California Supreme Court Depublishes Appellate Decision Finding Insurance Claim Adjusters Non-Exempt – Los Angeles Employment Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on December 13, 2012

  The California Supreme Court has chosen not to review the Court of Appeals decision that insurance adjusters are nonexempt employees covered by the Fair Labor Standards Act (FLSA).  Further, the high court has depublished the case, ensuring it cannot be used as precedent in any other misclassification case.  Harris v. Liberty Mutual Insurance Company.

In 2001, insurance claim adjusters working for Liberty Mutual Insurance Co sued the company claiming they were misclassified as exempt thereby denying them overtime pay.  After certifying the class, the trial court found that only claims arising before October 1, 2000 were entitled to class certification.  Both sides appealed.

In July 2012, the California Court of Appeals rejected Liberty’s argument that the insurance claim adjusters were administrative employees, exempt from FLSA coverage, and ordered certification for all claims, regardless of the date filed.  On appeal, the California Supreme Court reversed and remanded the case back to the appellate court for reconsideration.  The high court held that the “administrative/production worker dichotomy” is not dispositive in determining whether an employee is exempt or nonexempt.  On remand, the appellate court again held that the insurance claim adjusters were nonexempt employees entitled to overtime pay because though their duties were primarily management administration, the duties carried out the company’s day to day operations, and therefore were productive.   For instance, although the claim adjusters had the power to negotiate on Liberty’s behalf, their power was limited to entering settlements within a predetermined range.  Settlements above the range required the approval of higher authorities.

By removing Harris from the precedential decisions of California law, the issue of whether insurance claim adjusters are exempt or nonexempt employees will continue to be litigated in California courts.

If you believe you have been misclassified as an independent contractor, contact Blumenthal, Nordrehaug & BhowmikBlumenthal, Nordrehaug & Bhowmik is an experienced California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.


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