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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 last week 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. Copyright 2002 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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