AT&T Inc has been sued by the U.S. Equal Employment Opportunity Commission, which accused the largest U.S. phone company of age discrimination for refusing to rehire previously retired workers over age 40.

In a lawsuit filed Thursday in federal court in Manhattan, the EEOC said Dallas-based AT&T in October 2006 adopted a nationwide policy not to rehire employees who had retired under various retirement and severance programs.

AT&T's no-rehire policies have had and continue to have an adverse impact on employees and applicants for employment who are age 40 or over, the lawsuit said. There is no legitimate business reason or purpose for AT&T's no-rehire policies.

It was not immediately clear how many employees might be affected by the policy.

A spokesman for AT&T declined an immediate comment.

The case was brought in the name of John Yates, who the EEOC said was 57 when AT&T turned him down for employment.

The EEOC is seeking payment of back wages to affected employees, an injunction against further discrimination, and other remedies.

AT&T shares rose 11 cents to $25.49 in afternoon trading on the New York Stock Exchange.

The case is EEOC v. AT&T Inc, U.S. District Court, Southern District of New York (Manhattan), No. 09-7323.

(Reporting by Jonathan Stempel; Editing by Steve Orlofsky)

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