A recent case against a major insurance company which was pending in California, has resulted in a determination that special investigators, who were paid a salary and no additional overtime pay, are not exempt from receiving overtime pay under state or federal law. This means that these workers are entitled to overtime pay for hours worked past 40 per week (federal law) and for hours past 8 per day (California law).  The case concluded with the payment of $5+ million to resolve the claims of the employees who were part of the class/collective action. 

The result in this recent case is consistent with prior cases for the same type of job where it was found that such special investigators are not properly classified as exempt and are entitled to overtime pay (1.5 times the regular rate of pay), even though they are paid on a salary basis. 

The issue of proper overtime pay classification for various types of workers in the insurance industry has been hotly debated for years, with numerous misclassification cases brought on behalf of a variety of job positions ranging from adjusters to fraud investigators to clerical and office support staff. As with other overtime pay lawsuits, the key issues revolve around 1) how the employees are paid – hourly, salary or day-rate, and 2) the specific job duties and responsibilities of the position. In cases such as the one brought by investigators, who were paid a salary, the focus is on job duties and responsibilities. The employer claims that the job involves a significant degree of independent judgment, discretion and decision making, while the employees assert that, regardless of what might appear in a job description, the “real world” performance of the job is largely governed by set policies, guidelines and processes that severely limit any independent judgment, discretion and decision making – essentially requiring them to just follow the rules they are given. 

While it is better for insurance companies bottom line to be able to control and predict costs by paying workers (particularly those who are frequently required to work long hours, far exceeding 40 per week) on salary basis with no additional pay for overtime, this desire to reduce payroll cost does not alter the legal requirements regarding overtime pay. If the company decides to pay non-exempt employees on a salary basis, that is legal, however, it must then also pay at least time and one-half whenever they work overtime. 

In cases where insurance industry workers sue their employers, they seek to recover not only back wages, but liquidated (double) damages as well as state law penalties, costs and attorneys’ fees.  

Have You Been Unfairly Classified as Exempt?

Because of the strict time limits imposed by the overtime pay laws, procrastination can be costly. If you have any doubts as to your entitlement to overtime pay, contact the experts at The Lore Law Firm for a free and confidential review.

Call 1-866-559-0400 or submit your information using our convenient Case Evaluation form for a FREE and CONFIDENTIAL review of your circumstances – because time is money.