Farmers Insurance Ordered to Pay $52.5 Million in Suit

A federal judge has told Farmers Insurance Group Inc., the third-largest U.S. home and auto insurer, to pay $52.5 million to claims adjusters who say they were denied overtime pay.

U.S. District Judge Robert E. Jones in Portland, Ore., ruled Monday that Farmers, a unit of Zurich Financial Services of Zurich, Switzerland, must pay damages averaging about $50,000 to each of the 1,039 adjusters in seven states, said N. Robert Stoll, a lawyer for the adjusters.

Stoll said the case arose out of a California lawsuit in which Farmers agreed in September to pay about $200 million to settle claims that it denied overtime to more than 2,000 workers.

After success in that case, workers filed similar suits in various states, which were consolidated in the Portland court.

“Farmers contended that the adjusters were exempt from overtime laws on the basis that they were administrative employees, and we claimed they were white-collar production workers,” Stoll said.

Farmers, in a statement, said the damages phase of the case was a “cooperative effort between the parties” to calculate the amount of overtime due. Los Angeles-based Farmers also said it would appeal Jones’ determination last year that Farmers was liable.

After trial, Jones ruled that under federal and state laws insurance adjusters who handle real estate and auto damages must be paid overtime, while adjusters who process personal injury claims are exempt from overtime pay, Stoll said. Monday’s ruling, which covers unpaid overtime from 1999 to July 2004, involves adjusters in Colorado, Illinois, Washington, Michigan, Minnesota, New Mexico and Oregon.

“The issue of liability for overtime pay to claims adjustors has been evolving significantly over the past several years,” Farmers said in the statement.