Revived lawsuit spotlights how misclassifying crisis workers could cost HR teams big
A federal appeals court warns employers: misclassifying workers during crisis response can lead to legal trouble, as shown in a revived insurance adjuster overtime lawsuit.
On October 16, 2025, the Eleventh Circuit Court of Appeals breathed new life into a lawsuit brought by three insurance adjusters who claimed they were denied overtime pay after working long hours on Hurricane Harvey claims. The case, which pits the adjusters against One Call Claims, LLC (OCC) and the Texas Windstorm Insurance Association (TWIA), is now headed back to the lower court, where a jury will decide if these workers should have been treated as employees, not independent contractors.
The facts are a wake-up call for HR leaders. In the aftermath of Hurricane Harvey, TWIA – a state-backed insurer – needed extra hands to process a flood of claims. OCC, a staffing firm, supplied licensed adjusters Joel Galarza, Vicki Wimberly, and Kathrine Carpenter to help TWIA manage the workload. The adjusters were required to have state licenses and prior experience, but TWIA also put them through additional training and certification to meet its own standards.
According to the adjusters, TWIA didn’t just set the rules – they set the schedules, too. Galarza reported working from 8 a.m. to 6 p.m. on weekdays and 8 a.m. to 5 p.m. on weekends, all under TWIA’s direction. The adjusters had to keep timesheets, get them approved, and report any absences or tardiness to both OCC and TWIA. Missing work without notice could mean a day’s pay docked. TWIA provided the tools of the trade: computers, phones, and ID badges.
The contracts called the adjusters “independent contractors” and said assignments were of indefinite length, determined by TWIA. While the paperwork allowed the adjusters to seek work elsewhere, the reality was they worked exclusively for TWIA during their assignments, which lasted up to two years. Carpenter did leave twice to work for other insurers, but otherwise, the group was all-in with TWIA.
Pay was set at a fixed daily rate, ranging from $500 to $1,200, with the adjusters responsible for their own licensing fees, travel, and lodging. They claimed tax deductions for these business expenses. After several months, TWIA shifted the team to remote work. The adjusters said TWIA required them to install monitoring software and to get permission to work on Sundays, with the threat of being released for unauthorized work. TWIA disputed this, saying the remote shift was due to limited office space and that the adjusters provided their own equipment.
When their assignments ended, the adjusters sued OCC, TWIA, and two individuals, Kristi and Kelly Smoot, seeking overtime pay under the Fair Labor Standards Act. The district court sided with the companies, ruling the adjusters were independent contractors. But the Eleventh Circuit reversed, finding that a jury could reasonably conclude the adjusters were actually employees.
The appeals court’s decision hinged on the “economic reality” of the relationship. The judges pointed to TWIA and OCC’s control over the adjusters’ schedules and work, the exclusive and long-term nature of the assignments, and the central role the adjusters played in TWIA’s operations. Five out of six factors favored employee status.
Ultimately, this case is about getting worker classification right when the pressure is on – a challenge every HR leader knows well
For HR professionals, the message is clear: in times of crisis, the lines between contractor and employee can blur. But if your company controls the schedule, work process, and pay, you may be on the hook for overtime and other employee protections. As natural disasters and other emergencies become more common, this case is a timely reminder to review your worker classifications and compliance practices. The stakes are high, and the courts are watching.
