Alert
Close

Introducing AARP RealPad: The Wi-Fi Tablet That Makes It Easy to Share, Learn, Connect and Play. Learn more

about
foundation

AARP Foundation is dedicated to serving vulnerable people 50+ by creating solutions that help them secure the essentials and achieve their best life. Read

 

Foundation Overview

Executive Leadership

Governance

2009 Annual Report

Financial Information

Diversity Practices

Romero v. Allstate, Three Cases

AARP Attorneys Represent Allstate Agents Alleging Age Discrimination

AARP Foundation Litigation along with two Washington, D.C. law firms — Sprenger & Lang PLLC and Morgan, Lewis & Bockius LLP — are co-counsel for plaintiffs in three lawsuits challenging terminations at Allstate Insurance Company.

Background

The cases arise from Allstate's forced termination of more than 6,200 older employee-agents. Approximately 90 percent of those terminated were over age 40, and their median age was 50.

Allstate took several approaches in its job termination efforts. First, it tried to convert the employee-agents to independent contractors, which are far less costly to employers because some taxes and employee benefits do not have to be provided for independent contractors. Throughout the 1990s, Allstate attempted to persuade its employee-agents to convert to independent contractor status voluntarily — but got only a few takers.

Allstate next got more aggressive. In 2000, it notified all of its employee-agents that as part of a company reorganization their jobs had been eliminated and consequently they were only permitted to handle work for Allstate and/or receive severance benefits if they signed a release agreement stating that they were independent contractors. Denouncing the tactics used by Allstate as "threats, coercion and intimidation," the federal Equal Employment Opportunity Commission (EEOC), which has administrative authority over federal discrimination claims, issued a Determination that the release violated the Age Discrimination in Employment Act (ADEA) and was unenforceable. The agents sued Allstate, as did the EEOC.

The first suit (Romero I) was filed in 2001 as a class action on behalf of the 6,200 terminated employee-agents. In addition to claiming that the terminations of the older workers violated the ADEA, the suit also claims that Allstate violated the Employee Retirement Income Security Act (ERISA), since the terminations were allegedly intended to deprive the employee-agents of an excellent package of benefits, resulting in cost-savings to Allstate of nearly $200 million per year.

The second lawsuit (Romero II), also filed as a class action seeking to represent the 6,200 terminated employee-agents, claims that Allstate illegally reduced pension benefits in violation of ERISA's anti-cutback rules. Allstate's pension plan had initially provided early retirement benefits at age 55, which were enhanced as an early retirement incentive. In 1991, Allstate adopted pension plan amendments to phase out this incentive. Subsequently, Allstate adopted amendments to exclude certain types of service from being counted for determining eligibility for and earning additional amounts of early retirement benefits, sharply reducing the workers' ability to obtain these benefits. The district court's dismissal of this suit was reversed on appeal in 2011 by the U.S. Court of Appeals for the Third Circuit and is now pending in the lower court.

The third suit (Romero III), filed by the 29 named plaintiffs in Romero I, but not as a class action, alleges that Allstate illegally retaliated against them for filing the Romero I lawsuit by asserting groundless counterclaims against them in violation of the ADEA. Allstate's counterclaims are based on the fact that although these plaintiffs signed a release of their employment-related claims against Allstate, they subsequently filed discrimination charges with the U.S. Equal Employment Opportunity Commission (EEOC) and the Romero I lawsuit. The EEOC determined that the release signed by the Romero III plaintiffs is invalid because it violated the ADEA.

In the three cases the plaintiffs are seeking restoration of their lost benefits, the ability to obtain the enhanced benefits, monetary damages for back pay and other relief.


Search Legal Advocacy

Find
Legal Cases

Find the most recent cases in which AFL has advocated in courts nationwide for the rights of older persons, and filed AARP’s amicus curiae (“friend of the court”) briefs that help courts decide precedent-setting cases.

Make a Difference. Donate.

Make a Difference — support programs that help vulnerable seniors who are struggling to make ends meet.