A group of insurance agents asked a federal appeals court on Monday to revive an age discrimination lawsuit over the Allstate Insurance Co.’s decision to switch thousands of them from employees to independent contractors.
In oral arguments, a three-judge panel questioned a lower court’s brief order that dismissed what the panel called a complex and important case.
The former Allstate agents argue that the insurance company, which is based in Northbrook, Ill., illegally switched 6,400 of them from employees to independent contractors in 2000, violating federal pension security, age discrimination and other laws.
Some of the agents were days away from the 20-year service mark needed for early retirement when the conversion took place, said lawyer Peter Buscemi, who represented the plaintiffs.
Allstate’s lawyer, Richard Godfrey, said that was bound to be the case given the thousands of agents involved. He said the conversion was a legal plan designed to save money.
Allstate’s president at the time was Edward Liddy, who as chairman of the insurance giant American International Group Inc. is now at the center of the storm over bonuses paid by companies receiving government bailouts.
The Equal Employment Opportunity Commission has joined the case, accusing Allstate of retaliating against 19 agents who refused to sign releases required to continue as contractors. The releases prohibited the agents from suing for any past discrimination.
The 3rd U.S. Circuit Court of Appeals heard argument Monday on both issues.
Godfrey noted that Allstate paid out $182 million in cash severance packages, averaging $282,000, and let agents who stayed on keep their client rosters, worth up to $3 million each.
He argued that few agents refused to sign the waiver because the offer was such a good deal. But the agents said they had little choice if they wanted to continue making a living with the company, which says it has $156 billion in assets and sells 13 major lines of insurance, including auto, property, life and commercial.
U.S. District Judge John P. Fullam had dismissed the agents’ suit, which sought class certification. The appeals court panel did not indicate when it would rule.
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