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| | Appellate Court Says Claims Adjusters Can Get Overtime
By Jorge Alexandria - August 3, 2012
I have worked as a claims adjuster for 23 years – came here right out of college. Although I started young, it was not my first job. Those earlier jobs were all blue collar in nature. They were production type jobs where if you worked a minute over the eight hour mark on any given day you were paid overtime. No questions were asked. The employer knew the work needed to get done, there was no frowning, and overtime was paid.
Today when folks find out I’m a claims adjuster, the assumption is that it is an easy job and that I can pretty much elect whether to go in to work today or play golf. In their minds it is an administrative or executive job and not “real” work. I’m always amazed by this in both their ignorance and willingness to show it. Work is work and it really cuts into my free time.
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And one should be compensated for every hour spent on the desk because, believe me, I would rather be playing golf. |
Second, a workers’ compensation examiner’s job is not like that of an executive- it’s all production and there is just no way in Hades one can manage a two hundred plus inventory in an eight hour day. I mean the job needs to get done – the checks need to get cut and go out to the medical providers and injured workers, compensability decisions are consulted with the insured prior to being made, and the cases that are scheduled to trial need to be prepared and settlement authority obtained (as in some cases adjusters have zero settlement authority).
Then on top of that you have to deal with bosses – the ones that pay you and the ones who just act like they do. When all is taken into account, you can’t go home until all aforementioned tasks are completed. So trust me, an adjuster’s job is as “real” as it gets; it’s all production; and one should be compensated for every hour spent on the desk because, believe me, I would rather be playing golf.
Well, on July 23, 2012 the California 2nd District Court of Appeals added a ray of sunshine for workers’ compensation claim examiners when it ruled that claims adjusters for the Liberty Mutual Group are not exempt from state overtime laws.
The case, Harris v. Superior Court (Liberty Mutual Insurance Co.), No. B195121 http://www.courts.ca.gov/opinions/documents/B195121A.PDF, was before the 2nd District Court of Appeals for the second time, following remand from the state Supreme Court in December. The Division 1 panel again sided with the claims adjusters. The Harris case arose from four separate class actions filed by claims adjusters for Liberty Mutual Insurance Co. and Golden Eagle Insurance Corp. alleging the carriers did not pay overtime compensation that was due. Los Angeles Superior Court Judge Carolyn B. Kuhl consolidated the class actions into one proceeding and certified a class of "all non-management California employees classified as exempt by Liberty Mutual and Golden Eagle who were employed as claims handlers and/or performed claims-handling activities."
California employees are generally entitled to overtime pay for work in excess of eight hours in one workday or 40 hours in one week, however regulations promulgated by the California Industrial Welfare Commission exempt workers employed in "administrative, executive or professional capacities" from overtime payments.
In siding with the claim adjusters the first time, the appellate court said there was evidence that some of the adjusters occasionally engaged in work that was "potentially" administrative, but that was not their primary role. Adjusters "investigate and estimate claims, make coverage determinations, set reserves, negotiate settlements, make settlement recommendations for claims beyond
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In siding with the claims adjusters the first time, the appellate court said there was evidence that some of the adjusters occasionally engaged in work that was "potentially" administrative, but that was not their primary role. |
their settlement authority, identify potential fraud and so forth," the 2nd DCA said. "None of that work is carried on at the level of management policy or general operations. Rather, it is all part of the day-to-day operation of defendants' business." The California Supreme Court reversed, ruling that the 2nd DCA had applied an improper analysis. It told the court of appeal to look at it again. On remand the 2nd DCA reasserted, by two votes to one, that claims adjusters are nonexempt and that an adjuster "must be primarily engaged in work that qualitatively is ‘directly related to management policies or general business operations'" to qualify for the administrative exception to the state's overtime requirements pursuant to former Section 541.205(a).
Is the case heading back to the state Supreme Court? I don’t think so as the Appellate Court wrote their opinion following the guidance set out in the Supreme Court’s original decision on remand. Liberty Mutual has enough money and it is quite possible it will appeal it to the Supreme Court again but this time I don’t believe the Supreme Court will accept its appeal. In fact, after the appeal is filed if the Supreme Court does nothing with it after 30 days it is deemed denied.
In the meantime, does the law on who does or doesn’t qualify for the administrative exemption remain unclear? Yes, absolutely. As the law currently stands, claim adjusters qualify for the exemption if, among other things, their duties relate to the administrative operations of insurance as distinguished from production. Plaintiff and defense attorneys are going to get rich fighting or defending claims by multiple employees for unpaid overtime going back years if not decades.
You gotta love California.
Jorge Alexandría is a U.S. Army veteran who received his B.A. in Political Science from Cal State Los Angeles, and graduated from Cal Poly Pomona with a Master’s in Public Administration. He holds both a California Workers Compensation Claims Professional (WCCP) designation and the State of California’s Self-Insured Administrator’s License. With more than 20 years industry experience, including various leadership positions, he is a leading expert in the field of risk management. He currently practices federal workers’ compensation of maritime interest. He can be reached at Riskletter@mail.com. The views and knowledge expressed in this article are Jorge Alexandría’s alone.
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