Court Approves California Automobile Club Overtime Settlement

December 6, 2004 ( - A federal court in Santa Anna, California, has approved the settlement reached between the Automobile Club of Southern California and 1,300 employees who claim that they were denied overtime pay.

The Club has agreed to pay $19.5 million to settle the class-action claim.

Insurance agents for the company, which is the largest affiliate of the American Automobile Association (AAA), filed suit in June 1999, alleging a breach of the Fair Labor Standards Act (FLSA). They claimed that the company classified them as “outside salesmen” despite the fact that almost all of the agents worked most of their time inside district offices. Their claim relied on the “twenty percent test” that required employers to demonstrate that less than 20% of their workers’ time was spent on non-exempt or inside sale duties. This rule, however, has been removed from the new overtime regulation, which took effect on August 23.

Because of the rule change, the employees’ lawyer, David Borgen, asserted in a press release that “It would have been much harder, if not impossible, to win this case under the new Department of Labor (DOL) overtime rules.”

In the settlement, AAA has agreed to reclassify its sales agents as non-exempt employees, and will begin paying them overtime.

The case is Bullock v. Automobile Club of Southern California.