Allstate Said To Coerce Its Agents

A federal agency has concluded that the Allstate Insurance Company was illegally discriminating against about 650 life insurance agents even as it was negotiating to settle similar charges involving thousands of agents who sell auto and home insurance, several agents and the company disclosed yesterday.

In a letter to both sides in the dispute dated May 10, Lynn Bruner, a district director of the Equal Employment Opportunity Commission, said Allstate had engaged in "unlawful interference, coercion and intimidation" against the life insurance agents in 2000 and 2001.

According to the E.E.O.C., the company required agents to convert from being employees with health and pension benefits into independent contractors. Ms. Bruner said Allstate had acknowledged telling the agents they would not be permitted to work for the company unless they agreed in writing not to sue for any kind of employment discrimination. Such an action is a form of illegal pre-emptive retaliation, she said in the letter, which urged the company and the agents to begin settlement talks.

For nearly two years, Allstate has been fighting similar claims that it forced thousands of auto and home insurance agents to become independent contractors. Those agents sued Allstate in Federal District Court in Philadelphia in August. In December, the E.E.O.C. also sued Allstate.

Allstate has in turn sued the agents for fraud, saying they got severance or other benefits after agreeing not to sue the company, but never intended to honor their agreements. Susan Rosborough, an Allstate lawyer, said the company, the country's second-largest seller of auto and home insurance after State Farm, treated its agents properly and legally. The company says it wants to make its sales force more efficient and is increasing commissions to compensate for the elimination of benefits. But Michael Wilson, the lead lawyer in the agents' private suit, said their earnings as independent contractors were not making up for the losses in benefits.

The initial complaints from the home and auto insurance agents were based on age discrimination. More than 90 percent of them were more than 40 years old. More than 80 percent of the life insurance agents are that old. Both of the commission's cases cover a wide range of employment discrimination offenses.

Lawyers who specialize in suing corporations on behalf of workers portrayed Allstate as arrogant in its persistence. "If an employer gets a finding based on a certain type of practice, normally, you would expect the employer to be very cautious about doing it again," said L. Steven Platt, a Chicago lawyer who is president of Workplace Fairness, a group that provides information to workers.

But Ms. Rosborough said Allstate continued converting employees into contractors under the belief that the commission was wrong. "We don't understand their theory of retaliation," she said.

Felix Miller, the lead E.E.O.C. lawyer in the case involving the larger group of agents, said the retaliation concept was simple: agents were required to sign a release giving up their right to sue under antidiscrimination employment laws. "If an agent refused to sign," he said, "Allstate said: `Goodbye. We're not even going to consider keeping you as a sales agent.' We found that to be unlawful retaliation."

But Ms. Rosborough said, "The way we look at it, their jobs were going to go away whether they signed the release or not."

There were two types of jobs, she said — one with full benefits, the other with opportunities to make more money. "We essentially said, Job A is going away," she said. "You have a number of options. If you wanted to apply for Job B, in this case the independent contractor job, you had to sign the release."

With Allstate maintaining its position, there seems to be little hope for a negotiated settlement with the 650 life insurance agents. Whether the E.E.O.C. will eventually sue Allstate over the second group is unclear.

The commission's action against Allstate comes as its leadership and attitudes are shifting in a direction potentially more favorable to corporations. Dominated by Clinton appointees until recently, the agency has filed more than 400 discrimination lawsuits annually in three of the last four years.

But Republicans are on their way to gaining a majority on the agency's five-member board. Cari M. Dominguez, the current chairwoman, appointed by President Bush, has begun to emphasize mediation over litigation. Legal experts say the number of lawsuits is likely to decline.

At Allstate's annual shareholders meeting in Chicago on Thursday, Edward M. Liddy, the chief executive, called lawsuits "a plague on corporate America."

"We conduct ourselves in a most ethical way," he said.

Barry L. Hutton, an Allstate vice president, said it was common for companies to require departing employees to promise in writing not to file lawsuits.

But Mr. Miller, the lawyer for the E.E.O.C., said the big distinction in Allstate's case was that most of the agents were not leaving the company. "This was a situation where you were signing a release in order to stay," he said.

We can make the worm turn!!!