Progressive Sued For Not Paying Overtime to Auto Appraisers

It has been a while since we’ve seen a major insurance company sued by its automobile damage appraisers for overtime.  The last few to hit the Courts of Appeals resulted in rulings against them.  Progressive Casualty Insurance Company was just sued last week by two automobile damage appraisers who claim that they, and all other MRRS (Progressive calls them “managed repair reps” or “MRRs;” they are also called "Claims Adjusters -- Auto Damage") should have been paid overtime when they work more than forty hours per week.

There is a very informative post on this topic by Richard Hayber of Hartford.  The general rule seems to be that automobile damage appraisers whose primary duty is to prepare damage estimates and reach an agreed price with the auto-body shop are entitled to overtime pay.  When the auto appraisers spend time negotiating with the insured over the value of a totaled vehicle, their duties start to look more like claims adjusters (who usually don’t get overtime pay). 

This latest lawsuit quotes from job postings which list the duties of the position.  Those duties do not include negotiating overt total losses.  The case is being handled by the Hayber Law Firm in Hartford.  It asserts only the Fair Labor Standards act.  This law gives other employees the chance to join the case just by signing a Consent Form and filing it with the court. 

This case will be worth watching.  Earlier decisions in the District of Connecticut were favorable to automobile damage appraisers, including Reich v. AIAC in 1994 (summary judgment for the appraisers), and Neary v. Metropolitan Property and Casualty Company in 2007 (defense motion for summary judgment denied). 

Why Pay The Peons When You Can Just Make Them Work For Free?

I saw this post on Crooks and Liars, and my head exploded.  It's an article about how the next big thing for businesses is to use unpaid interns instead of paid workers, and corporate overlord types are salivating over the idea.  I guess it's the logical next step.  After driving down wages and benefits as much as possible, what could be better for the bottom line than not paying workers at all?

What really gets me is how excited these corporate hacks sound over the prospect of screwing their workers.  Sure, it's great for the company not to have to pay anything for its labor force.  But what happens when, as the Fortune article suggests, this becomes "the new normal?"  Henry Ford was smart enough to know that workers need to be paid a decent wage so that they can afford to buy your product.  Who is going to be able to buy Remote Stylist's "web-based interior design services" if this type of modern indentured servitude becomes the norm?  Actually, this is worse than indentured servitude, because at least then the employer was obligated to provide food, lodging and other necessities.

And what about the people who agree to this?  It's one thing for a student to serve as an unpaid intern in order to get some job experience -- the type of internship that has been common for years.  It's another thing entirely for a company's business model to be based on the use of unpaid workers.  I wonder about the woman quoted in the Fortune article who is happy to have the "job," even though she's down to $1.50 in her checking account.  What is she going to do if her boyfriend stops paying her bills?  How is she going to buy food?

And the line that really gets me in this article is "Unfortunately for many employers hoping to use unpaid labor to advance their business goals, there are strict federal and state rules that workers must be paid the minimum wage and paid for overtime, and must abide by other provisions in the Fair Labor Standards Act, which applies to about 135 million people working for 7.3 million employers."  Are you kidding me? It's "unfortunate" that the law requires you to pay the peons a measly $7.25 an hour?  What is wrong with these people?

We live in a world where GE can earn $14.2 Billion and pay zero in taxes.  But even in this corporatist climate, a company that makes a conscious decision to rely on unpaid labor is beyond the pale.  And the executives who think this is the greatest thing since sliced bread are simply reprehensible human beings.

Can I Be Fired For Making An Oral Complaint?

If the complaint is of a violation of the Fair Labor Standards Act ("FLSA"), the answer is "no."  That's what the U.S. Supreme Court held today in the case of Kasten v. Saint-Gobain Performance Plastics Corp.

Kevin Kasten complained to his bosses about the location of the time clock at work.  Specifically, he complained that the location prevented workers from getting paid for the time spent putting on and taking off their protective gear.  Under the FLSA, employees are required to be paid for such "donning and doffing" time.  Mr. Kasten complained to his supervisor, to HR, to his lead man and to his Operations Manager that he thought the location was illegal and the company would lose if it ever went to court.  When he was fired, Mr. Kasten sued under the FLSA's anti-retaliation provision, which makes it illegal "to discharge or in any other manner discriminate against any employee because such employee has filed any complaint . . . ." under the FLSA.

Mr. Kasten's suit was tossed out of court, on the grounds that the FLSA's anti-retaliation only applies to written complaints.  The Seventh Circuit Court of Appeals in Chicago agreed, so he took it all the way up to the U.S. Supreme Court.  And won.  The court held, in a 6-2 decision (Justice Kagan did not participate), that the "filed any complaint" language includes oral as well as written complaints.

Justices Scalia and Thomas dissented (gee, there's a surprise).  In their view, Mr. Kasten should lose, not because his complaints were oral rather than written, but because they were made to the employer rather than to the government.  In their view, the only way a complaint can be "filed" is with the government.  The majority declined to reach this issue, so it remains an open question.  In my view, this narrow, restrictive view undermines the goals of the FLSA and unfairly punished employees who choose to take the lesser, and perhaps more reasonable, step of complaining internally before escalating to the point of calling the government.

Regardless of this open question, this case is a nice victory for workers.  We need more like it.

Court Refuses to Force Employees to Arbitrate Overtime Claims

The Fair Labor Standards Act (FLSA) allows employees to band together in a "collective action"  (a form of class action) to sue their employers as a group for unpaid overtime.  One way the employers try to get around this is by forcing employees to arbitrate these claims instead of going to court, and then prohibiting them from collective actions in the arbitration agreement.

Earlier this month, a federal judge in Manhattan struck down such an arbitration agreement.  In Sutherland v. Ernst & Young, LLP (warning -- you'll need a subscription to the PACER service to view the opinion) Judge Kimba M. Wood found Ernst & Young's standard arbitration agreement unenforceable, thus allowing a collective action to proceed in court.

The Plaintiff, Stephanie Sutherland, worked for Ernst & Young as a low-level accountant.  She claims that, despite the fact that most of her work was secretarial and clerical, Ernst & Young classified her as an "exempt" employee and denied her the overtime that she is entitled to by law.  When she brought suit as a collective action, Ernst & Young moved to dismiss, arguing that she must arbitrate her individual claim instead of going to court.  Judge Wood denied the motion to dismiss for several reasons.  First, Ms. Sutherland's costs and attorneys fees would exceed $200,000, when her maximum recovery would be just over $3,700.  The Court stated that "only a 'lunatic or a fanatic' would undertake such an endeavor" and went on to note that if she couldn't pursue the case as a class action, Ms. Sutherland would be forced to give up any rights she might have to recover overtime payments.  The Court also noted that, because the arbitration agreement left it to the arbitrator's discretion to award attorneys' fees, if forced to arbitrate Ms. Sutherland likely would not be able to find an attorney to represent her.  Finally, Judge Wood found that enforcement of the class waiver provision would effectively ban all proceedings by Ms. Sutherland, thus giving Ernst & Young de facto immunity from liability for violations of labor laws.

This well-reasoned decision recognizes the realities that face employees who are wrongfully denied overtime.  Often, the amount at issue is relatively small -- a few thousand dollars.  By trying to force employees to submit to an expensive arbitration process while denying them the ability to act collectively, employers are gaming the system so that they can never be held liable for their actions.  So a tip of the hat to Judge Wood!