Exempt vs. Non-Exempt: Claims Examiners

Under the Fair Labor Standards Act, a workers employed in an "administrative capacity" means any employee whose duties and responsibilities involve the performance of work directly related to management policies or general business operations. Under this language, a person is employed in an administrative capacity and exempt from the reach of overtime pay laws when the employee's job duties and responsibilities involve the performance of office or non-manual work directly related to general business operations of his or her employer or the performance of office or non-manual work directly related to general business operations of his or her employer's customers.

Claims Adjusters Overtime Cases

Recently, the issue of whether or not claims examiners and adjusters are exempt vs. non-exempt from overtime pay laws has come under scrutiny by the courts. The California Supreme Court took on a case called Harris vs. Liberty Mutual, in which the claims examiners for Liberty Mutual claim that the company violated the Fair Labor Standards Act and/or California Labor Code by classifying the claims examiners as exempt despite the fact that the claims examiners do not perform exempt job duties. On Monday October 3, 2011, the California Supreme Court listed to oral argument in Harris vs. Liberty Mutual.

The claims examiners rely on prior California cases that found that claims examiners are non-exempt, meaning that they should be paid for all hours worked in excess of eight in a day and 40 in a week at one and a half times the claims examiners' regular rate of pay. In these previous cases that dealt with workers' compensation claims, the adjusters were deemed non-exempt because they could not exercise independent discretion and judgment, which is the touchstone of the administrative exemption. The reason they could not exercise the requisite discretion and judgment is because California has very strict workers' compensation laws and the claims adjusters were only allowed to fill out standard template forms and follow strict company guidelines as opposed to making their own decisions about whether or not a claim should be accepted.