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Farmers Special Investigators Represented by Nichols Kaster Are Not Exempt From Overtime Protection

Yesterday, a California federal judge held that special investigators who worked for Farmers Insurance Exchange are not exempt from receiving overtime pay under state or federal law. Special investigators are tasked by the insurance company with investigating suspicious or potentially fraudulent insurance claims. Farmers has always paid them a salary, with no overtime premium pay for overtime hours worked. Farmers claims that its special investigators are exempt from overtime pay under the “administrative exemption.” The case is certified as a collective action under the federal overtime law and as a class action under California state law.

The plaintiffs filed a motion for summary judgment in February, challenging Farmers’ exemption defense, and Farmers filed a motion asking the court to rule that the special investigators should not receive overtime pay. On May 15th, the court held that Farmers did not meet its burden of proving that special investigators are exempt. The case will now go to trial to determine how much overtime the special investigators worked and should be paid.

This isn’t the first time Farmers has been sued by its special investigators seeking overtime pay.  In Fenton v. Farmers Insurance Exchange, as case also handled by Nichols Kaster, PLLP, a Minnesota federal judge similarly ruled against Farmers, finding that the special investigators were overtime eligible. While Farmers claims in the current case that it changed the job duties so that special investigators are now exempt, the court was not persuaded.

The court addressed other issues in the ruling. Significantly, it rejected Farmers’ request to apply the “fluctuating workweek method” of calculating overtime pay at “half-time,” and held that overtime must be paid at 1.5 times the workers’ regular rate of pay. The court also granted the plaintiffs’ motion on claims for wage statement penalties that derive from the overtime misclassification. The court found that factual disputes prevented it from deciding now whether Farmers had a good faith reason for its violations and whether Farmers is liable for missed meal periods. Those issues will be decided at trial, which will begin September 30, 2019.

Plaintiffs are represented by Matt Morgan, Reena Desai, and Daniel Brome from Nichols Kaster, PLLP. The case is entitled Deluca v. Farmers Insurance Exchange, 3:17-cv-00034-EDL (N.D. Cal.).

Additional information about the case may be found at or by calling Nichols Kaster, PLLP at (612) 256-3200.

Photo by Bonnie Kittle on Unsplash