Farmers Insurance Overtime Pay Settlement – Over and Over Again

Los Angeles, CAFarmers Insurance has agreed to settle a California wage and hour lawsuit brought by Famers special investigators alleging failure to pay overtime, including meal breaks and rest periods. The settlement includes anyone who worked in California for Farmers as a special investigator between 2013 and 2018. And this is not the first time Famers has settled an overtime claim.

In late August 2020, California federal Judge Hixson said settling this (over 3-year-old) case is a “quicker, cheaper path to resolution than continuing to litigate and gives the investigators a guaranteed route to payment." About 80 investigators will share in the recovery—each plaintiff will get about $47,000. Judge Hixson noted that this "sizeable recovery of 46.6 percent of estimated total recovery is a testament to counsel's skill."

Judge Hickson said the litigation “has been actively contested, and counsel have frequently been successful,” and plaintiffs’ attorney Nichols Kaster “notched big wins for the class throughout the wage and hour case, including winning certification for the Farmers fraud investigators in February 2018,” reported Law360.

More Farmers Overtime Lawsuits

This isn’t the first time Farmers has settled an overtime hour lawsuit. In 2011 the insurance company agreed to pay $1.52 million in overtime back pay to 3,459 employees following an investigation that found “significant and systemic violations of the federal Fair Labor Standards Act’s overtime and record-keeping provision,” according to InsuranceJournal.com. As part of the settlement, Farmers agreed to “maintain future compliance with the FLSA by properly recording and compensating all hours worked by its employees.”  (This agreement affected call center employees who worked between Jan. 1, 2009, and May 10, 2010 in in Florida, Kansas, Michigan, Oklahoma, Oregon and Texas.)

Did Farmers simply forget the agreement in 2011 or did the company figure no one would notice?  Or maybe a few overtime settlements are just the cost of doing business…

Wait, that’s not all! 

A group of claims adjusters in 2014 filed a California wage and hour lawsuit alleging unpaid overtime, missed meal and rest breaks. Almost two years later, Farmers agreed to pay $4.9 million to 2,114 plaintiffs – claims adjusters who worked for Farmers Insurance between Sept. 2011 and Aug. 2016. “Plaintiffs sought certification of their claims for unpaid overtime and missed meal and rest breaks, unfair competition under the UCL, and statutory and civil penalties based on their belief that Farmers has class wide policies and practices that led to off-the-clock work and missed breaks,” court documents state.

This latest settlement stems from a wage and hour lawsuit filed in 2017 by Farmers Insurance special investigators. The case is David Deluca et al. v. Farmers Insurance Exchange et al., case number 3:17-cv-00034 in the U.S. District Court for the Northern District of California.

Settlement v. Trial

The Deluca case states the following:

• Continued litigation in this matter would be risky. Employment class actions “are, by their nature, time-consuming and expensive to litigate.”
• “Wage and hour trials are complex and expensive. In this action, Defendant vigorously opposed class certification and if litigation continues Plaintiffs face a risk of class decertification.
• Defendant has made no secret of the fact that it agreed to this only for settlement purposes and intended to move to decertify …if litigation continued.”
• If Plaintiffs prevailed at trial, Defendants might appeal. Accordingly, settlement is a quicker, cheaper, and, above all, guaranteed route to payment for Opt-in Plaintiffs and Class Members.

According to the claim, “The amount of settlement is close to a 50 percent of estimated total recovery, “although 25 percent is the benchmark for a reasonable fee award…in most common fund cases, the award exceeds that benchmark…Courts in several cases have approved awards near or exceeding 30 percent.”

Farmers is an inter-insurance exchange that sells homeowners insurance, auto insurance, commercial insurance, and financial services throughout the U.S. On its website, Farmers Insurance boasts has more than 48,000 exclusive and independent agents and approximately 21,000 employees.  Its revenue in 2019 was $11.65 billion.