Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) 9 Because Farmers Insurance Exchange was the claims subsidiary of Farmers Group, performing adjusting services for a variety of underwriting entities within the group, and because Farmers Group provided administrative support to Farmers Insurance Exchange, Bell held that the work of adjusters was inherently the production of Farmers’ product (insurance adjusting), which rendered the employees ineligible for the exemption regardless of their duties.43 It is significant that Bell was decided under the pre-2000 version of the Wage Orders, which did not expressly incorporate the FLSA’s regulations on its administrative exemption. Given that the current version of the IWC regulations expressly does incorporate the federal administrative exemption regulations, and given that numerous federal decisions have refused to apply Bell’s reasoning to FLSA insurance adjuster cases,44 employers have at least a colorable argument that Bell is not good law for cases arising since 2001. Moreover, the 2004 amendments to the FLSA regulations, which purport merely to clarify and to update what the FLSA has always required, state that insurance adjusters can be covered by the administrative exemption “whether they work for an insurance company or another type of company.”45 Several federal courts have concluded that, under the FLSA, insurance adjusters qualify for the administrative exemption.46 Employers hoped that further case law would limit Bell to its facts. Their hopes were bolstered with the Ninth Circuit’s 2007 decision in Miller v. Farmers Insurance Exchange.47 Miller held that insurance adjusters, as a rule, qualify for the administrative exemption, and criticized the Bell decisions’ overbroad construction of the meaning of “production work.”48 duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.”). 43 Bell, 87 Cal. App. 4th at 823-28. Although Bell specifically held that it did not need to look at the duties test, it noted that the undisputed evidence showed that the adjusters at issue simply acted as claims processors with little authority or discretion. 44 See, e.g., Miller v. Farmers Ins. Exch., 481 F.3d 1119 (9th Cir. 2007) (criticizing Bell’s interpretation of the administrative/professional dichotomy and finding insurance adjusters categorically to qualify as exempt employees); In re Farmers Ins. Exch., 336 F. Supp. 2d 1077, 1087-88, 1091 (D. Or. 2004), affirmed in part, reversed in part, In re Farmers Ins. Exch. Claims Representatives’ Overtime Pay Litigation, 336 F.Supp.2d 1077 (D. Or. 2004) (rejecting notion that Farmers’ adjusters were non-exempt “production“ workers regardless of whether they met the other requirements of the administrative exemption; refusing to apply Bell to a case under the FLSA). 45 29 C.F.R. § 541.203(a). The current regulations still require an adjuster to meet the duties test to qualify as exempt, which requires the adjuster to perform such activities as “interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damages estimates; evaluating and making recommendations regarding coverage of claims; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.” See also former 29 C.F.R. § 541.205(c)(5) (identifying insurance adjusters within the universe of employees often covered by the administrative exemption). 46 See, e.g., Bucklin v. Zurich American Ins. Co., 619 Fed. App’x 574 (9th Cir. 2015); Munizza v. State Farm Mut. Auto. Ins. Co., 103 F.3d 139 (9th Cir. 1996) (memorandum); Blinston v. Hartford Accident & Indemn. Co., 20 Wage & Hour Cas. (BNA) 6 (W.D. Mo. 1970). 47 481 F.3d 1119 (9th Cir. 2007). 48 481 F.3d at 1124, 1132.
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