Human Capital & Careers

Allstate Settles Overtime Dispute

Almost 3,000 white-collar employees are eligible to receive payments that could range from $1,000 to $100,000.
Craig SchneiderSeptember 2, 2005

Labor Day means a little more this year to some employees of Allstate Corp. The insurer announced that it will pay as much as $120 million to settle claims that it refused to pay its California white-collar workers for working extra hours during nights and weekends.

The class-action lawsuit alleged that Allstate repeatedly assigned those employees so many claims that they had to work six days or more a week to handle them, according to the Los Angeles Times. Under California law, employers are required to pay time-and-a-half for work in excess of 40 hours a week. Almost 3,000 California-based claims adjusters are eligible to receive payments that could range from $1,000 to $100,000, depending upon tenure and the amount of overtime, the paper added. The average payout will likely fall about halfway between, a lawyer for the plaintiffs reportedly stated.

Other insurers have also been forced to change their ways. In January, State Farm Insurance Cos. agreed to pay $135 million to settle an overtime lawsuit by its claims adjusters in California. Last September, Farmers Insurance Exchange agreed to pay as much as $210 million to resolve overtime claims.

Similar class-action suits alleging overtime exploitation have been a growing trend for about five years and have spread to industries such as retail, restaurants, and banking. Previously, noted the Times, many of those claims were handled individually and not as a class, which can require a greater payout. Other California employers such as RadioShack Corp., Bank of America Corp., Starbucks Corp., and Rite Aid Corp. have also reportedly settled lawsuits that called for a reform of their white-collar pay policies. The common practice, the newspaper reported, has been to classify those workers as managers or administrators to avoid having to pay overtime.

Allstate “continues to deny any liability or wrongdoing with respect to the claims raised in the lawsuit,” according to the Times, which cited a regulatory filing. The proposed settlement still must be approved by a Los Angeles County superior court judge.