On July 23, 2012 in Harris v. Superior Court (Liberty Mutual Insurance Co.,), (The California Court of Appeals – 2nd District, No. B195121), the court held that insurance claims adjusters are production workers and are not exempt from overtime compensation.
In Harris, several insurance companies' claim adjusters formed a class action suit seeking damages for unpaid overtime. They argued that they were not classified properly which resulted in them being exempted from overtime pay. The trial court initially certified the class on the basis of the administrative / production worker dichotomy under Wage Order 4 and Wage Order 4-200, but later partially decertified the class under Wage Order 4-2001. The plaintiffs filed a petition for review.
The California Court of Appeals granted the petition. The court noted that under both Wage Order 4 and Wage Order 4-2001 that persons employed in administrative, executive, or professional capacities are exempted from the overtime pay requirement. In order to qualify for the administrative exemption an employee must be primarily engaged in work that is directly related to management policies or general business operations. Day-to-day operations of the business are production and are not exempted from the overtime pay. The court ruled that the plaintiffs were engaged in production and not administrative work because they worked in day-to-day operations which did not entail management policies. Therefore the claims adjusters were not exempt from receiving overtime pay.
If you need information regarding wage and hour claims, severance agreements, or unlawful termination, please do not hesitate to contact a Southern California Employment attorney today.
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