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Settlement for Older Workers Challenging a Statewide RIF

AARP Foundation Litigation (AFL) attorneys represented older workers challenging a Virginia-wide reduction in force (RIF) that took place over two years.


Three former employees of Wellpoint, Inc, one of the nation's largest health insurers and best-known employment health care management consultants, challenged their terminations. Each had between 19 and 31 years of service at the firm; each met or exceeded job expectations; each had utilized some of the family and medical leave time guaranteed by federal law; and each also happened to be 47 years old or older. They suspected age discrimination, a suspicion bolstered by corporate practices at Wellpoint that include widely quoted CEO comments cautioning employers to look at increasing health care costs of older workers. The former employees sued on behalf of all Wellpoint's Virginia employees laid off during a RIF that spanned 2005 and 2006.

AFL represented the plaintiffs, with the law firm of Butler, Williams & Skilling. The lawsuit alleged that Wellpoint violated various federal laws (see below) as well as conditions of business operations imposed by state insurance regulators. More significantly for AARP members, while Wellpoint couched the layoffs as individual terminations, the lawsuit alleged that in fact, the layoffs were part of a coordinated and planned effort using health care cost "metrics" that disproportionately identified older employees as high cost workers suitable for termination and thus, illegally penalized them for utilizing health insurance benefits as well as federally guaranteed family/medical leave.

The settlement calls for a fund of $2.6 million to be distributed among over 150 plaintiffs and to cover the plaintiffs' attorney's fees and litigation expenses. In return, the plaintiffs' claims will be dismissed.

What's at Stake

The Age Discrimination in Employment Act (ADEA) prohibits employers from targeting older workers when making layoff, termination, hiring or promotion decisions. The ADEA prohibits both overtly discriminatory policies and policies that appear neutral on their face but in fact end up disproportionately affecting older workers, and further, cannot be justified by employers based on "reasonable factors other than age." The Older Workers Benefit Protection Act (OWPA) establishes specific requirements that govern layoffs, including sufficient time for employees to consider proposed releases and a duty to provide the names, ages and jobs held by all affected employees, so that affected employees have a chance to determine whether there appears to be a pattern of age-based terminations. The Family and Medical Leave Act (FMLA) guarantees certain employees (of firms employing 75 or more workers and who have logged at least 1,250 hours in the past year) a right to take up to 12 weeks of unpaid leave and return to work. The Americans with Disabilities Act (ADA) prohibits discrimination on the basis of an actual or perceived disability or a record of disability.

Plaintiffs argued that Wellpoint's actions violated all of these laws. AFL attorneys participated in the case to help assure that violations of these laws will not be tolerated.

Case Status

Settlement of Merritt v. Wellpoint, Inc., was approved by the Federal District Court, Eastern District of Virginia.