On February 6, 2026, the United States Court of Appeals for the Fifth Circuit held that a former Texas Farm Bureau agency manager, Jerry Merritt, failed to prove his old employer owed him overtime pay, ruling that the ex-employee did not show that Farm Bureau knew he was working overtime.

Farm Bureau employed Merritt as an Agency Manager. In this position, Merritt supervised a team of insurance agents in various Farm Bureau agencies. Farm Bureau classified all Agency Managers, including Merritt, as independent contractors. As an independent contractor, Merritt: (1) set his own schedule, (2) decided as much or as few hours he worked every day, and (3) had no obligation to track or disclose to Farm Bureau the hours he worked. Farm Bureau did not supervise Merritt’s hours worked or his completion of daily tasks. Additionally, Farm Bureau compensated Merritt not on an hourly basis, but on commission for policies sold and renewed. From 2016 to 2018, he earned between $552,000 and $627,000 annually.

Merritt sued Farm Bureau in November 2019 challenging his classification as an independent contractor and seeking unpaid overtime under the Fair Labor Standards Act as an employee. The district court ruled on summary judgment that Farm Bureau should have classified Merritt as an employee and that he was owed at least 816 hours of overtime. The sole issue for trial was whether Farm Bureau had notice of that overtime work. The lower court charged the jury with the following instruction modeled after the Fifth Circuit’s pattern jury instructions: “[A]n employee has a duty to notify his employer when he is working extra hours. . . . If the employer neither knew nor had reason to believe that overtime work was being performed, that time does not constitute hours worked.”

The jury decided Farm Bureau had neither actual or constructive knowledge of Merritt’s overtime. Merritt filed a Rule 50(b) renewed motion for judgment as a matter of law and an alternative Rule 59 motion to vacate and grant a new trial. Both were denied. The appeal to the Fifth Circuit followed.

The Court said Farm Bureau permitted agency managers like Merritt to work independently, and the agency never required Merritt to track his own time or pay them hourly. It held that “allowing Merritt to work as much as he pleased cannot mean Farm Bureau owes Merritt for any time he happened to work overtime, regardless of Farm Bureau’s knowledge of those overtime hours.

The Court’s opinion turned on whether Merritt provided evidence that Farm Bureau was aware he worked over 800 hours of overtime to collect payment for that work. While the lower court held as a matter of law, Farm Bureau should have classified Merritt as an employee rather than a contractor – the Fifth Circuit ruled Farm Bureau bore no responsibility to track Merritt’s overtime, stating “[t]o say that Texas Farm Bureau’s lack of a timekeeping system equals constructive knowledge of overtime would incorrectly flip Merritt’s burden onto Texas Farm Bureau. We decline to do so . . . Moreover, we have never held that an employer’s failure to maintain a timekeeping system in itself constitutes constructive knowledge of an employee’s overtime work.”

As failed to  Merritt to carry his burden of proof of Farm Bureau’s has knowledge that Merritt had work 800+ overtime house, the Fifth Circuit affirmed the trial court.

The attorneys in our Austin and Dallas office are available to answer any questions you may have. Please contact us at info@gstexlaw.com.

Legal Disclaimers

This blog is made available by Gerstle Snelson, LLP for educational purposes and to provide general information about the law, only.  Neither this document nor the information contained in it is intended to constitute legal advice on any specific matter or of a general nature.  Use of the blog does not create an attorney-client relationship with Gerstle Snelson, LLP where one does not already exist with the firm.  This blog should not be used as a substitute for competent legal advice from a licensed attorney.

©Gerstle Snelson, LLP 2026.  All rights reserved.  Any unauthorized reprint or use of this material is prohibited.  No part of this blog may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system without the express written permission of Gerstle Snelson, LLP.