Law360, San Francisco (August 1, 2017, 10:10 PM EDT) — A California federal judge Tuesday conditionally certified a collective action brought by 300 Farmers Insurance claims investigators who say they’ve been misclassified as exempt from overtime, finding they’d met the “low standard” for sending out notices, even though it was a “close question” for those whose duties didn’t include going into the field.
U.S. Magistrate Judge Elizabeth D. Laporte said she would allow the plaintiffs to send notice to three groups of employees — special investigators, senior special investigators and general special investigators — for the opt-in action, finding they’d met the lenient burden of showing the workers were “similarly situated,” since their duties were alike, they were classified as exempt and often worked overtime hours they weren’t compensated for.
While the judge agreed with Farmers Insurance Exchange’s skepticism that “desk investigators” who didn’t leave the office to interview witnesses or take pictures of the scene of an incident could qualify as nonexempt, she ended up including them.
“I think this is appropriate for conditional certification,” she said. “Though it’s a close question, it’s still a very low standard.”
The Fair Labor Standards Act suit, filed in January by David Deluca and Barry Francis, alleges investigators continue to be misclassified as exempt from overtime pay by Farmers, in spite of prior litigation over the practice.
The complaint alleges that while investigators look into insurance claims to see if they’re fraudulent and write reports based on their findings, they don’t render opinions or recommendations, suggesting they don’t have the “independent judgment” authority to trigger an administrative exemption under the FLSA. The investigators are salaried, but they regularly work more than 40 hours a week, the suit alleges.
Farmers, which offers insurance for homes, cars and commercial entities, has faced litigation for this practice before. A 2007 suit in Minnesota federal court ended with a summary judgment finding two years later that the company had misclassified its investigators as exempt, but the insurance company never changed its policy.
On Tuesday, Judge Laporte did trim “national investigators,” who handle complex fraud ring and organized crime investigations, from the action, finding their role hadn’t been sufficiently discussed in the complaint. Farmers attorney Andrew M. Paley of Seyfarth Shaw LLP also asked that she cut the language seeking to encompass “similar positions” from the case, arguing it was too vague.
“Even if Your Honor believes they’ve met a fairly low standard here, I would submit they have not met the standard with regard to anything but the three significant positions,” he said.
Plaintiffs’ attorney Daniel S. Brome of Nichols Kaster PLLP conceded on the national group, arguing “in general they do the same work, but we don’t have any evidence of that.” But he successfully fought to keep the desk investigators in the suit, saying the field work duties were “a distinction without a difference.”
Now email and mailed notifications will go out to the estimated 300 potential plaintiffs.
The plaintiffs are represented by Matthew C. Helland, Daniel S. Brome, Matthew H. Morgan and Reena I. Desai of Nichols Kaster PLLP.
Farmers is represented by Andrew M. Paley, Sheryl L. Skibbe and Ryan McCoy of Seyfarth Shaw LLP.
The case is David Deluca et al. v. Farmers Insurance Exchange et al., case number 3:17-cv-00034, in the U.S. District Court for the Northern District of California.