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EEOC - Page 4 - 2001

The Unites States Equal Employment Opportunity Commission: 1-800-669-4000

"The man who trades independence for security usually
deserves to end up with neither." - Benjamin Franklin

EEOC sues Allstate Insurance

Associated Press – December 31, 2001

PHILADELPHIA - The federal government is suing Allstate Insurance Co., accusing it of illegally converting thousands of agents to private contractors and forcing them to sign a waiver forfeiting their right to sue the company for age discrimination and other job issues.

The U.S. Equal Employment Opportunity Commission filed the lawsuit in federal court in Philadelphia on Thursday after a year of failed negotiations with the nation's second-largest insurer.

The EEOC said the waiver violates non-retaliation clauses of federal labor law, including the Age Discrimination in Employment Act.

"It's basically similar to any company firing its entire work force, and saying if you want to go back to work for us tomorrow, you have to sign this paper saying you can't sue us for anything that's happened up until today," said Bob Johnson, an EEOC attorney in St. Louis.

Craig Millison, a 53-year-old agent in York, Pa., with a wife and three young daughters, is among the plaintiffs involved in the lawsuit.

He said the reorganization cost him benefits that equaled about 30 percent of his salary. Allstate, which allows the agents to sell only Allstate products, also ended his $25,000 a year allowance for office expenses, he said.

In exchange, agents received a $5,000 bonus, a 2 percent hike in commission rates and ownership of their business, he said.

Millison said he now pays $700 a month for medical insurance, up from $100 a month.

"It's a nightmare," Millison said. "I'm taking home equity loans, two in the last year."

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.

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.

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.

EEOC Sues Allstate for Age Discrimination

The New York Times - by Joseph B. Treaster - December 29, 2001

(12/28/01) - The Equal Employment Opportunity Commission sued the Allstate Insurance Company late yesterday after 15 months of trying to settle accusations that the insurer had discriminated against its agents.

The suit, filed in United States District Court in Philadelphia without a formal announcement, centers on a decision by Allstate to convert its 15,200-member sales force from regular employees with pensions and health care benefits to independent contractors. To continue as contractors, the agents were required to sign a waiver, or release, that they would not sue Allstate. By last June, all but 6,400 of the agents had become contractors. The remaining agents, 90 percent of whom were older than 40, were then dismissed and given the choice of rejoining as contractors or leaving the company.

Infuriated by the waiver, which they viewed as the linchpin in the company's strategy to shed its older workers, several agents filed complaints with the E.E.O.C., accusing Allstate of age discrimination. For the E.E.O.C. to bring a suit, there must be a complaint of discrimination based on race, sex, age, religion or disability.

The agency determined in September 2000 that the waiver was a form of pre-emptive retaliation and that Allstate had violated several laws against discrimination. The agency pressed Allstate to compensate the 6,400 agents and to change its policies, but the E.E.O.C. said in February that negotiations had failed. Even so, Allstate and government officials said, the agency continued over the last few days to reach a settlement.

"This is not a lawsuit-happy agency," said Reginald Welch, the spokesman for the agency. "A lawsuit is a measure of last resort."

The lawsuit has the same goals: compensation for the agents and a change in corporate policy.

Although the case was brought before the current chairwoman, Cari M. Dominguez, was appointed by President Bush last summer, it is likely to further fuel discontent among business executives who think the Bush administration has yet to bring the often-partisan commission under control.

The administration has not filled two other vacancies on the five- member commission. As a result, the two sitting Democrats outnumber Ms. Dominguez. In addition, the administration has not appointed a general counsel, who is especially influential in deciding which discrimination cases to bring and how the litigation should be handled.

"From the business community's perspective, there's a sense that it's out of control, that there's no centralized direction to it," said Lawrence Z. Lorber, a lawyer who defends companies in labor and discrimination disputes.

The commission, created in 1964, has often been a partisan battleground populated by strongly ideological personalities. Ida L. Castro, who was the last chairwoman during the Clinton administration, is now an official at the Democratic National Committee. Perhaps the best-known Republican chairman in recent years was Clarence Thomas, now a Supreme Court justice and an icon in the party's right wing.

The E.E.O.C. receives tens of thousands of complaints each year but is able to investigate only a few and files lawsuits only in those cases that it considers significant and most critical in policing anti-discrimination laws.

"We have to be very strategic in terms of choosing litigation vehicles," Mr. Welch said. "The case has to be in the public interest. It could be a situation that looks particularly egregious and that requires us to step in very forcefully and aggressively."

Mary Alice Horstman, a spokeswoman for Allstate, the nation's second-largest insurer of cars and homes after State Farm, said last night: "We are very disappointed to learn that the E.E.O.C. has filed a lawsuit. We had hoped to reach a resolution without litigation. Allstate stands by its commitment to fairness to all individuals and believes that the release will be found to be a fair and lawful component of the reorganization program. Releases are used routinely in the American workplace in connection with business reorganizations and have been consistently upheld in court."

Private lawyers for the agents said their clients applauded the agency's decision. "This is the result the agents have been demanding," said Michael J. Wilson, one of the lawyers. "We are delighted."

In August, frustrated that the agency had been unable to resolve the case, Allstate agents filed their own lawsuit in Philadelphia, accusing Allstate of age discrimination and illegal denial of employee benefits and seeking class-action status. Allstate moved to dismiss the suit.

Government officials and lawyers for the agents said that both the government and the agents planned to ask the federal court in Philadelphia to combine the two suits. As a result, private and government lawyers would work together against Allstate. Last week, lawyers for the agents filed another suit, accusing Allstate of improperly reducing pension benefits. In addition, AARP, the organization of retired people and those approaching retirement, said that it was joining in the initial suit against Allstate as co-counsel.

"Allstate pressured thousands of loyal longtime employees to give up their benefits and their future," said John C. Rother, AARP's director of policy and strategy. "We joined as co-counsel to right a wrong, spotlight these blatant actions and send a message to other employers who might consider similar actions."

In its finding in September 2000, the E.E.O.C. said that Allstate's action amounted to "unlawful interference, coercion and intimidation." Employment lawyers say companies may obtain waivers against suits from employees but not as a condition of future employment.

There was some last-minute indecision over the suit. On Wednesday, lawyers for the agency were preparing to file suit yesterday morning. But on Wednesday afternoon, Ms. Dominguez ordered the lawyers to hold off.

"She had some questions," said one federal official who spoke on the condition of anonymity. This official said Ms. Dominguez wanted to "make one last-ditch attempt to see if a negotiated settlement" was possible. He said that a lawsuit was imminent but would probably not be filed before the new year. Then the commission decided to go ahead with the suit yesterday afternoon.

Mr. Welch, the agency's spokesman, said that Ms. Dominguez was not in the office yesterday and could not be reached for comment.

Allstate's decision in the fall of 1999 to convert its sales agents to independent contractors came as it was under increasing pressure from competitors like Geico, which uses no agents, and Progressive, which relies heavily on phone and Internet sales.

Over the years, as agents retired, Allstate had been replacing them with contract agents without full benefits but with a slightly higher commission rate. As part of Allstate's effort to convert the sales force, agents who wanted to remain as contractors or receive enhanced severance packages were required to sign the waiver.

Wal-Mart To Admit to Discrimination

Associated Press - December 18, 2001

Sacramento, California - Wal-Mart has agreed to pay $6.8 million and change its hiring practices after admitting it systematically discriminated against jobseekers with disabilities, a California newspaper has reported.

The settlement is believed to be one of the largest under the federal Americans With Disabilities Act. The U.S. Equal Employment Opportunity Commission's settlement with the retailer is expected to be formally announced Monday after a Sacramento federal judge approves a consent decree that settles 13 lawsuits by regulators in 11 states, the Sacramento Bee reported.

A Wal-Mart spokesman declined comment.

The consent decree would also settle EEOC lawsuits in North Carolina, Arizona, Arkansas, Illinois, Missouri, New Mexico, Ohio, Texas, and Virginia.

The EEOC alleged that the company illegally asked applicants about disabilities and medical conditions on a pre-employment form.

If they said they needed accommodation to perform some job requirements, the employees were asked to identify what help they needed.

The EEOC called that "an illegal screening device that Wal-Mart has not established to be job-related and required by business necessity."

Wal-Mart admitted in Sacramento federal court in October that it used the screening at its stores between March 1994 and December 1996 and at its distribution centers from March 1994 to December 1998, the Bee reported.

Under the reported agreement, Wal-Mart will pay $3.8 million to 21 jobseekers. The company will also create a $3 million national fund for others with disabilities who can document they were turned down for a Wal-Mart job between Jan. 1, 1994, and Dec. 31, 1998.

Under the agreement, the company also will replace the screening form, adopt a new ADA policy, and give preference in hiring to discrimination victims.

The EEOC suit also covered several disabled employees' dismissals, including one that triggered the Sacramento suit.

Steven Sanders, who has impaired hearing, was fired from the company's Red Buff distribution center in 1996 instead of reassigned. Sanders could not hear a scanning device's beeping sound signaling that a product's bar code had been read.

He will get $202,880 in back pay, interest and compensatory damages, and an unspecified job.

Two job applicants at a distribution center in Cobleskill, N.Y., also will receive payments: Carl Burch, who has back problems, will get $171,839 and John Bendall, who is partially blind, will get $187,774.

In September, Wal-Mart resolved a contempt of court ruling in Tucson, Ariz., over its refusal to hire two deaf men. The company agreed to air a television commercial about hiring people with disabilities and to pay a $427,500 fine.

Wal-Mart faces a separate federal suit in San Francisco alleging discrimination against female employees. That suit seeks to represent as many as 500,000 current and former women workers. The retailer denies the allegations.

Another class-action suit pending in Atlanta accuses the company of sex discrimination by denying female employees insurance coverage for contraceptives.

Worldwide Pension Losses

Employee Advocate – – December 17, 2001

Pension losses are not confined to the United States. Variations of the same games are taking place worldwide. In Britain, the pension losses are being recognized for just what they are – scams. The Guardian Unlimited article Undefined Benefit - Except for Companies, tells the story.

One important point from the article is that the new pension plans usually apply only to new hires. That is certainly not the case in the United States! In fact, that is the biggest sticking point: Companies have enticed American employees to stay with them for thirty years, and have then backed out on their promised benefits for doing so.

If a new hire were to start out with a defined contribution plan (or a cash balance plan), he would know it from the beginning, and could not say that he had been scammed. If in the course of his employment, he is given anything less than what he was promised – then he would be the victim of a pension scam.

But, some things are the same:

“There is one flaw in the arguments of those ditching final salary schemes. If the rationale behind the decision is simply all about accounting standards and red tape why do the vast majority also slash their contributions, by about a third, when they move to a new defined contribution scheme?”

Here is another point that many younger workers overlook:

“It is the current crop of twenty- and thirtysomethings who are likely to be the biggest losers because the switch to defined contribution schemes could take years to have a substantial impact.”

Most employees are aware that employees with long service lost money, but younger employees will also rack up pension losses. Evidently the Equal Employment Opportunity Commission was well aware of this fact in 1999. The EEOC waived the age limit for filing cash balance plan age discrimination charges! Just how many times have you ever heard of this happening?

One could attempt to confuse the issue by pointing out that cash balance plans and defined contributing plans are not the same. That is true, but the results are the same. They are ways to relieve employees of their promised retirement benefits. A good rule of thumb is that if a company does any kind of pension conversion, it will likely not benefit the employees.

The bottom line is that many older and younger employees lost pension money in the conversion. Of course, there is one group that always makes money on the conversions – the companies.

Celanese Acetate to Settle Lawsuit

Associated Press – December 17, 2001

ROCK HILL -- Celanese Acetate will pay $75,000 to settle a lawsuit with an employee who says he was racially harassed, the U.S. Equal Employment Opportunity Commission says.

The employee, who is black, said he was called an ape and gorilla and was subjected to threats of violence, ridicule and insults that included Ku Klux Klan symbol displays, the Confederate battle flag and a hangman's noose, the federal agency said. The employee filed the lawsuit in fall 2000.

"The message must be clear and unambiguous that such conduct will not be tolerated from any member of the work force," said Reuben Daniels Jr., director of the EEOC's Charlotte District Office.

The company, which admitted no wrongdoing, also will pay the employee an unspecified amount for attorneys fees.

"Celanese Acetate is committed to providing a safe, productive, harassment-free work environment in which all employees are valued for their contributions to the company," said B.J. Smith, vice president of human resources for Celanese Acetate.

A consent decree, which is an agreement between the two parties approved by the U.S. District Court in South Carolina, also required the company to amend its harassment reporting policy, train supervisors and employees, and submit semiannual reports to the EEOC for three years.

The company makes acetate filament, which is used by clothing manufacturers to make fabric.

AT&T Accused of Bias

The New York Times – by Reed Abelson – November 30, 2001

About 150 AT&T employees are accusing the company of discrimination and are considering filing federal lawsuits, according to the law firm representing the employees. A third of the employees have already made formal complaints with the Equal Employment Opportunity Commission. Twelve filed the complaints yesterday.

The remainder of the complaints are expected to be made by the end of the year, said Lenard Leeds, a partner in Leeds, Morelli & Brown, the law firm involved in the case. In order to proceed with a federal lawsuit, an employee must first file a complaint with the E.E.O.C.

The complaints involve a broad spectrum of discrimination, including numerous accusations of sexual harassment. Some employees contend they were treated unfairly because they are disabled, while others point to their age, race, sex or national origin. "There seems to be a systematic showing of disparate treatment," Mr. Leeds said.

Many employees say that AT&T either ignored their complaints or punished them for speaking out, he said.

"We are completely unaware of such charges," said Cindy Neale, a spokeswoman for AT&T, who added that the company could not therefore comment further. "AT&T has a very strong, longstanding commitment to workplace diversity," she said.

But Mr. Leeds said complaints had surfaced among former and current employees in at least nine states — including New York and New Jersey — who work in jobs ranging from engineers to sales representatives to managers. "We're hearing the same kinds of things all over the country," he said.

In Colorado, for example, Donna Daniels, a black woman who has worked in technical support for AT&T since 1992, said she had been sexually harassed by her supervisors. The behavior is "very hostile and very intimidating," said Ms. Daniels, who said offensive comments and inappropriate behavior occurred daily. One supervisor, for example, asked her to "come over to my house and take off your panties," according to her complaint, which was filed last month.

"I was treated as a sexual object, not a hard-working employee deserving of respect," Ms. Daniels said in her complaint.

Another employee in Colorado, Kendace Abram, also a black woman, said that she had been overlooked for promotions because of her race, according to her complaint with the E.E.O.C. She also contends that she was harassed by her supervisor, who "frequently made sexually explicit, degrading comments." When she complained, she said that she was accused of often being late or absent. The accusations "seemed like an attempt to discredit me and my complaints," she said in the filing.

Other employees say that they were discriminated against because of disabilities. In Georgia, Raymond Baskin, who joined AT&T in 1968, said in a complaint filed yesterday that he was harassed because he developed rheumatoid arthritis. Another employee, Melinda Nolbert, filed a complaint that said the company refused to accommodate her by moving her work closer to her home, despite the fact that she has sleep apnea and multiple sclerosis.

Leeds Morelli & Brown has been involved in several highly publicized discrimination cases, including one last year involving hundreds of employees at Nextel Communications, a wireless communications company. The firm represented the employees, some of whom filed complaints with the E.E.O.C. The complaints were withdrawn and a federal lawsuit was never filed. As part of an agreement with the law firm, Nextel is reviewing the complaints individually, a company spokeswoman said. Leeds, Morelli declined to comment.

School Settles Age Bias Suit

The Legal Intelligencer - Shannon P. Duffy - October 4, 2001

The Coatesville Area School District in Pennsylvania has agreed to pay more than $475,000 to settle an age discrimination suit brought by the U.S. Equal Employment Opportunity Commission that said the district's early-retirement incentives were illegally structured to pay less to older teachers.

According to the suit, Coatesville's early-retirement bonuses were structured on a sliding scale that paid increasingly smaller amounts as workers neared the traditional retirement age.

In a consent decree, the district promised to abandon the policy and to compensate 75 teachers who retired between January 1997 and December 2000 and received reduced benefits.

EEOC senior trial attorney Mary M. Tiernan filed the suit along with Philadelphia EEOC regional attorney Jacqueline McNair and supervisory trial attorney Judith A. O'Boyle.

The consent decree was signed by the school district's attorneys, William Huganir of West Chester, Pa., and John M. West of Bredhoff & Kaiser in Washington, D.C.

Attorney Lynne L. Wilson of the Pennsylvania State Education Association signed on behalf of the Coatesville Area Teachers' Association.

The proposed settlement has not yet been approved by U.S. District Judge Eduardo C. Robreno.

According to court papers, the 75 teachers will receive sums ranging from $349 to $15,361.

The consent decree says the school district promises not to establish a plan that "reduces, limits, or eliminates cash-based benefits under early-retirement incentive plans on the basis of age."

The district promises to provide by the end of the year all of its managerial employees with at least three hours of training on an employer's legal obligations under the Age Discrimination in Employment Act, with an emphasis on ensuring that no employee is retaliated against for exercising his or her rights under the law.

The teachers' union also promised to advise other local unions around the state about the case and to urge them not to enter into agreements that reduce or eliminate early-retirement incentives on the basis of age.

EEOC - Page 3 - 2001