Age Discrimination Suit Reinstated

The California Sixth District Court of Appeal reversed a lower court ruling that dismissed an age discrimination case brought by three insurance agents of the California State Automobile Association (CSAA) and ruled that the agents could bring most of their claims to court.

The agents had begun working for CSAA in the late 1960s and 1970s. All agents are expected to adhere to a sales quota, but the company had a 28-year old policy that relaxed the quota by 15 percent when the agents reached age 55, and by 25 percent at age 60. The company changed this policy in 2001 and terminated the three agents in 2005 after a stalemate over whether the policy still applied to them.

The plaintiffs alleged that they remained with CSAA in reliance upon its promise to reduce their quotas, and that the company's unilateral decision to get rid of its relaxation policy in 2001 amounted to breach of contract and age discrimination. They also alleged that the policy was changed to weed out older agents and to transfer its sales business to telemarketers who work hourly instead of on commission, thus saving the company thousands of dollars.

The Age Discrimination in Employment Act of 1967 (ADEA) bars employers from firing an employee 40 years of age or older for age-related purposes, as does the Fair Employment and Housing Act (FEHA). In this case, CSAA would have to argue a nondiscriminatory reason for firing the three agents pursuant to the FEHA - a tough argument, given that it admitted that its senior agents had been given preferential treatment whenever there was a change in commissions or sales quotas.

Although the agents were hired "at will," they could reasonably have expected not to be fired for not meeting the established sales quotas and for relying on a promise that their quotas would be reduced as they became age 55 and then 60. The company's claim that it could unilaterally withdraw its policy since it had no expiration date was rejected because a jury could reasonably find that the company intended the second reduction in sales quotas to last for five years, the same time as that of the first reduction, until retirement age.

If CSAA is found liable, the court could order reinstatement of the agents to their prior positions, back pay from the date of the discrimination or from 2005, when they were fired, attorney's fees, compensation for emotional distress and punitive damages.