Ninth Circuit Ignores Legal Written Policy in Favor of Using Statistical Sampling to Certify Class

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September 3, 2014 the U.S. Court of Appeals for the Ninth Circuit upheld a certification of class in Jimenez v. Allstate Ins. Co.: 800 nonexempt insurance claims adjusters claimed that they worked overtime and did not receive payment. This is in spite of the company’s written policy stating that nonexempt employees would be paid for all the hours they work.

The Ninth Circuit based their decision on the discovery that three common questions existed:

  1. The existence of an “unofficial” Allstate policy that discouraged employees from reporting overtime.
  2. Whether or not employees’ workloads forced them to work overtime (in excess of eight hours in one day or over 40 hours in one week).
  3. If Allstate’s timekeeping method resulted in unpaid overtime or underpayment for overtime.

The court discovered that the adjusters weren’t responsible for the preparation of time sheets/clocking in and out. Instead the time cards were set to a default of eight hours each day and 40 hours each week. Supervisors could submit “exceptions” for hours that were worked outside of the default schedule. The Ninth Circuit decided that a common question did exist in relation to the question of whether the timekeeping method resulted in unpaid overtime for adjusters.  

The Ninth Circuit also held that liability for the problem and whether or not the employer should have known its employees were working off the clock could be resolved with statistical sampling. Although, it is important to note that the Ninth Circuit did not specify exactly how the issues could be resolved through statistical sampling.  

This decision could provide a basis for a legal standard, making an employer’s lawful written policy not enough to completely insulate the company from class certification questions. The recent decision is a deviation from previous rulings as in the Supreme Court’s decision in Walmart Stores v. Dukes and Comcast Corp. v. Behrend.

If you have questions regarding class certification or the method of timekeeping used at your place of business, contact the employment law experts at Blumenthal, Nordrehaug & Bhowmik for additional information.