Professional Service Agreement

Insurance Fraud Investigators Entitled to Overtime Pay Under FLSA

June 06, 2019

Insurance fraud investigators are not exempt from the overtime pay requirements mandated by the Fair Labor Standards Act (FLSA), according to the 4th U.S. Circuit Court of Appeals. The FLSA requires employers to pay overtime for each hour their non-exempt employees work in excess of 40 hours per week. The court held that conducting factual investigations and making recommendations to the company on whether to prosecute certain insurance claims as fraudulent is not, by itself, sufficient to make these employees exempt. Of significance, the court determined that the investigators had no role in managing, running or servicing the company’s general business operations nor developing, reviewing, evaluating or recommending to the company business policies or strategies related to the claims they investigated. This case provides a clear reminder that employers periodically need to examine employment positions they are treating as exempt from the FLSA’s overtime pay requirements. SESCO has a long history of ensuring that employers are compliant with federal and state wage and hour requirements. If employers have any questions or concerns about their pay practices, we recommend they contact us to ensure compliance.