Editor's Note: This article originally appeared in National Underwriter, P&C.

The federal appeals court in Washington, D.C. has found that auto damage adjusters working for GEICO do not qualify for overtime benefits under the Fair Labor Standards Act of 1938 (FLSA).

The finding -- which agreed with GEICO's position that the employees are exempt because they are "administrative" employees -- reverses a previous decision by the U.S. district court in Washington. GEICO is a Berkshire Hathaway subsidiary.

Charles E. Tomkins, of the Boston law firm Shapiro Haber & Urmy, LLP, who represented the plaintiffs in the case, said he is "currently pursuing possible avenues to continue prosecuting the case, but said he was unsure whether there would be an appeal.

Issuing the opinion for the U.S. Court of Appeals for the District of Columbia, Circuit Judge Karen LeCraft Henderson noted that GEICO employs "at least three categories of personnel at varying levels of responsibility who may service a given automobile claim."

The three mentioned are the liability adjuster, which falls within the FLSA exemption; the auto damage appraiser, which does not fall under the exemption; and the auto damage adjuster, whose exemption status was brought into question in this case.

Judge Henderson found that the primary duty of the GEICO auto damage adjusters "includes the exercise of discretion and independent judgment, and thus they come within the administrative employee exemption from the overtime pay requirements of the FLSA."

The case came before the district court when plaintiffs Jerome Robinson-Smith, Christine Lindsay and Robert McGruder -- who had all worked for GEICO as auto damage adjusters -- sued the insurer for overtime benefits.

The district court agreed with the plaintiffs, finding that GEICO's auto damage adjusters do not exercise discretion and independent judgment as part of their primary responsibilities.

Speaking to the district court decision, Ms. Henderson said in her opinion, "Although [the district court] recognized that 'some discretion is certainly exercised by the adjusters,' it was satisfied that the discretion exercised was not 'sufficient' because 'the vast majority of the adjusters' work consists of using their training and skills to assess the value of the damage to the vehicle in accordance with the standards laid out by GEICO.'"

But Ms. Henderson said the actions the GEICO adjusters take are "virtually identical" to adjusters found exempt in previous court decisions. She said the GEICO adjusters fit the exemption because, as acknowledged by the district court and the appellees' concession, their negotiations with insureds involve "some discretion."

Phil Gusman is associate editor of National Underwriter , part of Summit Business Media's P&C Magazine Group, which includes .

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