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September 06, 2005
Allstate to Pay $120M to Settle White-Collar OT Claims

Allstate Corp. will pay as much as $120 million to settle claims that some of its white-collar employees in California were routinely required to work long hours without overtime pay, according to the Los Angeles Times.

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The Times calls the case "the latest in a series of class-action lawsuits putting pressure on California employers to revamp their white-collar pay policies."

RadioShack Corp., Bank of America Corp., Starbucks Corp. and Rite Aid Corp. are among the other employers to settle such lawsuits, which center on the practice of classifying workers as managers or administrators to avoid paying overtime.

In this case, adjusters at Allstate--the nation's second-largest home and auto insurer--alleged that the company refused to pay overtime but routinely assigned them so many claims that they had to work nights and weekends to keep up.

"It's very similar to what happened in the '40s with the sweatshops," R. Rex Parris, a lawyer representing the adjusters, told the Times. "The laptop had become the sewing machine of the 2001 era. Companies were sending these people home with their laptops. They'd work long hours at work, and then they'd go home and continue to work."

Almost 3,000 California-based adjusters are eligible to receive payments that could range from $1,000 to $100,000, depending on each employee's tenure with Allstate and amount of overtime worked, Parris said. He estimated that the typical payout would be $50,000 or $60,000. Adjusters make about $50,000 a year, without overtime.

Allstate did not respond to the Times' request for comment. But in a filing with the Securities and Exchange Commission (SEC) on Thursday, the company said it "continues to deny any liability or wrongdoing with respect to the claims raised in the lawsuit."

The proposed settlement is subject to approval by a Los Angeles County Superior Court judge.

The Allstate case "is part of a wave of class-action litigation by white-collar workers claiming overtime exploitation in industries such as retail, restaurants, and banking," the Times reports. It began about 5 years ago, after California lawyers began seeking class-action status for alleged overtime law violations.

Under California law, employers are required to pay time and a half for more than eight hours of work a day. It also requires them to pay the overtime premium to many white-collar workers--regardless of title--who spend more than half their time flipping burgers, running cash registers or doing other non-managerial or non-administrative work.

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