Are Insurance Adjusters Exempt Employees?

Recently, Hurricanes Harvey and Irma wreaked havoc on Texas, the Caribbean Islands, and Florida. In addition to the devastating loss of lives, many people were left rebuilding, having suffered damage to total loss of their cars, their homes, and their businesses. Mass events like these serve as a startling reminder that accidents and disasters can hit us at any time, and just how important it is that insurance companies fulfill their obligations to their customers in a prompt and fair manner. Car insurance expert, isolated on white background.

An absolutely essential part of helping people get back on their feet is insurance adjusters, who are hired for a wide range of duties relating to resolving insurance claims. Unfortunately, insurance companies often treat their adjusters as they do claimants and try to save every penny they can. This has resulted in legal battles over whether hard working adjusters are “exempt” employees and therefore exempt from receiving overtime pay in accordance with state and federal labor laws.

Exempt Employees

State and federal law generally protect employees by requiring that employers provide them a minimum wage and that they are paid overtime when they work more than 40 hours per week. This does not apply to exempt employees, who must meet specific criteria to be considered exempt from receiving the legally mandated overtime rate of pay.

California Labor Code Section 515 states that an exemption only applies “if the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.”

One of the more complex classifications is the administrative exemption, which requires that the employee primarily engage in the following duties: (1) regularly exercise discretion and independent judgment; (2) perform office work that is directly related to management policies or the business operations of the employer; and (3) regularly assist a proprietor or bona fide executive or administrator, or work under only general supervision work along specialized/technical lines requiring special training experience, or knowledge, or execute their special assignments under only general supervision.

State And Federal Courts View Insurance Adjusters Inconsistently

Whether insurance adjusters are exempt under the administrative exemption is not clear and really depends on the adjuster’s pay and their specific job duties. Federally, the Code of Federal Regulations Section 541.203 explicitly provides insurance claims adjusters as an example of the administrative exemption, stating:

“Insurance claims adjusters generally meet the duties requirements for the administrative exemption, whether they work for an insurance company or other type of company, if their duties include activities such as interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.”

Under the California Labor Code, California Appellate Courts and the U.S. Circuit Court have reached conclusions in several cases before them that insurance adjusters were exempt; however, this is not a general rule. Instead, the Supreme Court of California has stated that “in resolving whether work qualifies as administrative, courts must consider the particular facts before them and apply the language of the statues and wage orders at issues.”

In other words, just because you hold the title “insurance adjuster” does not automatically make you an exempt employee under federal and state labor laws. Instead, if you are classified as “exempt” and are thereby denied overtime, you should consider speaking with a lawyer. For years, the attorneys at Moss Bollinger have been helping employees stand up to improper employer conduct. Misclassifying an employee to save money is unlawful and we can help determine if you have a claim. We charge no fees up front and work on a contingency basis. Call Moss Bollinger today at (310) 982-2291 for a free consultation or reach us online.