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Robinson-Smith v. Government Employees Insurance

Court of Appeals for the D.C. Circuit
15 Wage & Hour Cas.2d (BNA) 1127, 389 U.S. App. D.C. 46, 590 F.3d 886 (2010)
ELI5:

Rule of Law:

Under the Fair Labor Standards Act's 'short test' for the administrative exemption, an employee's primary duty 'includes' the exercise of discretion and independent judgment if they have the authority to make independent choices on matters of significance, even if such discretion is not exercised constantly or for a majority of their work time.


Facts:

  • Jerome Robinson-Smith, Christine Lindsay, and Robert McGruder worked for GEICO as 'auto damage adjusters'.
  • Their primary duties were to assess, negotiate, and settle automobile damage claims, which involved appraising vehicles and estimating repair costs, often with the aid of computer software.
  • Adjusters handled 'total loss' claims, where they had the authority to decide whether a vehicle was too damaged to repair, a decision with significant financial implications for GEICO.
  • Adjusters worked largely unsupervised in the field, investigating damage, interviewing insureds about pre-existing damage, and identifying potential fraud.
  • Although most claims were routine, adjusters engaged in negotiations with customers over total loss claims for approximately 20 to 60 claims per year.
  • Adjusters possessed the authority to independently settle claims and financially bind GEICO up to a limit of $10,000 or $15,000 without prior supervisor approval.

Procedural Posture:

  • Jerome Robinson-Smith and other auto damage adjusters (plaintiffs) sued their employer, GEICO, in the U.S. District Court for the District of Columbia.
  • The plaintiffs alleged they were improperly classified as exempt employees and were owed overtime pay under the Fair Labor Standards Act (FLSA).
  • The parties filed cross-motions for summary judgment.
  • The district court granted summary judgment in favor of the plaintiffs, holding they did not exercise sufficient discretion to qualify for the administrative exemption.
  • GEICO, the defendant, appealed the district court's judgment to the U.S. Court of Appeals for the D.C. Circuit.

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Issue:

Does the primary duty of GEICO's auto damage adjusters, which involves assessing vehicle damage using software but also includes negotiating and settling claims up to a significant monetary limit, require the exercise of discretion and independent judgment sufficient to qualify them for the administrative exemption from overtime pay under the Fair Labor Standards Act?


Opinions:

Majority - Henderson, Circuit Judge

Yes. The primary duty of GEICO's auto damage adjusters includes the exercise of discretion and independent judgment, qualifying them for the FLSA's administrative exemption. The 'short test' for the exemption only requires that an employee's primary duty 'include' the exercise of discretion, not that it be performed 'customarily and regularly.' The adjusters satisfy this test because they exercise discretion free from immediate supervision and with respect to matters of significance. Their authority to negotiate settlements, declare vehicles a total loss, and financially bind GEICO for up to $15,000 per claim demonstrates independent judgment on matters of significance, even if these tasks do not constitute the majority of their time. This aligns with decisions from other circuit courts holding that insurance adjusters with similar responsibilities are exempt administrative employees.



Analysis:

This decision aligns the D.C. Circuit with a growing consensus among federal appellate courts that insurance claims adjusters generally fall under the FLSA's administrative exemption. The ruling clarifies that under the pre-2004 'short test,' the requirement that a primary duty 'includes' the exercise of discretion is a lenient standard that does not demand constant or even majority use of that discretion. By focusing on the significance of the discretionary tasks—such as the authority to bind the company financially—the court establishes a precedent that makes it more difficult for employees with similar hybrid roles of skilled and discretionary work to challenge their exempt status.

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