The Allstate Insurance Co. has agreed to pay 90 former employees about $4.5 million to settle an age discrimination suit filed after the insurer tried to convert its workforce form employees to independent contractors in 1999.

The U.S. Equal Employment Opportunity Commission, in a case filed in Missouri, alleged that Allstate engaged in “unintentional discrimination by implementing a policy restricting for a period of up to two years the re-employment of its employees whose employment contracts were terminated” by the company. The conversion was part of its “Preparing for the Future Group Reorganization,” which was announced in November 1999.

The EEOC said the policy adversely affected employees who were at least 40 years old.

The insurer required about 6,500 agents to sign releases promising not to sue the company when it converted them to independent contractors, according to the EEOC suit, filed in October 2004 under the Age Discrimination in Employment Act.

A total of 19 agents refused to sign the release document, while another 4,000 became independent contractors and 2,500 left the company, according to published reports.

The EEOC filed the case because 90% of the agents on whom a hiring freeze was imposed were 40 or older.

In one of the largest discrimination suits ever filed, the EEOC had sought about $30,000 per affected agent, totaling about $2 billion, in compensatory and punitive damages.

The order, approved by U.S. District Court Judge E. Richard Webber Sept. 14, notes that Allstate neither admits nor denies the allegations.

As part of the settlement, Allstate officials must make sure that any policy used to reduce its workforce does not disqualify for re-employment a disproportionate number of employees age 40 and up. If the policy would unfairly affect older workers, the Northbrook, Ill.-based insurer must provide the EEOC with written notification of its plan and reasons for the action at least 14 days prior to implementation so the EEOC can meet to discuss the policy with Allstate officials, the order says.

Allstate also must require its human resources department to undergo training on the Americans with Disabilities Employment Act within six months.