Los Angeles, CAIn a case that’s been characterized as wage theft by the plaintiff’s legal team, a California labor lawsuit has been granted favor by the United States Court of Appeals for the Ninth Circuit after the latter determined a class-action lawsuit against Allstate Insurance Company (Allstate) can move forward. The insurance juggernaut had attempted to quash the suit.
Under California and labor law, non-exempt employees are to be paid overtime for any work performed above 40 hours per week or beyond 5 days per week, as well as extra pay for missed meal breaks and rest periods as mandated by the California labor code, if an employee is required to work through a rest period or meal break.
However, according to the California labor lawsuit, policy and protocol observed by Allstate effectively discourages managers from paying overtime, allegedly due to incentives afforded Allstate managers to stay within mandated budgets. Such incentives, according to the lawsuit, included paid bonuses to managers who kept within budgetary parameters.
Plaintiffs claimed that such incentives for managers to stay on budget - not to mention the pursuit of a good performance review that might hinge on a manager’s capacity to stay within budgetary guidelines - dissuaded managers from recording overtime hours.
“The complaint alleges that Allstate’s managers are required to stay within an annual budget that includes overtime compensation, and that the performance evaluations and bonuses paid to managers are dependent on how closely they conform to the budget,” said attorney Alexander R. Wheeler, of the R. Rex Parris Law Firm, which represents the plaintiffs. “This would mean that a manager would have a disincentive to approve and report overtime, the class claims.”
That’s a violation of California labor employment law.
Plaintiffs allege that managers would witness workers performing tasks off the clock and outside of their normal work hours, but make no inquiry as to whether or not overtime was to be requested. The California labor lawsuit also suggests that repeated requests for overtime were seen as a performance issue, rather than incidents that suggested claims adjusters were given too much work to complete within the allotted hours.
Rather than suggest a requisition for overtime, an employee might be counseled as to alternative work methods through better training and increased efficiency in order to avoid overtime hours. However, given the incentives allegedly afforded by the defendant to stay within budget suggests Allstate managers did not have the best interests of their underlings at heart, but rather their own and those of the defendant.
“The potential recovery in this case is expected to be in the hundreds of millions for wage theft by Allstate,” said R. Rex Parris, founding partner of the R. Rex Parris Law Firm. “Casualty adjuster Jack Jimenez brought the suit in 2010 on behalf of any claims adjuster working for the insurer in the state of California since Sept. 29, 2006.”
California state labor laws are clear with regard to the requirement to pay overtime for non-exempt workers. While an employer always has the right to offer training in order to improve efficiency in an effort to avoid overtime, an employer does not have the right to deny an employee overtime pay for extra hours worked, when the overtime was unavoidable.
The case is Jack Jimenez v. Allstate Insurance Company - Case No. 2:10-cv- 10-8486-JAK-FFM, in the United States Court of Appeals for the Ninth Circuit.