Compliance October 23, 2006

PBGC Assumes Pension Plans of School Locker Manufacturer

October 23, 2006 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation (PBGC) has announced it has assumed responsibility for two pension plans sponsored by Republic Storage Systems Co., Inc.
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The pension plans faced abandonment after the bankrupt Canton, Ohio-based manufacturer of school storage lockers sold substantially all of its assets to Chrysalis Capital, the PBGC said. The plans covered nearly 900 former employees.

The PBGC estimates that the Republic Storage Systems Co. Inc. Pension Plan for Non-bargaining Employees and the Republic Storage Systems Co. Inc. Pension Plan for Bargaining Unit Employees combined are only 47% funded, with $25 million in assets to cover more than $54 million in promised benefits. The PBGC said its insurance will cover all but about $6 million of the shortfall, and assumption of the plans will have no material effect on its balance sheet.

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The agency, which became trustee of the plan on October 19, will send trusteeship notification letters to all participants within the next few weeks, according to the announcement. Retirees already receiving benefits will not see an interruption in their payments, and may be eligible for the federal Health Coverage Tax Credit.

Retirees and other former employees of the company can visit www.pbgc.gov or call 800-400-7242 with questions.

Compliance October 20, 2006

Allstate Rehire Policy Defies ADEA

October 20, 2006 (PLANSPONSOR.com) - The US District Court for the Eastern District of Missouri ruled in a summary judgment that Allstate Insurance Company's one-year moratorium on rehiring its former sales agents has a greater impact on those workers aged 40 and older.
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The ruling by US District Judge E. Richard Webber, in a suit filed by the Equal Employment Opportunity Commission (EEOC), found that Allstate’s policy violates the Age Discrimination in Employment Act (ADEA). But Allstate is still awaiting a jury decision on whether its rehire policy meets an exception to the act, which says any action based on a “reasonable factor other than age” is not unlawful.

The EEOC claimed in its lawsuit that Allstate fired its agents and then offered them jobs as independent contractors, but refused to hire them in other positions as employees for one year. Some 90% of the agents were 40 years old or older.  The workplace anti-discrimination agency says this violates the ADEA, because a disproportionate number were aged 40 or older.

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Weber agreed that the EEOC presented “sufficient evidence to show a disparate impact on the protected group” of workers 40 and over, making the decision one of the first instances putting into practice a Supreme Court ruling last year that ADEA does apply to “disparate impact” cases.

The Supreme Court turned away an appeal request by former Allstate agents in March to review the decision of the 7th US Circuit Court of Appeals (See Judge: Allstate Innocent of Age Discrimination Claims ) that said the insurance company’s decision to discharge 6,400 employee agents was legitimate and nondiscriminatory. The plan had called for Allstate to no longer sell insurance through employees, but instead through a network of independent contractors (See US Supreme Court Turns Away Allstate ADEA Case ).

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