AARP Foundation, contending that not everybody is in good hands with Allstate Insurance Company, has joined as co-counsel in a class action lawsuit charging the giant firm with violating federal age discrimination and pension laws. The suit alleges that Allstate severed employment contracts with 6,400 company agents, seeking to deprive the agents of their benefits and purge older workers from its ranks. These actions violated the company's statutory obligations under the Age Discrimination in Employment Act (ADEA) and Employee Retirement Income Security Act (ERISA), according to the suit. "Allstate pressured thousands of loyal long-time employees to give up their benefitsand their futures," said AARP's Director of Policy and Strategy John C. Rother in announcing the nonprofit organization's entrance into the case. "We joined as co-counsel to right a wrong, spotlight these blatant actions, and send a message to other employers who might consider similar actions," Rother said.

Twenty-nine terminated Allstate agents, acting for 6,400 company agents, filed suit against the corporation in US. District Court for the Eastern District of Pennsylvania, located in Philadelphia. They charged that the company terminated their employment contracts in order to deprive them of their pensions and other benefits. The plaintiff agents also asserted that Allstate had another motiveto weed out older agents and eventually replace them with younger employees. AARP Foundation attorneys have joined with the two law firms representing the plaintiffsSprenger & Lang PLLC and Zevnik Horton LLPto serve as co-counsel.

The plaintiffs argue that throughout the 1990s Allstate unsuccessfully sought to persuade its employee agents to relinquish their protected status as employees and convert to independent status. The real goal of what was actually a mass termination plan was allegedly to save the company more than $200 million annually. But the plaintiffs state that only a few agents were willing to give up their employment statusand the generous benefit package that went with it. So, in November 1999, the suit alleges, Allstate took a more directand illegalapproach. The company announced that the agents would basically be terminated and would only be allowed to remain with the company as "independent contractors" if they waived their right to bring a lawsuit. According to the complaint, Allstate's actions led more than 99 percent of its employee agents to sign the release, a release that allegedly violates ERISA and ADEA and is unenforceable. The plaintiffs say that the second reason for the termination program was to transform the sales force from one in which approximately 90 percent were over 40 to one infused with younger agents and other sales personnel. The Equal Employment Opportunity Commission (EEOC) has issued a determination that Allstate engaged in "threats, coercion, and intimidation" and that forcing the agents to sign the release violated the ADEA.

What are some reasons Allstate Insurance Company would want to have its employees becomeindependent contractors? If you were a business manager for Allstate, what course of action would you decide to take, given these reasons? Why?