State Farm settles O.T. suit

Revised: 09/22/2006

State Farm settles O.T. suit; More Adjuster Cases In Line?

April 15, 2005

Lysiak, Fran Matso

State Farm has agreed to pay $ 135 million to resolve a class-action lawsuit brought by more than 2,600 adjusters in California who alleged the company violated state wage and hour laws by failing to pay them overtime compensation.

The settlement, which recently was approved by Los Angeles Superior Court Judge Anthony J. Mohr, marks the end of the 5-year-old lawsuit, said plaintiff attorney Louis Marlin of the law firm Marlin & Saltzman, with offices in Anaheim and Agora Hills, Calif.

The main allegation in the suit, filed in September 2000 on behalf of 2,615 current and former State Farm automobile and fire claims adjusters in California, was that State Farm Mutual Automobile Insurance Co. and State Farm Fire & Casualty Co. misclassified the adjusters as exempt employees when they were, in fact, nonexempt employees entitled to overtime compensation under California laws, he said. "Our investigation showed that on average, people were working around 47 hours a week and were only getting paid for 40," Marlin said. State Farm required the adjusters to work long hours on a daily basis, and often on weekends, without overtime compensation, Marlin said.

State Farm had argued the claims adjusters were "administrative employees" and therefore not entitled to overtime pay, but the court rejected that position, Marlin said.

This lawsuit "represents both a financial and moral victory for the class members," Marlin said.

Meanwhile, Marlin said that his firm has the "exact same lawsuit" pending against Allstate, also in front of Judge Mohr. "The judge has already ruled that Allstate adjusters are entitled to overtime compensation," Marlin said. "The only thing that hasn't yet been decided is the amount of damages that Allstate owes to the class members." That issue is set for trim on Feb. 28, he said.

The R. Rex Parris Firm of Lancaster, Calif., and Mazursky, Schwartz, Daniels and Bradley of Los Angeles also represented the plaintiffs in the lawsuit against State Farm.

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