New York Times Report on Litigation Challenging an Allstate Waiver Agreement, by Jeremy Telman, Contracts Prof Blog

http://bit.ly/1kwF7GI

According to this article in today’s New York Times, 6,200 Allstate employees, who joined its Neighborhood Agents Program in the 1980s and 1990s, were called into meetings in 1999 at which they were told that they would now proceed as independent contractors, forfeiting health insurance, their retirement accounts or profit-sharing, and terminating the accrual of their pension benefits.   If they wanted to continue to sell Allstate insurance, they had to sign waivers in which they agreed not to sue the insurer.  Thirty-one agents signed but have now sued nonetheless, alleging age discrimination and breach of contract.

They sued thirteen years ago, but the case is still far from over.  They are still seeking class certification.  The Times article indicates that cases such as this one are hard to win, but the judge in this case has already stated that those that signed the waivers were made substantially worse off, that Allstate’s claimed corporate reorganization was actually a disguised staff reduction, and that Allstate’s conduct was ‘self-serving and, from most perspectives, underhanded.’  In addition, Allstate seems to have misrepresented to the agents the consequences of not signing the waiver, having told the agents that they would be barred for life from soliciting business from their former customers.  Allstate has already paid $4.5 million to settle an age-discrimination claim brought by the EEOC on behalf of 90 of the agents.