Allstate Reaches Settlement for Overtime Suit

September 2, 2005 ( - Allstate has agreed to pay up to $120 million to settle claims that some of its white-collar California employees were denied overtime pay for long hours of work.

The Los Angeles Times reports that adjusters allege that the insurance company refused to pay them overtime while giving them so many claims to process that they had to work nights and weekends to keep up. R. Rex Parris, an attorney for the adjusters, compared it to the sweatshops of the ’40’s saying, “The laptop had become the sewing machine of the 2001 era. Companies were sending these people home with their laptops. They’d work long hours at work, and then they’d go home and continue to work.”

Parris said almost 3,000 California-based adjusters are eligible to receive payments that could range from $1,000 to $100,000, depending on each employee’s tenure with Allstate and amount of overtime worked, according to the Los Angeles Times. Parris estimated that the typical payout would be $50,000 or $60,000.

In the settlement, Allstate admits no wrongdoing. The settlement must be approved by an Los Angeles County Superior Court.

The case is the latest in a wave of class-action suits putting pressure on California employers to change their overtime policies. According to the Los Angeles Times, u nder California law, employers are required to pay time and a half for more than eight hours of work a day and are also required to pay the overtime premium to many white-collar workers, regardless of title, who spend more than half their time doing non-managerial or non-administrative work.

Suits similar to Allstate’s are still pending against other insurance companies and several companies have settled. The newspaper notes that, i n January, State Farm Insurance Cos. agreed to pay $135 million to settle an overtime lawsuit on behalf of 2,600 claims adjusters in California, and Los Angeles-based Farmers Insurance Exchange agreed last September to pay as much as $210 million to resolve the overtime claims of 2,400 adjusters who had earlier won $90 million from an Oakland jury.

According to Parris, the newspaper reports, most of the insurers who settled changed their policies for managing adjusters’ work schedules and pay, some for California employees only and some for their employees nationwide.