A three-judge panel of the Ninth Circuit Court of Appeals on Wednesday ruled that a class action lawsuit involving 800 Allstate Insurance Co. employees in California may move forward.
The lawsuit alleges that the company had an unofficial policy of requiring its claim adjusters to work unpaid overtime in violation of California law, which requires employers to pay time and a half for more than eight hours of work a day.
The class claims that Allstate's managers are required to stay within an annual budget that includes overtime compensation, and that the performance evaluations and bonuses paid to managers are dependent on how closely they conform to the budget. This would mean that a manager would have a disincentive to approve and report overtime, the class alleges.
“The potential recovery in this case is expected to be in the hundreds of millions for wage theft by Allstate,” plaintiffs' attorney R. Rex Parris said in a statement.
The decision sends the case back to the U.S. District Court in Los Angeles.
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