A non-exempt hourly employee of the County of San Diego filed a lawsuit contending that life and accidental death and dismemberment (AD&D) insurance premiums irrevocably paid by the County to MetLife should have been included in her regular rate of pay, and thus, should have increased her overtime pay. The employee claimed the County’s practice constituted a willful violation of section 207 of the Fair Labor Standards Act (FLSA). The County moved for summary judgment.
In analyzing this claim, the court first acknowledged that under FLSA section 207(e)(4), an employer should “include all remuneration for employment paid to, or on behalf of, the employee” in the employee’s regular rate. However, the court recognized that “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees” are not included in the regular rate.
The parties took opposing stances as to whether the group policy at issue constituted a “bona fide plan.” The employee contended that the court should follow guidance from a regulation issued by the Department of Labor, 29 C.F.R. section 778.215, which provides that a plan is not bona fide if it gives employees “the right to assign” benefits or the option to receive any part of the employer’s contributions in cash instead of benefits under the plan. Pursuant to that regulation, the employee asserted that the group policy did not constitute a “bona fide plan” because it had a term allowing gift transfers, viatical assignments for terminally or chronically ill employees, and an accelerated benefit option for employees with a terminal or chronic illness to receive a percentage of their life insurance before death.
The County argued that the gift, viatical assignment, or accelerated benefit options did not show that the policy was designed to provide employees with disguised compensation and evade the FLSA’s overtime rules.
The court reasoned that group policy qualified as a bona fide plan because assignment provisions fell within a regulatory exception since the gift transfers did not provide employees with a payment and viatical assignments and the accelerated benefit option were limited to specified circumstances (terminal/chronic illness) consistent with insurance purposes rather than disguised compensation. The Court found the Plaintiff failed to dispute these limitations or argue assignments constituted FLSA evasion.
The court granted summary judgment on the issue of whether the premiums were properly excluded from regular rate of pay under the FLSA.
Rossell v. County of San Diego, No. 24-cv-1872-L-DDL (S.D. Cal. Mar. 2, 2026).