Farmers Insurance to Pay $1.5M in Labor Settlement

July 8, 2011

Los Angeles-based Farmers Insurance Inc. has agreed to pay $1.52 million in overtime back wages to 3,459 employees following an investigation by the U.S. Department of Labor’s Wage and Hour Division that disclosed significant and systemic violations of the federal Fair Labor Standards Act’s overtime and record-keeping provisions. Violations occurred at 11 customer service call centers located in Florida, Kansas, Michigan, Oklahoma, Oregon and Texas, the DOL stated.

“Failing to properly compensate employees for pre- or post-shift work is a violation of federal law,” said Secretary of Labor Hilda L. Solis. “The Labor Department is committed to ensuring that employers abide by the law so that workers are protected against exploitation, and law-abiding employers are not placed at a competitive disadvantage.”

Through interviews with employees and a review of the company’s timekeeping and payroll systems, investigators found that the company did not account for time employees spent performing pre-shift work activities. Employees routinely performed an average of 30 minutes of unrecorded and uncompensated work — such as turning on work stations, logging into the company phone system and initiating certain software applications necessary to begin their call center duties — per week.

Because employees’ pre-shift work times were excluded from official time and payroll records, they were not paid for all hours and are owed compensation at time and one-half their regular rates for hours that exceeded 40 per week, the DOL said.

Farmers Insurance has agreed to pay back wages, as well as to maintain future compliance with the FLSA by properly recording and compensating all hours worked by its employees.

The agreement affects call center employees who worked between Jan. 1, 2009, and May 10, 2010, at Farmers’ HelpPoint facilities in Olathe, Kan.; Oklahoma City, Okla.; Lake Mary, Fla.; and Grand Rapids, Mich. It also affects workers employed at a former location in Overland Park, Kan., between Jan. 1, 2009, and Jan. 10, 2010. Additionally, it affects employees who worked between Jan. 1, 2009, and Feb. 1, 2010, at Farmers’ ServicePoint and commercial facilities in Austin, Texas; a ServicePoint facility in Grand Rapids, Mich.; a ServicePoint facility in Olathe, Kan.; and ServicePoint and commercial facilities in Hillsboro, Ore.

As part of the settlement agreement, employees located in Kansas, Michigan, Texas, Oklahoma, Oregon and Florida and will be compensated the equivalent of 6 minutes per day – or 30 minutes per week – over a time period ranging from 14 to 17 months, depending on the location.

The FLSA requires that covered employees be paid for pre-shift and post-shift job duties, and for attending required meetings. Employees must be paid time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers must pay at least the federal minimum wage of $7.25 for all hours worked, and maintain accurate time and payroll records.

“Farmers has always been committed to — and remains committed to — fair pay and accurate timekeeping practices. In addition, we continuously strive to provide the best work environment for our employees. Covered employees will receive a DOL document regarding the settlement and individual payment. Covered employees no longer working for Farmers Insurance will be notified by mail at their last known address,” said Jerry Davies, assistant vice president of media and public relations for Farmer Insurance in North America.

Topics Texas Agribusiness Oklahoma

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