Wage and Hour Law Update
Fifth Circuit Holds Insurance Adjuster Is Exempt Administrative Employee
In the latest decision addressing the applicability of the FLSA’s administrative exemption to claims-handling employees (such as adjusters), last week the Court of Appeals for the Fifth Circuit, affirmed a District Court’s grant of summary judgment, rejecting the assertion of an American Risk Insurance (“ARI”) adjuster that ARI misclassified him as exempt. Talbert v. Am. Risk Ins. Co., 2010 U.S. App. LEXIS 25889 (5th Cir. Dec. 20, 2010).
The Court’s review focused on whether Plaintiff exercised discretion and independent judgment in the performance of his duties. Id. at * 10-15. While ARI argued that Plaintiff’s responsibilities in making recommendations concerning coverage and settlement of claims rendered him exempt, Plaintiff attempted to minimize his involvement in coverage analysis by arguing that close supervision by his supervisor undermined any ability to exercise discretion or independent judgment. Id. The Court sided with ARI, noting that, under DOL regulations, the requirement of supervisory approval for Plaintiff’s claims recommendations does not preclude a finding that he exercised discretion and independent judgment in making those recommendations. Id.
Though the Talbert opinion does not directly cite to authority from other circuit courts, it is consistent with other appellate authority regarding the classification of adjusters and similar industry positions as exempt. See Robinson-Smith v. Gov't Emples. Ins. Co., 590 F.3d 886, 897 (D.C. Cir. 2010)(collecting cases). Nevertheless, continued uncertainty (and litigation) regarding the proper application of the administrative exemption means that all employers must apply or rely upon the exemption with care. And, of course, certain state laws with higher exemption standards, potentially muddy the waters.