GEICO misclassified security investigators as exempt from overtime

Posted on: December 6th, 2012 by Steve Larson
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A Maryland federal judge has ruled that Geico General Insurance Co. misclassified security investigators as exempt from overtime pay.  In Calderon v. Geico, the Maryland federal court granted the employees’ motion for summary judgment and held that the employee investigators were entitled to receive overtime wages. The court held GEICO had misclassified the employees as exempt from overtime and rejected the employer’s claim that the employees fell within the administrative exemption of the Fair Labor Standards Act.

 The court noted that in the Fourth Circuit, the FLSA’s administrative exemption is “narrowly construed,” and held that GEICO had failed to demonstrate by clear and convincing evidence that Investigators fit within the narrow administrative exemption.  The court further noted that although the Investigators appear to perform administrative tasks and exercise some discretion during investigations, the Investigators’ discretion does not bear on matters of significance.  See Desmond v. PNGI Charles Town Gaming, L.L.C., 564 F.3d 688, 692 (4th Cir. 2009) (“FLSA exemptions are to be ‘narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within [the exemptions’] terms and spirit.’”) (quoting Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960)).

The Maryland federal court also noted that the mere fact that an employee may do important work does not render the employee exempt from overtime:

“[A]ll employees exercise some discretion in deciding how to perform their jobs, and the way in which they exercise that discretion likely will affect matters of significance.”  Id. at 908.  Specifically, for “claims investigators, how they exercise their discretion in conducting an investigation will impact or affect how a claims adjuster . . . decides the significant matter of the value of the claim.  But an exercise of discretion that impacts or affects a matter of significance is not exercising discretion with respect to a matter of significance.  If the rule were otherwise, all employees would arguably meet the third element of the definition of administrative employees.”

This case will now proceed to the damages stage of the litigation for determining the amount of wages owed to the employees.