$775,000 Settlement Approved for Failure to Compensate for Preshift Work

By Erin L. Winters October 25, 2017
$775,000 Settlement Approved for Failure to Compensate for Preshift Work

A federal court has approved a $775,000 settlement in a class-action lawsuit brought against Farmers Insurance for its alleged failure to compensate auto claims representatives, appraisers and adjusters in several states for preshift work, in violation of the Fair Labor Standards Act (FLSA) and various state labor laws.

The settlement, which the U.S. District Court for the Eastern District of Pennsylvania granted final approval of, arose from a lawsuit filed in 2014. In that lawsuit, seven former employees alleged that Farmers required workers responsible for field inspections of claims to perform preshift activities "off-the-clock," or without pay.

[SHRM members-only HR Q&A: We have employees who regularly work overtime without permission. Are we required to pay for unauthorized overtime?]

The alleged unpaid activities included starting up computers and accessing Farmers' software applications, obtaining daily assignments, determining the locations the workers would need to visit and the order in which the visits would occur, mapping routes, contacting customers and auto repair facilities, downloading required forms and gathering paperwork, as well as traveling to the workers' first appointments of the day. The plaintiffs, whom sought to represent a nationwide class, alleged both FLSA collective action and class-action claims under the state laws of Pennsylvania and Connecticut.

Farmers defended the action by asserting that the company did not require off-the-clock work and that it had no reason to know that the class members were performing such work. In addition, the company filed a motion seeking dismissal of several of the plaintiffs' state law claims.

The settlement included both the FLSA collective action and state law class claims and covers nearly 400 current and former employees. In addition, the parties carved out six state law subclasses for all current or former nonexempt workers employed as claims representatives, claims adjusters or claims appraisers from Connecticut, Illinois, New York, Oregon, Pennsylvania and Washington. The court noted that while three of the six proposed state law subclasses contained small groups of current and former employees, the approval of a class-action settlement was preferable to individual litigation.

In its final approval order, the court concluded that the plaintiffs had satisfied the federal requirements for certification of a class-action lawsuit, including that the proposed class size was large enough to justify a collective action, that common questions of law and fact existed between the proposed class members, that the representative plaintiffs had similar claims to the rest of the proposed class members, and that the representative plaintiffs would fairly and adequately protect the interests of the class members.

Finally, the court concluded that the settlement amount was fair and adequate and that the attorney fees and costs were appropriate. However, the court did point out that a typical class member's claim had a maximum value of approximately $5,500 but with the settlement agreement the average payout was around $1,100.

Tompkins v. Farmers Insurance Exchange, E.D. Pa., 5:2014-cv-03737 (Sept. 27, 2017).

Professional Pointer: Employers must ensure that nonexempt employees are paid for all hours worked while under their direction or control. When reviewing preshift or post-shift activities, employers should consider the tasks performed, the amount of time spent on those tasks, and the level of control the employer has over the employee pre- and post-shift. Employers should review policies and practices regarding compensation for pre- and post-shift work, as well as educate managers about the wage laws that require payment for all hours worked.

Erin L. Winters is an attorney with Pacific Employment Law in San Francisco.


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