A recent ruling by a federal court states that claim adjustersare not eligible to receive overtime based upon the duties theyperform as part of their daily routines.

According to the Ninth U.S. Circuit Court of Appeals in SanFrancisco, "insurance adjusters generally meet the duties andrequirements for an administrative exemption, whether they work foran insurance company or other type of company, if their dutiesinclude activities such as interviewing insureds, witnesses andphysicians; inspecting property damage; reviewing factualinformation to prepare damage estimates; evaluating and makingrecommendations regarding coverage of claims; determining liabilityand total value of a claim; negotiating settlements; and makingrecommendations regarding litigation."

Essentially, the court ruled that since adjusters are notinvolved strictly in administrative matters while working forinsurance companies, they do not qualify for overtime.

"We hold today that all of the adjusters in this case areexempt," read the court's opinion. "The district court's factualfindings establish that, regardless of the type (personal injury v.property) or size (large v. small) of the claims they handle, theadjusters are required to: use discretion to determine whether theloss is covered, set reserves, decide who is to blame for the loss,and negotiate with the insured or his lawyer. If the Department ofLabor should choose to distinguish between adjusters based on thetype or value of the claims they handle, it is free to amend theregulations and tell employers how to do that. Unless and untilthat happens, we are obligated to follow [existing laws]."

The ruling overturned a previous decision made in 2003, whicheventually led to a judgment award of $52.5 million for 1,700employees at Farmers Insurance in early 2005. At the time, theaward was the largest judgment in a case involving the Fair LaborStandards Act. It involved Farmers employees in Colorado, Illinois,Michigan, Minnesota, New Mexico, Oregon, and Washington.

Since the ruling was made in a federal court, it does notreverse any decisions made at the state level, where exemptioneligibility may be narrower.

To read the complete judgment and opinion, please clickhere.