Are auto damage appraisers entitled to overtime pay?

As an attorney, I fully understand the frustration that comes when we just can’t give a straight answer to a simple question.  The problem is that different judges can rule differently on the same issue.  When that happens (we call that a “split of authority”) things get confusing.

The law regarding auto damage appraisers is a good example.  Some courts have ruled that they get overtime pay and some have ruled that they don’t.

Any historical analysis starts with the U.S. Department of Labor.  Here is what they have said since 1975:

Auto damage appraisers:  Appraisers whose functions are to inspect damaged motor vehicles in order to estimate the cost of the necessary repairs, and who also reach an “agreed” price with the repair shop on the cost of repairs, do not customarily and regularly exercise discretion and independent judgment as required by Reg. 541.2.  Their work consists essentially of the determination of facts, and in making their estimates they are guided primarily by their skill and experience and by written manuals of established labor and material costs.  However, there may be sufficient elements in the job to permit the application of the upset salary rule.

Field Operations Handbook,  Section 22d01.  A federal judge in Connecticut ruled in favor of auto damage appraisers in 1994.  Reich v. AIAC, 902 F.Supp. at 326 (granting judgment for automobile damage appraisers).  Another Connecticut judge ruled in favor of auto damage appraisers in 2007 (Neary v. Metropolitan Prop. & Cas. Ins. Co., 517 F.Supp.2d 606 (D.Conn. 2007).  The Ninth Circuit Court of Appeals wrote this:

Appraisers who merely inspect damaged vehicles to estimate the cost of labor and materials and to reach an agreed price for repairs with the repair shop have not been considered as the type of employees who customarily and regularly exercise discretion and independent judgment. . . .  In making their estimates, they are guided primarily by their skill and experience and by written manuals of established labor and material costs. . . . DOL Wage & Hour Div. Op. Ltr., at 1-2 (Feb. 18, 1963). 

In contrast, an adjuster “investigates the validity and the extent of liability of a claim and negotiates settlement . . . irrespective of whether the claim is one for property damage or for personal injury.”  Id. at 2.  And in 1957, the DOL opined that if adjusters are given “reasonable latitude in carrying on negotiations with the insured, the results of which form the basis of their recommendations, they may be [exempt].”  DOL Wage & Hour Div. Op. Ltr., at 2 (Oct. 24, 1957).  If those adjusters had authority to make settlements, that would be “stronger evidence of their exercise of discretion and independent judgment.”  Id.In re Farmers Ins. Exch., 466 F.3d 853, 861 (9th Cir. 2006).

                Occasionally, courts have ruled that auto damage appraisers are more like adjusters and are exempt.  The Seventh Circuit Court of Appeals ruled in 2008 that Material Damage Appraisers at CC Services were not entitled to overtime wages.  Roe-Midgett v. CC Services, Inc., 512 F.3d 865 (2008).  These workers had settlement authority up to $12,000.  The D.C. Court of Appeals ruled that “auto damage adjusters” at GEICO are not entitled to overtime pay.  Robinson-Smith v. GEICO, .. F.3d. .. (2010).

                The key difference seems to be the extent to which the employee handles total loss claims and negotiates with insureds.  The more total loss and the more negotiation, the more likely courts are to rule that they are exempt adjusters.  On the other hand, the more the employees work is limited to appraising damaged vehicles and following company guidelines, the more likely he is to be non-exempt.

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