Allstate Must Face Overtime Pay Class Suit

Allstate must face class action claims by roughly 800 claims adjustors that the insurers requires its adjusters to work unpaid off-the-clock overtime in violation of California law, a federal appeals court ruled Wednesday.

The 9th U.S. Circuit Court of Appeals upheld certification of a class action against Allstate insurance and sent the case back to U.S. District Judge John Kronstadt in Los Angeles federal court.

In 2005, Allstate shifted all of its California-based claims adjusters to hourly pay from previously salaried jobs.  Adjusters often worked more than eight hours a day or 40 hours a week prior to the change and the workload remained the same after the pay change.

Adjusters could request overtime payment from managers but each of the state’s 13 Allstate offices had nonnegotiable pay budgets that effectively set a limit on the amount of overtime a manager could approve, according to the court.

Jack Jimenez filed the class action suit accusing Allstate of failure to pay overtime to current and former California claims adjusters.  The class was certified by Kronstadt and Allstate appealed.

Allstate argued that the class members include inside adjusters, who work in an office, and outside adjusters who work in the field, as well as various offices with different managers and thus the class does not have the same, or common, questions to resolve liability.  In addition, Allstate said the approval of statistical modeling to determine liability violates the company’s due process rights and would conflict with the U.S. Supreme Court decision in Wal-Mart v. Dukes.

The 9th Circuit rejected the Allstate positions saying Kronstadt found three common questions “contained the ‘glue’ necessary” for the suit to proceed as a class action.

The circuit also rejected Allstate’s statistical modeling challenge, pointing out that modeling does not violate due process if it is used to decide liability – and not to establish damages.

Other circuits have issued similar holdings, the court said, pointing to the 5th and 7th Circuits.

Case:  Jimenez v. Allstate Insurance Co., No. 12-56112

Click to access 12-56112.pdf

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