In a significant case for employees getting the wages they deserve, a Maryland federal judge had 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. In reaching its decision, the Maryland federal court, held as follows:
Regulations and case law suggest that the fact that Investigators note that certain claims could be fraudulent does not in itself establish that their discretion bears on “matters of significance.”
In the Fourth Circuit, the FLSA’s administrative exemption is “narrowly construed,” and the Court concludes that GEICO has failed to demonstrate by clear and convincing evidence that Investigators fit within the narrow administrative exemption. Although they 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)).This case will be helpful in setting the limits on employers trying to push the envelope for the FLSA exemptions and expand them beyond their proper boundaries. The Maryland federal court wisely 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 damage stage of the litigation for determining the amount of wages owed to the employees. Lebau & Neuworth handle numerous overtime cases. Contact us if you think you may be entitled to overtime wages.
