  won without it.
• According to the article, many judges dont like
  age discrimination lawsuits.
• In age cases, courts are all too willing to
  accept economic defenses - a company that says
  it laid off older workers because they were
  highly paid will often prevail
• Judges often dont see old people as a protected
  class, like they do with race
• Judges are also inclined to see pushing older
  workers out as part of the natural order, because
  they are less able, or to make room for the next
  generation

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Current status of the case

• On March 30, 2004, A United States District Judge
  issued a ruling in three of the pending cases.
• In granting partial summary judgment in favor of
  plaintiffs, the Court held that the release
  violated the ADEA because it barred the filing of
  "charges," including challenges to the validity
  of the release
• The Court also agreed with the plaintiffs and
  EEOC by holding that Allstate engaged in unlawful
  retaliation under the ADEA by forcing the agents
  to sign the releases and forfitting their
  federally protected rights.
• The Court dismissed the counterclaims that
  Allstate had brought against 28 of the
  plaintiffs.

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Current status of the case

• On March 30, 2005, the United States Supreme
  Court issued its ruling in Smith v. City of
  Jackson, MISS, which recognized disparate impacte
  under the ADEA

To keep posted on the status of the case, visit
www.allstatecase.com
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The Age Discrimination Act of 1975
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