GEICO agrees to settle claims adjusters’ overtime lawsuit

GEICO agrees to settle claims adjusters’ overtime lawsuit

On Behalf of | Jul 4, 2023 | Employment Law - Employee

Time efficiency may sound like a great measure of employee performance. But a recently settled lawsuit reveals that such an approach might be a double-edged sword for employers, especially regarding overtime pay.

Insurance giant GEICO paid $805,000 to settle a lawsuit against the company by claims adjusters last week. The claims adjusters argued they had to underreport the hours they spent working overtime because doing so would have adversely affected their productivity rating. They also claimed that the insurer knowingly allowed adjusters to perform off-the-clock work despite its tough policy on productivity and that their underreporting led to unpaid wages.

While the claims adjusters admitted that quantifying the amount of uncompensated work would be difficult because of the lapses in recording, GEICO had also admitted that it wasn’t required to audit employees’ electronic records of work activity such as overtime.

The settlement affects 91 claims adjusters across Florida, New Jersey, North Carolina, Ohio and Pennsylvania. Of the $805,000 settlement total, $442,500 will be split among the claims adjusters for alleged unpaid wages and damages. The remaining amount will go to attorneys’ fees. The agreement also doesn’t contain GEICO’s admission of liability.

What the law says about the issue

The federal Fair Labor Standards Act (FLSA) requires all employers to pay their employees for any overtime work they’ve done. According to the law, employees must receive overtime pay for working beyond 40 hours per workweek. GEICO may not have admitted liability in the case, but it still had to recognize that the adjusters put in extra work.

It’s not unusual for employers to force their workers to render off-the-clock work to avoid paying overtime. Doing so is a violation of the FLSA.

Employees that feel pressured to work overtime or even off the clock should confront their employer through a lawsuit. Because employment law is incredibly complicated, such as the case with GEICO, it would be beneficial for employees to seek legal counsel before filing a lawsuit.