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Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 15, 2009 Decided January 5, 2010

No. 08-7146

JEROME ROBINSON-SMITH,

APPELLEE

v.

GOVERNMENT EMPLOYEES INSURANCE COMPANY,

APPELLANT

NO. 08-7147

CHRISTINE LINDSAY; ROBERT MCGRUDER,

INDIVIDUALLY AND ON BEHALF OF 

ALL OTHER PERSONS SIMILARLY SITUATED,

APPELLEE

V.

GOVERNMENT EMPLOYEES INSURANCE COMPANY,

APPELLANT

Appeals from the United States District Court

for the District of Columbia

(No. 1:01-cv-01340)

USCA Case #08-7146 Document #1223577 Filed: 01/05/2010 Page 1 of 21
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1

The two appeals are Robinson-Smith v. GEICO, No. 08-7146

(filed Dec. 18, 2008), and Lindsay v. GEICO, No. 08-7147 (filed Dec.

18, 2008). More than 200 additional auto damage adjusters joined

each case via the opt-in provision of the FLSA, 29 U.S.C. § 216(b);

the Lindsay action includes more than 200 additional class members

who are employed by GEICO in New York State and who joined the

litigation pursuant to Federal Rule of Civil Procedure 23. Appellees’

Br. i.

Eric Hemmendinger argued the cause for the appellant.

Glen Donath and Bruce S. Harrison were on brief.

Charles E. Tompkins argued the cause for the appellees.

Thomas V. Urmy Jr., Todd Heyman, Robert Ditzion, Joseph M.

Sellers and Jenny R. Yang were on brief. Michael D. Hausfeld

entered an appearance.

Before: GINSBURG and HENDERSON, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Government

Employees Insurance Corporation, better known as GEICO,

underwrites, sells and services insurance policies covering

automobiles and other property. Jerome Robinson-Smith,

Christine Lindsay and Robert McGruder, the named plaintiffs in

the two consolidated cases on appeal, worked for GEICO as

“auto damage adjusters.”1

 They sued GEICO for overtime

benefits they claim they are owed under the Fair Labor

Standards Act of 1938 (FLSA), 29 U.S.C. §§ 201 et seq., which

ordinarily requires employers to pay employees time-and-onehalf for hours worked beyond forty per week unless the

employees are exempt. GEICO considers auto damage adjusters

exempt “administrative” employees. On cross motions for

summary judgment, the district court, applying the so-called

“short test” used by the United States Department of Labor

USCA Case #08-7146 Document #1223577 Filed: 01/05/2010 Page 2 of 21
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2

The district court had no occasion to decide whether the job of

a GEICO auto damage adjuster is so easy a caveman could do it. 

(Labor or DOL) to describe administrative employees, held that

GEICO’s auto damage adjusters do not exercise “sufficient”

discretion and independent judgment to qualify for the

exemption and granted the plaintiffs summary judgment.2

GEICO appeals the judgment, arguing that the undisputed fact

that the adjusters exercise “some discretion” means that they are

exempt from overtime pay as administrative employees under

the FLSA. For the following reasons, we agree with GEICO and

reverse. 

I.

GEICO employs at least three categories of personnel at

varying levels of responsibility who may service a given

automobile claim: the liability adjuster, the auto damage adjuster

and the auto damage appraiser. At the higher end of the

responsibility scale is the liability adjuster (a term used by the

parties to also include a “claims service representative” and a

“telephone adjuster”), who determines coverage and liability,

sets reserves, works with lawyers and evaluates claims for lost

wages, comparative negligence and personal injury. At the

lower end is the auto damage appraiser, an entry-level employee

who works under close supervision in GEICO drive-in locations

inspecting damaged cars that remain in drivable condition.

GEICO considers the former exempt as an administrative

employee under the FLSA (and thus not entitled to overtime

wages) but not the latter.

At a level of responsibility between the liability adjuster and

the auto damage appraiser are the appellees: the auto damage

adjusters. As the district court observed, auto damage adjusters

(also known as “field adjusters”) “assess, negotiate and settle

automobile damage claims.” See Robinson-Smith v. Gov’t

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3

The “field” includes tow yards, body shops and residences.

Employees Ins. Co., 323 F. Supp. 2d 12, 15 (D.D.C. 2004).

They spend a majority of their time appraising damaged vehicles

and estimating repair costs but also negotiate and settle claims

with body shops over repair costs and with insureds over total

loss vehicles. A newly-hired GEICO employee typically works

as an auto damage appraiser for a probationary period before

being promoted, with sufficient experience, to auto damage

adjuster. Once promoted, he takes on additional responsibility

and autonomy. For example, he begins to handle total loss

claims, which involve vehicles GEICO deems too damaged to

repair. An auto damage adjuster also works in the field3

(typically one or two days per week at a GEICO drive-in

location but otherwise in the field) and under less direct

supervision (usually on his own but with a ride-along supervisor

about once a month). The average auto damage adjuster handles

more than 1,000 claims per year, totaling over $2.5 million.

For most claims, the adjuster’s main task is to determine

how much GEICO should pay to restore a vehicle to its “preloss condition,” using the most economical parts available

unless safety is a consideration. In assessing vehicle damage

and estimating repair costs, the adjuster relies on software that

walks him through the appraisal process. He enters a vehicle

identification number, or VIN, into a laptop computer with

software that provides extensive information about the car. He

then inspects the damaged vehicle and enters a description of the

damage into the computer, which gives him information like the

cheapest generic parts available or standard refinish times and

material prices. An adjuster also makes decisions that are not

dictated by the software, however, such as interviewing insureds

about pre-existing damage, determining whether damage was

caused by a covered event and recommending that payment be

withheld on a claim if the damage did not result from a covered

USCA Case #08-7146 Document #1223577 Filed: 01/05/2010 Page 4 of 21
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loss. (He is not authorized to decide whether GEICO is liable

for a given claim or to deny liability, however, tasks performed

by the liability adjuster.) An adjuster also spends some time

negotiating with shops over repair times for body work. The

extent of such negotiations is disputed: One witness testified

that “every job has . . . to be negotiated” but several others made

clear that negotiating does not occupy a significant portion of an

adjuster’s time, no more than fifteen or twenty minutes per day.

Other adjuster tasks include checking for indicia of fraudulent

claims, determining whether to repair or replace a part, choosing

which type of replacement part to use and adjusting the base

value of a total loss vehicle to compensate for preexisting

damage. GEICO supervisors initial each estimate and review

some claims but not until the estimate is written and the claim

paid.

Some claims involve vehicles that are so damaged they are

declared a total loss. As a general rule, a vehicle is a total loss

if the repair cost exceeds 75% of the vehicle value. While the

software flags a vehicle as a potential total loss when its repair

cost approaches 75% of the vehicle’s value, it is the adjuster’s

task to decide whether it is economically feasible to repair a

damaged vehicle or instead to pay the owner its value, which is

sometimes based on adjuster estimates of repairing probable

hidden damage in addition to visible damage. Adjuster

determinations of whether to declare a vehicle a total loss can

involve thousands of dollars in additional liability for GEICO.

Approximately 20% of the claims the typical adjuster handles

involve total loss vehicles, although plaintiff Lindsay testified

that her proportion is about 30%. While fewer in number, total

loss claims are more time consuming than partial loss claims

because they involve several steps. After determining that a

vehicle is a total loss, the adjuster first obtains the base valuation

from the computer database. Depending on the similarity of

comparable vehicles in the database, the adjuster then chooses

that valuation or an alternative one from, for example, dealer

USCA Case #08-7146 Document #1223577 Filed: 01/05/2010 Page 5 of 21
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quotes, internet listings, classified advertisements or dealer

invoices, making sure to adjust that valuation for any preexisting

damage. He then prepares an estimate and presents it to the

vehicle owner, who may accept the offer or request more

money. 

About 70% of total loss claims are settled on the first offer

with no subsequent negotiation. For the remaining 30%, the

adjuster initiates settlement negotiations over amounts ranging

from nominal to thousands of dollars. In some regions of the

country the adjuster can transfer a particular total loss claim to

one of GEICO’s “total loss” units after the initial offer, but in all

regions the adjuster can pursue settlement beyond the initial

offer under at least some circumstances. For example, the

adjuster generally has full authority to settle a claim within his

limits ($10,000 for a Level I adjuster or $15,000 for a Level II

adjuster) if he can justify his decision within GEICO guidelines

and based on his experience. Most claims are settled within the

adjuster’s limits but he may also recommend a larger settlement

to his supervisor. Adjustments used to reach settlements include

using an alternative base valuation, waiving prior damage or

making a “customer service concession,” although some of the

adjustments are made only with supervisor approval. GEICO

has no policy or set dollar amount in dispute that requires the

adjuster to consult his supervisor about adjustments. Rather, an

adjuster’s decision to consult with his supervisor is made on a

case-by-case basis and he typically makes minor concessions

without supervisor approval. Nevertheless, some adjusters

routinely call their supervisors in situations involving

adjustments or concessions and at least one adjuster testified that

she was required to do so.

Although the parties agree that the adjuster negotiates with

insureds on total loss claims, they disagree on how often that

occurs. At the high end, the parties agree that approximately

20% of the 1,000 yearly claims (or 200) involve total losses and

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4

The appellees point out that of the 858 claims files GEICO

produced, GEICO identified settlements involving deviations from the

computer-generated value of $100 or more in only 20 of the 858

claims, or 2%. GEICO counters that it identified 24 such claims and

that these were drawn only from the 182 total loss claims, meaning

that deviations constituted 3% of all claims but 13% of total loss

claims. At oral argument, GEICO asserted that there is no similar way

to analyze adjuster discretion in partial loss claims. 

approximately 70% of the total loss claims (or 140) involve no

negotiation at all. Based on these rough estimates, an adjuster

probably handles about 60 claims per year involving customer

negotiation over total losses. See Appellees’ Br. 10 n.5 (“[A]t

most only 6% of the claims handled by [auto damage adjusters]

involve discussions with customers on total loss claims.”). At

the low end, a one-week sample of total loss claims involving

forty-six adjusters nation-wide revealed that a little over 10% of

the total loss claims—2 to 3% of all claims—apparently

involved the exercise of discretion and independent judgment.

(GEICO maintains that the exercise of discretion is involved in

total loss settlements that deviate from the computer-generated

estimate by $100 or more and, according to the chart attached to

its summary judgment motion, most of the deviations involved

customer negotiations.4

) These potential negotiations, which

amount to between 20 and 30 per year when extrapolated from

the 1,000 yearly claims handled by the average GEICO adjuster,

involved deviations ranging from $100 to $2,875. Thus, the

record indicates that the typical number of customer negotiations

regarding total loss vehicles is between 20 and 60 per year.

Because this range includes only deviations of $100 or more

from the computer-estimated vehicle value in total loss

situations, it fails to capture negotiations involving partial loss

claims or situations where an adjuster “holds firm” in declining

to alter GEICO’s initial offer. 

USCA Case #08-7146 Document #1223577 Filed: 01/05/2010 Page 7 of 21
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II.

On cross motions for summary judgment, the district court

held that the auto damage adjusters do not come within the

FLSA administrative exemption because their primary duty does

not “include[] the exercise of discretion and independent

judgment.” See Robinson-Smith, 323 F. Supp. 2d at 26.

Although it 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.” Id. It also found that the

adjusters’ negotiations are “limited in scope by both the

information and standards contained in the computer software

and the guidelines and limits on negotiating authority laid out by

GEICO.” Id. In reaching its conclusion, the district court found

the reasoning of other district court decisions persuasive,

particularly In re Farmers Insurance Exchange Claims

Representatives’ Overtime Pay Litigation, 300 F. Supp. 2d 1020

(D. Or. 2003). See Robinson-Smith, 323 F. Supp. 2d at 25 n.7

(“Although not controlling precedent in this Court, the facts

surrounding the In re Farmers decision concerning the Farmers

auto physical damage adjusters are nearly identical to those at

issue here, and the Court finds the reasoning [in Farmers] . . . to

be persuasive.”). Immediately after the district court order

issued on July 1, 2004, GEICO converted its auto damage

adjusters to non-exempt status pending the outcome of this

appeal. The district court subsequently granted summary

judgment to the Lindsay adjusters on their FLSA claims on

September 8, 2006 and on their New York state claims on

March 23, 2007. 

But the Farmers decision was reversed by the Ninth Circuit

in October 2006, in an opinion that rejected the precise language

the district court had relied on here. See In re Farmers Ins.

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5

Our sister circuits variously state that employers must meet this

burden by a “preponderance of the evidence,” Yi v. Sterling Collision

Ctrs., Inc., 480 F.3d 505, 507-08 (7th Cir. 2007), by “clear and

affirmative evidence,” Archuleta v. Wal-Mart Stores, Inc., 543 F.3d

1226, 1233 (10th Cir. 2008) (internal quotations omitted), or by “clear

and convincing evidence,” Desmond v. PNGI Charles Town Gaming,

L.L.C., 564 F.3d 688, 692 n.3 (4th Cir. 2009). We have had no

occasion to determine the proper standard but conclude that, on the

Exch., Claims Representatives’ Overtime Pay Litig., 466 F.3d

853 (9th Cir. 2006), as amended, 481 F.3d 1119, 1131 n.9 (9th

Cir. 2007) (“For those reasons, we disagree with the district

court's legal conclusion, quoting the language of the regulations,

that an automobile damage adjuster’s primary duties ‘require the

use of skill in applying techniques, procedures and specific

standards, not the use of discretion and independent judgment.’”

(quoting 29 C.F.R. § 541.207(b))). One month later, in

November 2006, GEICO moved for reconsideration of the

summary judgment rulings in both Robinson-Smith and Lindsay,

citing the Ninth Circuit’s reversal in Farmers as well as a recent

Seventh Circuit decision, Roe-Midgett v. CC Servs., Inc., 512

F.3d 865, 874-75 (7th Cir. 2008), holding automobile insurance

adjusters exempt on similar facts. On January 24, 2008, the

district court denied GEICO’s motion to reconsider and also

explained that its earlier grant of summary judgment to the

Lindsay plaintiffs was based on the reasoning in its 2004

Robinson-Smith opinion. The two appeals, which were

consolidated on February 4, 2009, followed. 

III.

Whether an employee comes within the FLSA

administrative employee exemption from overtime benefits is a

question of law. See Icicle Seafoods, Inc. v. Worthington, 475

U.S. 709, 714 (1986). GEICO bears the burden of establishing

that its auto damage adjusters fall within the exemption.5

 See

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largely undisputed record before us, GEICO has satisfied its burden no

matter which standard applies.

6

Shortly after the district court granted summary judgment to the

adjusters, the DOL substantially revised the FLSA overtime

exemption regulations effective August 2004. The revisions were

meant to “consolidate and streamline” the old regulations and to be

“consistent with” the old short test. 69 Fed. Reg. 22,122, 22,126 &

Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974).

In determining whether GEICO has met its burden, we review

de novo the district court's grant of summary judgment. See

Verizon Wash., D.C. Inc. v. Commc’ns Workers of Am., 571 F.3d

1296, 1301 (D.C. Cir. 2009). Each party believes that it is

entitled to prevail even if such factual disputes as exist are

resolved against it. Our task is to ensure that the district court

correctly applied the law to the undisputed material facts. See

Fed. R. Civ. P. 56(c); Bldg. & Constr. Trades Dep’t v. Reich, 40

F.3d 1275, 1279 (D.C. Cir. 1994) (citing Beckett v. Air Line

Pilots Ass’n, 995 F.2d 280, 284 (D.C. Cir. 1993)). 

A.

Under the FLSA an employee is ordinarily entitled to pay

equal to one and one-half times his normal hourly wage for all

hours worked beyond forty per week. See 29 U.S.C.

§ 207(a)(1). Certain employees, however, including those who

work in a “bona fide executive, administrative, or professional

capacity,” are exempt from the overtime provision. Id.

§ 213(a)(1). The DOL regulation in effect when these suits were

filed contains two tests governing whether an employee works

in a “bona fide administrative capacity”: (1) a generally

applicable “long test” and (2) a “short test” for employees

making more than $250 per week. See 29 C.F.R. § 541.2 (2003)

(unless otherwise noted, all subsequent references to the Code

of Federal Regulations are to the 2003 version).6

 The short test,

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22,139 (Apr. 23, 2004). For this reason, we cite the new regulations

where appropriate. See Roe-Midgett, 512 F.3d at 870 (although not

directly applicable, “the new regulations are nonetheless

informative”). 

7

In a footnote the appellees contend that the latter conclusion is

incorrect, see Appellees’ Br. 28 n.19, but they otherwise fail to support

which governs the appellees, provides:

The term employee employed in a bona fide * * *

administrative * * * capacity . . . shall mean any

employee . . .[w]hose primary duty consists of . . . the

performance of office or non-manual work directly

related to management policies or general business

operations of his employer or his employer’s

customers, . . . which includes work requiring the

exercise of discretion and independent judgment . . . .

Id. This test has three prongs: first, the employee must make

more than $250 per week (satisfied here); second, the

employee’s primary duty must be administrative in nature; third,

his primary duty must include work requiring the exercise of

discretion and independent judgment. See id. The third prong

of the short test is easier to satisfy than the long test’s

requirement that an administrative employee exercise discretion

“customarily and regularly.” Id. § 541.2(b); see Dymond v. U.S.

Postal Serv., 670 F.2d 93, 95 (8th Cir. 1982) (unlike long test,

short test is “more liberal standard requiring that their duties

merely ‘include’ work requiring the exercise of discretion and

independent judgment”). 

The district court found that the adjusters earn more than

$250 per week and that their primary duty is administrative, i.e.,

that it consists of the performance of office or non-manual work

“directly related to GEICO’s management policies and business

operations.”7

 Robinson-Smith, 323 F. Supp. 2d at 23; see 29

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that contention and thus give the court no basis on which to disturb the

district court’s holding. We note, however, that the district court’s

conclusion is consistent with Labor’s regulations. See 29 C.F.R.

§ 541.205(c)(5) (listing “claim agents and adjusters” as examples of

employees whose work is “directly related to management policies or

general business operations”).

8

The Lindsay plaintiffs brought claims based on a New York

statute that the parties agree is at least as protective as the FLSA

because it incorporates the FLSA administrative employee exemption.

See 12 N.Y.C.R.R. § 142-2.2 (requiring that overtime be paid “in the

manner and methods provided in and subject to the exemptions of”

FLSA); Lindsay v. GEICO, C.A. No. 04-1213, slip op. at 1 (D.D.C.

Mar. 27, 2007) (“The parties agree that New York state law expressly

adopts in its entirety the federal exemptions from overtime that are at

issue in this case.”). The appellees argue that the administrative

employee exemption is narrower under New York law than under the

FLSA and that, if we reverse the FLSA claims, the district court

should in the first instance rule on the New York state claims. See

Appellees’ Br. 27 n.18. GEICO apparently disagrees. See Appellant’s

Reply Br. 14 n.6. Because the parties brief this issue by footnote only,

we do not reach it. See, e.g., Hutchins v. District of Columbia, 188

F.3d 531, 539 n.3 (D.C. Cir. 1999).

C.F.R. § 541.206(a) (employee employed in bona fide

administrative capacity “must have as his primary duty office or

nonmanual work directly related to management policies or

general business operations of his employer or his employer's

customers”). But the court found that GEICO failed to satisfy

its burden on the third prong. The only issue briefed and argued

to us, therefore, is whether the district court correctly held that

the primary duty of the GEICO auto damage adjuster does not

include “discretion and independent judgment.”8 See

Appellant’s Br. 1 & Appellees’ Br. 1. Such discretion connotes

“the comparison and the evaluation of possible courses of

conduct and acting or making a decision after the various

possibilities have been considered.” 29 C.F.R. § 541.207(a). It

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9

The last requirement has now been incorporated into the revised

regulation, which applies to employees “[w]hose primary duty

includes the exercise of discretion and independent judgment with

respect to matters of significance.” 29 C.F.R. § 541.200(a)(3) (2009)

(emphasis added). 

is distinguished from the mere “use of skill in applying

techniques, procedures, or specific standards.” Id.

§ 541.207(b)(1); see id. § 541.207(c)(2) (typical examples of

employees who use skill are “inspectors” who do “specialized

work along standardized lines involving well-established

techniques and procedures which may have been cataloged and

described in manuals or other sources” and who may have

“leeway in the performance of their work but only within closely

prescribed limits”); see also 29 C.F.R. § 541.202(e) (2009) (test

“does not include clerical or secretarial work, recording or

tabulating data, or performing other mechanical, repetitive,

recurrent or routine work”). An employee satisfies this

requirement only if he “has the authority or power to make an

independent choice, free from immediate direction or

supervision and with respect to matters of significance.” 29

C.F.R. § 541.207(a);9

 cf. id. § 541.207(d)(1) (discretion not

exercised in matters of significance by truck driver deciding

which route to follow, shipping clerk deciding method of

packing and mode of shipping small orders or bookkeeper

deciding which ledger to post first). 

B.

To establish the third prong of the short test for an exempt

administrative employee, GEICO must show that the auto

damage adjuster’s primary duty (1) includes work requiring the

exercise of discretion and independent judgment (as

distinguished from the mere use of skill in applying well

established techniques) and that the discretion is exercised (2)

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10The total amount of discretion and independent judgment

exercised by the adjuster is probably higher as these numbers include

neither the exercise of judgment in the appraisal process, specifically

as related to negotiations with repair shops over partial loss vehicles,

nor the exercise of discretion by the adjuster who unilaterally decides

not to increase a settlement offer to a total loss claimant who requests

one.

free from immediate supervision and (3) with respect to matters

of significance. We conclude that GEICO has done so. 

First, the undisputed record shows that the primary duty of

a GEICO auto damage adjuster, which consists of the

assessment, negotiation and settlement of automobile damage

claims, includes the exercise of discretion and independent

judgment. Although the parties disagree on how much

discretion the adjuster exercises, no one disputes that he

exercises “some.” See Robinson-Smith, 323 F. Supp. 2d at 26;

Appellees’ Br. 52 (“[T]here is no question that [auto damage

adjusters] likely exercise ‘some discretion’ in their negotiations,

whether they take place with auto body shops or

customers . . . .”). As noted above, the GEICO auto damage

adjuster exercises discretion as often as 60 times per year in

negotiations with customers over total loss claims alone. The

frequency of such negotiations may be enough to satisfy even

the “customarily and regularly” requirement of the “long test.”

See 29 C.F.R. § 541.701 (2009) (“Tasks or work performed

‘customarily and regularly’ includes work normally and

recurrently performed every workweek; it does not include

isolated or one-time tasks.”). In any event, engaging in total loss

negotiations even 20 times per year satisfies the short test

requirement that the adjuster’s primary duty “include[]” the

exercise of discretion and independent judgment.10 See 29

C.F.R. § 541.2. 

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The appellees respond that these sporadic total loss

negotiations are “insufficient” to satisfy the discretion and

independent judgment prong. Appellees’ Br. 24. But the

regulation requires that the adjuster’s primary duty “include[]”

the exercise of discretion and independent judgment; it does not

specify how frequently discretion need be exercised. See 29

C.F.R. § 541.2; see also 69 Fed. Reg. 22,122, 22,143 (Apr. 23,

2004) (“[F]ederal court decisions have recognized that the

current ‘short’ duties test does not require that the exempt

employee ‘customarily and regularly’ exercise discretion and

independent judgment, as does the effectively dormant ‘long’

test.”); see, e.g., O'Dell v. Alyeska Pipeline Serv. Co., 856 F.2d

1452, 1454 (9th Cir. 1988) (had district court correctly applied

short test rather than long test, “it could only have come to the

ultimate conclusion that [plaintiff] exercised some discretion

and independent judgment during the course of his job, and

therefore [he] was an exempt administrative employee”). Even

assuming the district court correctly held that “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,” Robinson-Smith, 323 F.

Supp. 2d at 26, we conclude that their primary duty nevertheless

“includes” work requiring the exercise of discretion and

independent judgment. 

 Second, the auto damage adjuster has the power to make

independent choices “free from immediate direction or

supervision.” 29 C.F.R. § 541.207(a). Although the district

court held that the adjusters’ negotiations were too structured by

the estimating process and GEICO’s guidelines to satisfy this

requirement, see Robinson-Smith, 323 F. Supp. 2d at 25-26,

freedom from immediate direction “does not necessarily imply

that the decisions made by the employee must have a finality

that goes with unlimited authority and a complete absence of

review.” Id. § 541.207(e)(1); see also 29 C.F.R. § 541.202(c)

(2009) (“[E]mployees can exercise discretion and independent

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judgment even if their decisions or recommendations are

reviewed at a higher level.”). Here, the adjusters worked in the

absence of immediate supervision the majority of the time and

made decisions that were reviewed only after the estimate was

written and the claim paid. Moreover, while it is true that some

adjusters routinely called their supervisors in situations

involving non-minor adjustments or concessions, there was no

GEICO policy or procedure requiring them to do so. See

Robinson-Smith, 323 F. Supp. 2d at 17 (adjuster “would not

consult his supervisor, so long as he knew the supervisor would

approve the additional credit”). In fact, adjusters have full

authority to settle claims within their limits of $10,000 or

$15,000 as long as they can justify their decision on the facts of

the claim and within GEICO guidelines or prior practice. Our

sister circuits have held exempt employees who possessed

similar levels of autonomy. See Roe-Midgett v. CC Servs., Inc.,

512 F.3d 865, 869 (7th Cir. 2008) (finding exempt adjusters who

“may settle claims of up to their $12,000 limit of authority” and

whose supervisors “need not formally approve the actual amount

of settlement or underlying estimate, though they informally

review an [adjuster’s] work for errors”); In re Farmers Ins.

Exch., Claims Representatives’ Overtime Pay Litig., 466 F.3d

853 (9th Cir. 2006), as amended, 481 F.3d 1119, 1132 (9th Cir.

2007) (finding exempt claims adjusters who have discretion to

settle claims within settlement authority). We also agree with

the Farmers holding that the ample unsupervised discretion of

the GEICO adjuster distinguishes him from the “claims

specialist” discussed in the DOL opinion letter cited by the

appellees, as the latter “could not conduct additional

investigation without supervisor approval and was ‘so closely

supervised’ that he ‘d[id] not have the authority to make

independent choices.’” Id. (citing DOL Wage & Hour Div. Op.

Ltr., at 2, 6 (Aug. 26, 2005)) (alteration in Farmers). 

Finally, the adjuster makes choices “with respect to matters

of significance.” 29 C.F.R. § 541.207(a); see id. § 541.207(d)(2)

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(employees exercise discretion with respect to matters of

significance if they “exercise authority within a wide range to

commit their employer in substantial respects financially or

otherwise”). He is empowered to negotiate with claimants and

body shops and settles claims up to $10,000 or $15,000—all

actions that bind GEICO financially. See Roe-Midgett, 512 F.3d

at 874 (adjusters “routinely use their discretion and independent

judgment to make choices that impact damage estimates,

settlement, and other ‘matters of significance’”) (citing 29

C.F.R. § 541.207(a)); see also 29 C.F.R. § 541.202(b) (2009)

(factors that bear on discretion and independent judgment

determination include “whether the employee has authority to

commit the employer in matters that have significant financial

impact”); cf. id. § 541.205(b)(2) (work of employees

“performing routine clerical duties” such as “messenger boy . . .

carrying large sums of money” or worker “operating very

expensive equipment” is not of substantial importance). Under

these circumstances, we conclude that the GEICO auto damage

adjusters exercise discretion free from immediate direction or

supervision and with respect to matters of significance, making

them exempt administrative employees under the FLSA and the

applicable DOL regulations. 

Although acknowledging the adjusters’ “occasional exercise

of discretion,” the appellees nevertheless argue that it “is

immaterial because it is not an aspect of the [auto damage

adjusters’] primary duty, which is non-exempt appraisal work.”

Appellees’ Br. 52; see id. at 23 (“the essence of the appraiser

tasks GEICO identifies . . . is the determination of facts” and

“[s]uch fact-finding is non-exempt work”). As we suggested

above, however, the regulations do not define “primary duty” so

narrowly. An administrative employee’s “primary duty” does

not consist of one specific task but rather of “administrative

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11The section defining “primary duty” states that an employee

employed in a “bona fide administrative capacity . . . must have as his

primary duty office or nonmanual work directly related to

management policies or general business operations of his employer

or his employer's customers.” 29 C.F.R. § 541.206(a). The same

section refers, for additional guidance, to the definition of “primary

duty” in the “executive” employee exemption section. Id.

§ 541.206(b). The latter regulation specifies that an executive is

exempt if, inter alia, his primary duty “consists of the management of

the enterprise,” id. § 541.1, which generally means an employee who

spends “over 50 percent of his time in managerial duties,” id.

§ 541.103. An employee has “administration” as his primary duty if

his work “consists of” the “performance of office or non-manual work

directly related to management policies or general business operations

of his employer,” id. § 541.2(a)(1), and he spends more than half of

his time performing such “administrative duties,” see id. §§ 541.103,

541.206(b). See Shockley v. City of Newport News, 997 F.3d 18, 28

(4th Cir. 1993) (“[T]he short test for determining whether an employee

is employed in an administrative capacity requires proof either that the

employee spends half his time on administrative duties or that

administrative duties have special significance relative to the

employee’s other duties.”). Although the appellees argue that their

“primary duty” should be narrowly defined as “appraisal work,”

Appellees’ Br. 52, they nonetheless expressly rely on Shockley’s

language in their brief, id. 29.

duties” generally11—and, as in Roe-Midgett, “appraising damage

is included among many duties [the adjusters] perform in the

course of adjusting auto damage claims.” 512 F.3d at 875. But

even if we were inclined to define the adjuster’s “primary duty”

as narrowly as the appellees request, their own authority shows

that even employees engaged primarily in fact-finding work may

yet come within the administrative employee exemption

provided they exercise discretion and independent judgment.

See DOL Op. Ltr. (Oct. 24, 1957) (employees who primarily

engage in appraisal work to arrive at amount of vehicle loss

may, if “given reasonable latitude in carrying out negotiations

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12Although the revised version was not in effect when these suits

were filed, the Labor Secretary described the subsection as “consistent

with” then-current regulations, case law and a DOL opinion letter. 69

Fed. Reg. at 22,144-45; see Roe-Midgett, 512 F.3d at 870-71. 

with the insured,” exercise “the kind of discretion and judgment

to qualify for the exemption”). Likewise, Labor’s revised

regulation exempts an insurance claims adjuster if he performs

activities such as “inspecting property damage” and “reviewing

factual information to prepare damage estimates,” see 29 C.F.R.

§ 541.203(a) (2009)—tasks more concisely known as

“appraisal” and “fact-finding.”

Indeed, the latter revised regulation bolsters our conclusion

that GEICO’s auto damage adjusters are exempt as

administrative employees. It provides that: 

Insurance claims adjusters generally meet the duties

requirements for the administrative exemption . . . if

their duties include activities such as interviewing

insureds, witnesses and physicians; inspecting property

damage; reviewing factual information to prepare

damage estimates; evaluating and making

recommendations regarding coverage of claims;

determining liability and total value of a claim;

negotiating settlements; and making recommendations

regarding litigation.

29 C.F.R. § 541.203(a) (2009).12 The district court found that

GEICO’s adjusters “cannot be automatically classified as

exempt employees” because they perform only three of the

seven activities listed therein—inspecting property damage,

preparing damage estimates and negotiating settlements. See

Robinson-Smith, 323 F. Supp. 2d at 22. To those we would add

two more activities the adjusters perform, at least in part: they

interview insureds about partial loss claims; and, although they

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do not “evaluate or determine coverage issues” in the way a

liability adjuster does, they do assess, as in Roe-Midgett, to the

extent that they evaluate and make recommendations regarding

evidence of preexisting damage and indicia of fraud. See RoeMidgett, 512 F.3d at 868, 874 (although adjusters “do not make

coverage or liability determinations,” they “make coverage

recommendations to their superiors” regarding fraud and

preexisting damage issues on claims). Thus, like the Farmers

and Roe-Midgett adjusters, GEICO’s auto damage adjusters can

be said to perform a majority of the listed activities. See RoeMidgett, 512 F.3d at 874 (“The balance of [plaintiffs’] day-today responsibilities mirror the duties the new regulations

attribute to exempt ‘claims adjusters,’ . . . .”); Farmers, 481 F.3d

at 1129 (“The district court’s findings almost track word for

word the language in § 541.203.”). 

The actions the GEICO adjuster takes are, in fact, virtually

identical to those of the adjusters found exempt in Roe-Midgett,

with the significant difference being that, on the one hand, the

GEICO adjuster interviews only insureds about preexisting

damage (not witnesses and law enforcement) but is authorized

to handle total loss claims (not just partial loss claims) on the

other. See Roe-Midgett, 512 F.3d at 868-69 (Roe-Midgett

adjusters “interview claimants, witnesses, and where relevant,

police personnel” but prepare estimates for partial loss claims

only and have no authority to negotiate with insureds). Given

the district court’s conclusion—and the appellees’

concession—that negotiating with insureds involves “some

discretion,” see Robinson-Smith, 323 F. Supp. 2d at 26 &

Appellees’ Br. 52, the fact that the GEICO adjuster engages in

such negotiations over total loss claims means he is an even

better fit for the administrative employee exemption than the

Roe-Midgett adjusters. See Farmers, 481 F.3d at 1131 (noting

total loss claims are often difficult to negotiate and settle and

require exercise of discretion and independent judgment beyond

computer skill). In finding the Roe-Midgett adjusters exempt,

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the Seventh Circuit joined every circuit that has recently

considered the application of the administrative employee

exemption to claims processing employees. See Roe-Midgett,

512 F.3d at 875 (citing Farmers, 481 F.3d at 1132; Cheatham v.

Allstate Ins. Co., 465 F.3d 578, 585-86 (5th Cir. 2006);

McAllister v. Transamerica Occidental Life Ins. Co., 325 F.3d

997, 998, 1001 (8th Cir. 2003)). In accord with these decisions,

we conclude that the primary duty of GEICO’s 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. 

IV.

For the foregoing reasons, we reverse the orders of the

district court, remand and direct the court to enter judgment for

GEICO on the FLSA claims and to conduct further proceedings

regarding the Lindsay plaintiffs’ state claims consistent with this

opinion. See supra note 8.

So ordered.

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