On Friday, May 15, 2015, Rick Hayber and Tony Pantuso of the Hayber, McKenna & Dinsmore won a jury verdict in favor of their client, an insurance underwriter who had been misclassified as exempt from overtime. The case, Graves v. Chubb & Son, Inc., was tried in New Haven in front of Judge Janet Hall. The employer attempted to argue throughout the case that because the underwriter, Garrett Graves, did some financial analysis and customer service, he was an exempt “administrator” and could be expected to work more than 40 hours per week without any overtime pay.
The jury, however, agreed with the Hayber, McKenna & Dinsmore. It determined that the work that Mr. Graves did was not “related to the general business operations of the employer or the employer’s customers.” This is a key element that any employer seeking to show that its employee is an exempt administrator must show. This means that the employee is performing work like tax, accounting, marketing, or human resources that could be done at any company- not just the type of company at which he is employed. For example, an employee administering employee benefits for a widget factory could do the exact same job at a car manufacturer or a university; whereas the employee operating the widget machine is making widgets and not involved in the “general business operations of the company.”
This example highlights another important aspect of the manner in which the administrative exemption is interpreted- the “administrative/production dichotomy.” What this means is that an employee can generally be characterized as performing either administrative or production work, even in an industry where the “product” is intangible, such as an insurance policy or a loan. Employers have long argued that unless an employee is actually making something you can touch, he’s not a production employee. However, judges and juries agree that an employee can be producing an insurance policy by applying the employer’s rules and coming up with a policy suited to the situation.
This is an important win- the first in the country for insurance underwriters. It’s time for the insurance industry to examine how it pays its employees!