Monday, September 14, 2009

Discriminatory Policy's Price Tag

In my last post, Discrimination's Price Tag, I described a suit brought by an individual college math instructor that resulted in a $1.2 million judgment. Hopefully that sounded like a lot of money (because it is). While an individual may win a decent-sized judgment, employers may end up paying out even more money in the case of discriminatory policies.

Case in point, the EEOC recently issued a press release detailing its settlement with insurance giant, Allstate.
"In its lawsuit, filed in October 2004 under the Age Discrimination in Employment Act (ADEA), the EEOC charged that in the year 2000 Allstate adopted a hiring moratorium for a period of one year, or while severance benefits were being received, that applied to all its employee-sales agents who were part of its Preparing For The Future Reorganization Program."
The problem? The EEOC alleges "more than 90 percent of the agents subjected to the hiring moratorium were 40 years of age or older." As the EEOC press release explains:
"In 2005, the U.S. Supreme Court held in Smith v. City of Jackson that a facially neutral policy, such as Allstate’s hiring moratorium, which disproportionately affected those age 40 and over violated the ADEA unless the policy was based on a reasonable factor other than age."
Allstate chose to settle the matter. The price tag? $4.5 million! That's just the tip of the iceberg though. The settlement "also provides for discrimination prevention training, posting of notices, reporting and monitoring, and other relief designed to educate Allstate managers in order to prevent future violations of the ADEA." And then there were of course Allstate's legal fees which were no doubt substantial. Do you think a national press release from the EEOC alleging your business's policies discriminate on the basis of age hurts? I'm sure it's not the kind of marketing for which Allstate is looking.

End Note: This post and its predecessor dealt specifically with the litigation costs of discrimination. In a future post I will deal with the costs of discrimination itself.