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Media Alerts - EEOC v. Allstate Insurance Co. - Third Circuit
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February 18, 2015
  EEOC v. Allstate Insurance Co. - Third Circuit
Headline: Third Circuit Holds Waiver of Legal Claims As Condition for Continued Employment Not Illegal Retaliation

Area of Law: Employment Discrimination

Issues Presented:

Does requiring employees to sign a blanket waiver of legal claims for continued employment violate employment discrimination anti-retaliation statutes.

Brief Summary:

Allstate Insurance Company fired at-will employees and conditioned their return as independent contractors on waiving existing legal claims against Allstate. The Equal Employment Opportunity Commission sued Allstate alleging the company had illegally retaliated against employees by only allowed them to continue their employment if they waived all discrimination claims. The Third Circuit affirmed the District Court, holding that (1) continued employment can validly be exchanged for a waiver of anti-discrimination claims; (2) refusing to sign the waiver was not a protected activity; and that (3) the actions of Allstate did not comprise an adverse employment action.

Extended Summary:

Allstate Insurance Company fired at-will employees as part of a restructuring program with the goal of converting over to a sales program based on independent contracting. Employees were given four options: (1) conversion to independent contractor; (2) $5000 and an economic interest in their accounts; (3) one-year's severance; or (4) 13-week severance. Each option required the individual at-will employee to waive all legal claims, but not future claims, against Allstate Insurance Company.
The Equal Employment Opportunity Commission brought a lawsuit alleging illegal retaliation against the at-will employees by requiring waiver of discrimination claims as a term of future employment. The District Court rejected all theories of retaliation presented by EEOC and granted summary judgment for Allstate.
The Third Circuit first noted that waiver of claims under anti-discrimination statutes is valid generally and held that continued employment was sufficient consideration. The Third Circuit noted the enhanced benefits of the conversion option compared to new independent contractors and the at-will employee's lack of rights to continued employment or severance.
The Third Circuit held that Allstate did not retaliate against the at-will employees because refusing to sign the release was not a protected activity. The Third Circuit reasoned that the waiver was for all legal claims and so refusal to sign it could be for reasons unrelated to discrimination. The Third Circuit then held that there was no adverse employment action because the at-will employees were not entitled to any benefits denied if they refused to sign the waiver.

Find the full opinion at:

Panel: Hardiman, Scirica, Barry, Circuit Judges

Argument Date: January 14, 2015

Date of Issued Opinion: February 13, 2015

Docket Number: No. 14-2700

Decided: Affirmed

Case Alert Author: Philip Jones


Paul D. Ramshaw (argued), C. Felix Miller, Iris A. Santiago-Flores, John V. Gorman, Coleen M. Meehan for Plaintiff-Appellant

Donald R. Livingston (argued), Katherine M. Katchen, Richard C. Godfrey, Jordan M. Heinz, Sallie G. Smylie, Erica Zolner for Defendant-Appellee

Rae T. Vann amicus for Defendant-Appellee

Author of Opinion: Hardiman

Circuit: Third Circuit

Case Alert Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 02/18/2015 11:01 AM     3rd Circuit  

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