In a recent decision, the California Supreme Court has chosen to not review Harris v. Liberty Mutual Insurance Company. The high court also depublished the Harris case so it cannot be used as a precedent in any subsequent case.
In Harris, Liberty Mutual Insurance Co. classified their insurance claim adjusters as administrative personnel, exempt from Fair Labor Standards Act (FLSA) coverage. Under the FLSA, exempt employees are not entitled to overtime compensation.
In 2001, several insurance claim adjusters sued Liberty claiming the company classified them as exempt solely to deny them overtime pay. The trial court certified the class. After an evidentiary hearing, however, the trial court decertified the class for all claims that arose after October 1, 2000. Claims arising before October 1, 2000 continued to be entitled to class certification. Both the insurance claim adjusters and Liberty appealed.
On July 23, 2012, the Second Appellate Division of the California Court of Appeals held that the insurance claim adjusters were not administrative employees. Instead they were covered by the FLSA and entitled to overtime pay. The appellate court also ordered certification for all claims, regardless of the date filed. Liberty appealed.
The California Supreme Court reversed, holding that the “administrative/production worker dichotomy” is not dispositive in determining whether an employee is exempt or nonexempt. The case was remanded back to the appellate court. On remand, the Court of Appeals once again held that the insurance claim adjusters were nonexempt employees. The appellate court reasoned that though the insurance claim adjusters did perform management administration, such as negotiate settlements for the company, their duties were actually carried out to further along the company’s day to day operations. For instance, any settlements above the predetermined range need approval from higher ups. Therefore the insurance claim adjusters’ duties were primarily productive, and overtime pay should be paid.
In a recent 9th Circuit District Court case, the court held that insurance sales agents are independent contractors exempt from FLSA. Daskam v. Allstate.
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