U.S. House Passage of OT Rules Reportedly Bodes Well for Insurers

July 14, 2003

Proposed Department of Labor regulations that were approved by the House of Representatives July 10 would reportedly clarify how employers determine who is exempt from overtime pay and should aid insurers, according to the Alliance of American Insurers (AAI).

“The Alliance is encouraged by the House’s action,” said Kirk Hansen, director of claims for the Alliance, which sent comments to the Labor Department in support of the regulations. “Though the proposed regulations could still be stalled in the Senate, the House vote makes that possibility less likely.”

The Department of Labor proposal is intended to clarify and simplify how employers determine who is exempt from overtime pay requirements under the Fair Labor Standards Act.

“The issue of whether insurance adjusters are due overtime pay has been the source of class action litigation, filed mostly in California,” continued Hansen. “By specifically mentioning claims adjusters, as an occupation that performs ‘work of substantial importance,’ and therefore exempt from overtime pay, the new regulations should help clear up any ambiguity in this area.”

The proposed regulations specifically mention claims adjusters and state that: Insurance claims adjusters also generally perform work of substantial importance, whether they work for an insurance company or other type of company, if their duties include activities such as interviewing insureds, witnesses and physicians; inspecting property damage; reviewing factual information to prepare damage estimates; evaluating and making recommendations regarding coverage of claim; determining liability and total value of a claim; negotiating settlements; and making recommendations regarding litigation.

The Republican-controlled House, by a vote of 213-210, blocked a Democratic initiative to prevent the proposed regulations.

Fourteen Republicans, primarily from the Northeast, crossed party lines and voted with the Democrats on the vote.

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