solution

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This case examines the practice of removing expensive labor costs from the payroll by forcing retirement. It examines one of two different practices intended to accomplish the same end—(a) mandating retirement of older workers and (b) forcing payroll labor into contract labor.

Allstate Insurance

Diversity Issue: Age Discrimination (thru demotion to contract work)

In 1999 Allstate fired 6,400 home and auto insurance agents of which 90% were over age 40. Allstate offered to rehire them as independent contractors with slightly higher pay but without their expensive health and pension benefits—providing they waived their rights to sue Allstate for age or any other discrimination. Allstate also imposed a one-year freeze on rehiring former sales agents in other positions. This procedure was repeated with 650 life insurance agents, 80% of whom were over 40. A class-action suit was filed by employees who were joined by EEOC. Allstate counter sued for fraud.