Equitable Life Assurance Society of the United States said Thursday that it would pay a record $12.5 million to settle claims that it had discriminated against more than 400 employees because of their age during a siege of companywide layoffs in 1978.
The money, to be paid into an escrow account shared equally by two groups of former employees--132 former workers who filed their own private suit in 1979 and another 300-plus represented by the federal Equal Employment Opportunity Commission in a suit filed in 1981--is the largest cash settlement made in any case brought under the Age Discrimination in Employment Act of 1967, said James L. Lee, an EEOC attorney here.
According to the settlement, reached in U.S. District Court here, all age discrimination claims stemming from the 1978 firings will be dropped.
Equitable, the nation's third-largest life insurance company, noted in a statement that the settlement "contains no findings or admissions of wrongdoing by the Equitable, which has denied the allegations."
The settlement does not require that the company rehire any plaintiffs. The company did agree, however, to announce internally its policy of compliance with the 1967 act and to file "informational" reports with the EEOC for 1985 and 1986.
Both sides agreed that, without the settlement, the litigation would have dragged on for years, with appeals virtually a certainty after the first trial or trials.
The two lawsuits arose after Equitable embarked on a drive "to improve profitability and reduce the growth of expenses" in 1978 by firing or encouraging the retirement of 545 workers, of whom 70% were over 40 years old.
The 1967 act prohibits discrimination against workers between the ages of 40 and 70.
The fired workers ranged from a corporate vice president earning $100,000 annually to secretaries earning as little as $10,000, Lee said.
Of the $12.5-million settlement fund, half will be apportioned among the 132 private plaintiffs and half among the roughly 300 former workers represented by the EEOC. All will receive a share according to their age, length of service and actual losses, said Martin Jacobson, a New York lawyer who represented the private plaintiffs.
Jacobson said the private plaintiffs would receive a proportionately larger share because most of them had had to make an affirmative effort to pursue their suit by testifying and answering lengthy written questionnaires. In contrast, many of the EEOC's clients may not even be aware that a lawsuit was brought on their behalf.
The EEOC's Lee, however, argued that attorneys' fees and expenses would consume a significant share of the private plaintiffs' pot.