In a recent decision, the United States Court of Appeals for the Second Circuit has vacated and remanded the United States District Court for the Eastern District of New York’s grant of summary judgment for Government Employees Insurance Company (“Geico”) against Plaintiffs Candace Harper, Lisa Hoyt, Mark Anthony Turner, and Allison M. Akers.
Plaintiffs brought this case to contest Geico’s finding that they are employed in an administrative capacity, which would mean that they fall under the administrative exemption and are therefore not entitled to coverage under the Fair Labor Standards Act (“FLSA”). An employee that is employed in a “bonafide administrative capacity” must (1) receive compensation of more than $455 a week, (2) have a primary duty to perform office or non-manual work pertaining to management or general business operations of the employer or employer’s customers, and (3) exercise discretion and independent judgment with respect to significant matters. Exemption from the FLSA would exclude Plaintiffs from collecting overtime pay, which is one-and-a-half times their regular pay for any labor in excess of 40 hours in a week. The District Court held that as a matter of law, Plaintiffs fell under the administrative exemption. Specifically, the court held that the Plaintiffs, who are “telephone claim representatives” (“TCR”) and are responsible for processing claims brought against Geico policy holders for bodily injury or property damage stemming from automobile accidents, fall under the second prong of the administrative exemption.
On review, the Second Circuit analyzed the lower courts reliance on a guideline written by the Secretary of Labor which claims that insurance claims adjusters generally fall under the administrative exemption as long as their duties involve interviewing insureds, inspecting damage, reviewing facts and preparing damage estimates, and making evaluations and recommendations pertaining to cover of claims, value of claims, negotiation settlements, and litigation. The court specifically noted that the title of “insurance claim adjuster” does not create a blanket exemption and that exemption claims must be analyzed on a case-by-case basis. Generally, the requirement of a case-by-case analysis makes judgments as a matter of law, which requires the moving party to show that there is no legitimate question of fact and that their party is entitled to judgment as a matter of law, an improper outcome.
The court further analyzed the duties noted within the Secretary of Labor’s guideline, and compared it to the duties required of the Plaintiffs as TCR’s. They noted that TCR’s do not inspect property damage or make valuable recommendations regarding litigation. Further, while TCR’s do have duties noted by the secretary of labor, such as interviewing insureds and preparing damage estimates, they have very little true discretion in the process. All of their work is either closely monitored by their supervisors, or entered as data into software which removes the majority of the discretion normally required of insurance claims adjusters. Even the settlements they negotiate must fall within a narrow range and be approved by supervisors.
The court found that, based on the information provided, there was an issue of triable fact. Accordingly, the court vacated the District Court’s ruling that the Defendant was entitled to judgment as a matter of law, and remanded the case to be brought in front of a factfinder.
The Employment Lawyers at Fitapelli & Schaffer frequently represent employees who have been misclassified as exempt under the Fair Labor Standards Act and the New York Labor Law. Additionally, Fitapelli & Schaffer has handled many cases where employers have misused the administrative exemption to deny overtime wages, recovering these lost wages. Please contact us at (212) 300-0375 to schedule a free consultation to further discuss your rights. For more information, please visit our website,www.fslawfirm.com.