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Recently introduced legislation proposes to exempt "any
employee employed in insurance claims adjusting" from the
federal Fair Labor Standards Act's overtime requirements under
certain circumstances. Under H.R. 6346 (link to available
version below), introduced by Representative Denny Rehberg (R-MT)
and Representatives Jo Bonner (R-AL) and Alcee Hastings (D-FL),
these adjusters would be exempt while performing specified
insurance-claims work under particular conditions following a
"major disaster", including natural catastrophes (such as
a hurricane, tornado, earthquake, or blizzard) or fires, floods, or
explosions.
Restrictions And Conditions Imposed
The exemption would apply only for a 24-month period following
the major disaster. Each employee would have to receive an
average weekly income of at least $591 per week for the period in
which the work is performed. Among the duties falling within
the exemption would be interviewing insureds and others with
relevant information, inspecting property damage, making
recommendations about coverage, liability, or value, and
negotiating settlements.
Employees of companies (or their affiliates, as defined in the
exemption) that underwrite, sell, or market insurance would not be
eligible. Instead, the provision would apply only to those
brought in by independent companies that possess the necessary
licenses, provide worker's-compensation coverage, and make the
required tax withholdings.
Exemption Would Supplant State And Local Law
A number of federal courts have found the FLSA's
"administrative" exemption to apply to insurance
adjusters in a variety of situations. However, a California
appellate court reached the opposite conclusion in July, when it
held that adjusters were not exempt under that state's version
of the administrative exemption.
The California decision underscores the potential for
differences in or divergent interpretations of similar-sounding
exemptions in the FLSA and analogous state or local laws. The
drafters of H.R. 6346 apparently intend to eliminate this
possibility. The proposal says that the new exemption would
"exclusively" displace state or local provisions with
respect to qualifying workers.
H.R. 6346 has been referred to the House Education and the
Workforce Committee. There is no timetable as to when it
might be the subject of hearings or brought to the floor for a
vote. We will monitor the progress of this legislation in the
coming months.
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